Steve Ballmer has opinions--lots of them. As the Microsoft executive vice president of sales and support, he has to convince the buying public that the software giant has the goods to be a leader in the Internet-dominated world. Ballmer held court on Microsoft and the Web during a visit to CNET earlier this week.
C|NET: Have you seen any significant improvement in market share for Internet Explorer?
BALLMER: Some improvement. We're still at the level where even that improvement isn't something where you go, "Oh, oh, oh!" On the intranet, I think we're starting to make some real inroads. It's not clear to a lot of people why they ought to go out and buy the Netscape browser when our stuff will be very well integrated with Windows and will be very integrated with our Office stuff. So certainly in that [intranet] environment we've seen some great progress, but it's a little harder to measure. But I sure feel like there's a lot of momentum in the customers I visit. I see people moving fairly nicely.
C|NET: Do you have a specific expectation on the Internet? Do you think you'll get 20 percent by the end of the year?
BALLMER: I don't think we have a stated target. We just know we have to put our heads down and get everything we can, as fast as we can. AOL itself, if that all works out right, should be a significant bump, almost independent of everything else, but we just have to keep our heads down. We've got to ship IE 3.0--that's actually a very important milestone. We've got to get content that really takes advantage of IE 3.0. IE 3.0 is very customizable, which from the number of provider standpoints, is very attractive.
The best way to become number one is to first become number two! And the best way to never be number two is to seize number three and number four! When we started building market share in word processing, we didn't take it away from WordPerfect at first. Eventually we started cutting into them.
C|NET: Are there going to be just two horses in this browser race?
BALLMER: You tell me. I think so. I have not seen significant momentum, at least in terms of what ISVs [independent software vendors] or ICPs [independent content providers] are talking about other than our stuff and Netscape's stuff, but maybe I'm fooling myself. But I think that's pretty true.
C|NET: Bill Gates at Internet World said he thinks the Web browser is the fastest-growing piece of software out there and that if we don't watch out we're going to have another OS on our hands. Many people see Netscape Navigator as an alternative, on some level, to the traditional OS.
BALLMER: Yeah, [Netscape] wants to be an OS. That's right.
C|NET: Is Internet Explorer 3.0 not headed for the same goal?
BALLMER: No, IE 3.0 doesn't need to reproduce that. We have to make sure that we share well with the rest of Windows. That's basically the difference. So it doesn't need to be another OS; it just needs to add on certain things that you don't get today in Windows. We need to integrate in. There doesn't need to be an Explorer and an Internet Explorer. There just needs to be one thing. We'll do that later this year. We don't need to have multiple ways of letting people view email. That can be integrated and not done twice. In other words, we don't need two programming models; ActiveX attempts to unify the programming model.
C|NET: How seriously is Microsoft going to get into providing content?
BALLMER: Quite seriously. The content field is vast, so it's not clear what it means to say "seriously." But we clearly have plans to try to add value, to do some exciting things in more than one area. Slate [an online political magazine set to launch this summer] is a good example. What we're doing with MSN is a good example. I read that rumor about old CityScape--who knows whether that's a good example or not, but we've done some stuff in health already. I think our pregnancy stuff is available today. I guess "health guides" is the best way to characterize what we've done there. Car Source, of course, will be 100 percent Web based. You can call it content or not--it's more of a shopping and information guide. It's a form of content, absolutely. The work we're doing with NBC certainly falls into that category. So we'll have a number of things that we try to do. Hopefully, some of those will be viewed positively. I'm sure we'll get some bumps and bruises from some of them.
C|NET: And your business model is to have users pay for the content?
BALLMER: Well it's a mix, like everybody else. Where appropriate, each of the properties will have sort of a different mix of zero subscription fees, all advertising-funded, to exactly the reverse. We know there's definitely a subscription fee for Slate. Not only might that be important in having it make money, but it's very important to [Slate editor Michael] Kinsley because he doesn't come from the same kind of world that maybe some of us do. He doesn't think anything is worth owning if you didn't have to pay for it. That's the magazine world.
C|NET: A year and a half ago the platform for most users was Windows, and today on a PC, for a lot of people the platform is Windows plus Office. Very soon it will be Windows plus Java, Office, a built-in browser, and ActiveX components. What does Windows take on next?
BALLMER: Telephony, video, MPEG, 3D. There are a lot of things that relate to the way people communicate to the platform. One of the key messages of the whole browser thing isn't so much the Internet, because we always bet that communication prices would come down and people would communicate. But people like hypertext links.
If you ask me what's the number-one lesson we should have learned, it's kind of a shame on us--we had this very tree-oriented metaphor. People turned out to like this hypertext link mode. Now, I think there's sometimes people who actually like to go back to the old tree metaphor. Being able to mix those two modes well is important, but there's always something on the frontier of what people want to do in the way they organize information to express themselves, to communicate.
C|NET: Are Microsoft's expectations in line with Windows 95's penetration into the corporate market?
BALLMER: Right now, we've exceeded our plans reasonably significantly.
C|NET: If you're taking market share with Windows 95, who are you taking it from?
BALLMER: OS/2 has kind of faded, so primarily we take it from Windows 3.1. The battle for the operating systems isn't about Windows. It's really about what's the future for Windows. Is the future of Windows Windows, or is the future of Windows Navigator? Windows' number-one competitor is Netscape today much more than it is OS/2.
C|NET: Why do you say that, even if Navigator isn't a fully fledged operating system?
BALLMER: Oh, because [Netscape's Marc] Andreessen says it's going to be.
BALLMER: Whatever you want to call it--an operating environment. Aren't you fined a quarter for calling Navigator a "browser" at Netscape? You're supposed to call it a "client."
C|NET: Do you take that seriously?
BALLMER: Sure! Let me tell you a story. Once upon a time there was a piece of software that was an extension of an operating system, and it had a nice little user interface and it had some programming interfaces and people kind of liked it, and over time they built on top of it. One day, the thing that it was built on top of wasn't all that important anymore, and it kind of got subsumed inside of the thing that was originally an extension.
OK, well I'm telling you, of course, the story of Windows 95, Windows, and DOS. And when we tell the story about what's happening today with browsers ten years from now, I want the thing that replaces Windows to be Windows. I don't want to wake up in a position one day where the guys at Netscape say, "Isn't Windows just that little thing that we use to put up menus and draw lines? Let's just write our own and suck it up into our client."
Is that a real competitive risk or not? It is if we screw up, you bet! That's the way we will get smacked over the head. If I wanted to compete with Microsoft, I wouldn't say, "Oh yeah, let's try to write a better memory manager, and we'll have lighter-weight threads than they do." In this day and age it's not sexy enough, and there's no user interface. The OS/2 experience proves full well the value of that. I would do what Netscape is doing. I'd say I'll build on top of [Windows], and I'll take their future away from them.
So yeah, we look at [Navigator] as a very direct threat for Windows if we don't do a good job. That's not a threat a month from now or five months from now. It's a longer-term threat, but it's a clear threat. It's sort of an everyday issue, but if we screw up, you won't know for a few years. You'll know day-by-day what our browser share is, but that doesn't really speak to the issue, doesn't threaten the fundamental health of Windows. I'm not sure any of us will know which day it was when we got it salted away. So we're just going to keep working very, very, very hard--at least the rest of my working life! [Windows] is our core franchise. What else is worth working hard on?