Microsoft defends the throne

Advocates of the network computer have had a major, positive impact on Microsoft (MSFT), the principal target of NC proponents, a senior Microsoft executive says.

"It's fantastic that there are pretenders to the PC throne," Steve Ballmer, Microsoft's executive vice president of sales and marketing, told an audience of major Hewlett-Packard (HWP) customers yesterday. "It keeps us motivated and focused."

With HP officials, Ballmer sang the praises of the NetPC, the Microsoft-Intel alternative to the network computer.

"When you start with a more powerful device [like a personal computer], it's easier to dumb something down than to smart something up," Ballmer said. He contended that NC proponents, and Oracle (ORCL) CEO Larry Ellison in particular, "don't understand what people do with PCs."

Ballmer offered a thumbnail comparison of the PC and the NC: "One can run PC programs and one can't." He and Duane Zitzner, a Hewlett-Packard vice president, scored the NC camp for having multiple and incompatible definitions of the NC. Ballmer also predicted a $500 PC within two years.

But Ballmer acknowledged the "total cost of ownership" issue, which looks beyond purchase prices of PC hardware and software to support and administration costs too, must be addressed.

"Total cost of ownership is just another challenge that we need to attack head on in Windows. It makes it far easier to take the PC and enhance it than to throw everything out and start over," he said.

Microsoft's Zero Administration initiative, unveiled this fall with its NetPC plans, addresses cost-of-ownership concerns. Automatically updating software and installing new applications centrally will be one feature of Microsoft's zero-cost administration strategy, which Ballmer said won't be confined only to PCs.

"All these things will work not only on NetPCs but on a lot of other Windows PCs too," he said.