Ballmer Lays Out Microsoft's Services Future

The world's largest software vendor is becoming an application service provider, letting users in effect rent its applications.

"Software will all evolve to become a service," said Microsoft Corp. President Steve Ballmer this week during the company's annual Government Leaders Conference in Seattle. "In 10 years, will people buy software or use software services? Most will use software services, because it's more convenient," Ballmer said in an interview.

Company officials, starting with Chairman Bill Gates, used the gathering of 400 government information technology executives from 130 countries to tout Microsoft's .Net initiative. Under .Net, all Microsoft products will have extensible markup language embedded for greater scalability and interoperability.

Ballmer said the ASP model of software distribution "will not happen today, but when we do, we'll be on the .Net platform."

The ASP distribution method would be a good one for government agencies, Ballmer said. He envisions some software components residing in users' server or PC caches to better use local processing power, as opposed to a terminal architecture or a complete download every time an application is checked out.

And, he said, customers would pay a flat fee per month for software instead of per use.

Shorter term, Microsoft's next big releases will be the Windows XP successors to Windows 2000 and Windows 2000 Professional. According to Mark Croft, a product manager, XP will have greater backward compatibility with Windows 98 applications and hardware drivers than Windows 2000 has had. That, he said, should overcome the reluctance of many systems administrators to upgrade to Windows 2000.

Ballmer said the relatively slow adoption rate of Windows 2000 Professional was not related to a flattening in growth of PC shipments. "We could have done better. Our issue was proving the value of the professional product" vs. Win 98, he said.

Unless organizations have relatively new hardware, they may have no choice but to upgrade to Windows XP, Ballmer said. That's because Microsoft is testing the products, due out in the fourth quarter, only on PCs built this year with 64M of RAM.

"We tell people, if you have a machine from before Jan. 1, 2000, we're not targeting you," he said.

In other topics, Ballmer said:

*Microsoft will release a fully 64-bit version of Windows XP whenever Intel Corp. ships its Itanium processor. That version, he said, has a different instruction set from the 32-bit set of most PCs.

*The company's Hailstorm initiative, which will host a repository of customer information available to any subscribing Web service, would be useful to government because it doesn't require the Web site operator to issue cookies, something federal agencies are not allowed to do.

*Microsoft will try to include handheld devices using the Palm operating system in the wireless part of its .Net initiative, and not just Pocket PC devices. "We'll have discussions with Palm about whether there is a business model that makes sense for us and for them," Ballmer said.