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Microsoft CEO takes launch break with the Sun-Times

June 1, 2001

It's hard to find a computer that doesn't run a Microsoft product, particularly in Chicago. Microsoft's Chicago-based Midwest district office, which covers Illinois, Indiana and Wisconsin, is the tech giant's biggest moneymaker in the country, with more than 500 customers generating $500 million in revenue annually for Microsoft.

It should come as no surprise, then, that the Seattle-area company sent its No. 2 man, CEO Steve Ballmer, for the official launch of its new Office XP software Thursday at the United Center (yes, Bill Gates went to New York).

Between appointments in a whirlwind visit to Chicago--which included a lunch with 100 local companies and back-to-back-to-back media interviews--Ballmer sat down with Chicago Sun-Times reporter Dave Newbart to discuss the local tech economy, Microsoft's dominance in the market, the federal antitrust case, Microsoft's new licensing requirements and the open-source movement (in effect, free software on the Web, which he called a ''cancer'').

Q: Boeing recently moved to Chicago. Why doesn't Microsoft relocate here?

A: [laughs] We are quite comfortable with our headquarters in Seattle. Chicago is a great city. I'm from Detroit. I like it here. But we have 20,000 people comfortably ensconced in Seattle.

Q: More seriously, in Chicago we do seem to have an inferiority complex about our place in the tech world. Rankings frequently put us toward the bottom among major cities in terms of our tech presence. How do you view the state of our tech economy?

A: I think there is a lot of great stuff going on in Chicago. There are a lot of innovative users in the Chicago area, which is exciting. We have a lot of great partners. I'll be on stage with a company called Genesis [Consulting], which I'm very excited about. We have a local partner named Calypso [Systems]. We literally have dozens of partners doing very innovative work with customers here.

I don't know what the national surveys say. Other than Silicon Valley, I think it's hard to point to any one place and say, "That's where it's all happening."

Q: Microsoft's market dominance and financial position are stronger than ever, despite the government's antitrust case and the weakening economy. Has the government's case had any impact on the way you do business?

A: There has been no legal ruling put into effect. We have and continue to innovate within the spirit and letter of the law. We continue to do what we have always done, because we think it's 100 percent correct. We add new capabilities to our product, we keep our prices low, we try to offer our customers better and better values. The laws were designed to encourage that and protect that behavior, because it's good for consumers.

Q: Microsoft has expanded to a number of markets, especially with the development of the Xbox and a smart phone. What's next, and is there any area that you don't see yourself entering?

A: We have a lot on our plate. We have a big dream about what XML (a markup language for documents containing structured information, such as words and graphics) can do for the world. The way software gets built will change over the years, which we are pursuing with our .Net platform. But we are hardly trying to do everything. I won't sit here and try to rule out that we might do other things in the future, but we have a few clear priorities.

Q: The new Windows XP software, I've seen a trial version, contains a number of free products--media player, a CD burner, an Internet firewall. Could that bundling hurt smaller competitors who make stand-alone software? Isn't this kind of bundling that you offered with Windows and Internet Explorer?

A: Just as with Internet Explorer, our job is to offer customers what they want. We are trying to provide more functionality at the same or better prices every day. [A]ll the new capabilities of Windows XP are open to software developers to add onto, to build value around. I think Windows XP ought to be a real boon to the kinds of innovations that come from smaller companies. The inclusion of Internet Explorer with Windows has been absolutely great ... for innovation in the software industry. Whether it was great for Netscape is a different question.

Q: Independent analyses of your new licensing policy indicate that unless a company upgrades its software every two years, it could face costs from one-third to double what they are paying now to upgrade. What do you think of the criticism that says Microsoft is forcing companies to upgrade to Windows XP by October or face much higher costs later?

A: We are trying to simplify our licensing practices in many ways. We are clearly providing some incentive to upgrade more regularly. Your better customers get a better price. An analysis we've done, 80 percent of our customers are going to see the same or lesser prices, and 20 percent are going to see very small to somewhat larger increases.

Q: The new software also allows a user to install it only twice. You have recently cracked down on corporate piracy and large-scale pirating operations. Are home users next?

A: Intellectual property should be protected. That's the only way that a newspaper or a software company or record company or artist can get a fair return on their work. Our goal is to try to educate people on what it means to protect intellectual property and pay for it properly. We are trying to help customers understand when they are crossing the line by putting some bumps in the road so they can't do the wrong thing.

Q: Do you view Linux and the open-source movement as a threat to Microsoft?

A: Yeah. It's good competition. It will force us to be innovative. It will force us to justify the prices and value that we deliver. And that's only healthy. The only thing we have a problem with is when the government funds open-source work. Government funding should be for work that is available to everybody. Open source is not available to commercial companies. The way the license is written, if you use any open-source software, you have to make the rest of your software open source. If the government wants to put something in the public domain, it should. Linux is not in the public domain. Linux is a cancer that attaches itself in an intellectual property sense to everything it touches. That's the way that the license works.

Q: You've been on this job [as CEO] almost 18 months. What has it been like replacing Bill Gates?

A: [I]n a weird and strange way I probably feel more pressure now, no reason I should, but I feel a little more pressure, responsibility. The great thing is we get a chance to do two things. Bill gets a chance to put the highest possible percentage of time into our strategy. My particular capability and focus are really about building a management team, the business processes, etc. Bill and I are going to be around for a lot of years, but we are not going to be around forever. In some senses I'll put a little more time and energy into setting us up so the business is a business that doesn't depend on one guy, even a guy who is as talented as Bill Gates.

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