Future Is Later for Microsoft

The way Ballmer sees it, Microsoft is a company with two cores -- its desktop business and its server-oriented businesses. And he's quick to remind listeners that many analysts said the company, which started out with just a desktop business, would never succeed in the world of servers and the enterprise. It has, of course. Now, he wants to make online a third core and entertainment the fourth.

Don't think Ballmer will give up on the new strategy very easily. "There is nothing that we have undertaken -- with a couple of exceptions, like Microsoft Bob, that I'll cop to in advance -- where I'd say, 'We have decided that we have not succeeded, and let's stop.' We've either succeeded, or we're still telling you we're going to succeed," he says. (Microsoft Bob was a poorly conceived attempt in the 1990s to make a cartoon-like character a major part of Windows.)

Interestingly, the analyst meeting at which Microsoft focused more on noncore businesses than ever before was the first in which Chairman Bill Gates, on vacation in Africa, did not attend.

"I have to become the full-time champion of innovation. Because if you look at the four things that will really allow us to both succeed in the marketplace, change the world, grow and drive shareholder return, innovation is the foundation," Ballmer said.

How did Wall Street react to all this? in a word, nervously. Some investors were bothered by Ballmer's "champion of innovation," remarks, taking it as a signal that he will move away from day-to-day operations, an unlikely eventuality.

But the greatest fuss of the day was caused by Kevin Johnson, co-president of the Platform and Services division, when he repeated the company's prediction that Vista, the next version of Windows, will meet its deadline of business availability in November and consumer availability in January unless a major bug or other flaw surfaces during testing.

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