Microsoft will pump $500 million into marketing Windows Vista and Office 2007, the latest versions of the company's dominant desktop PC operating system and suite of clerical programs.
That's part of the message Microsoft CEO Steve Ballmer delivered to senior executives of 500 companies who traveled to New York to hear an hour-long sales pitch about the upgrades, due out late this year.
Ballmer's theme: Vista and Office 2007 are packed with "people-ready" tools designed to boost efficiency and create revenue. "People do drive business outcomes. People, people, people," said Ballmer, in his trademark, high-energy speaking style. "And software and technology need to be a tool right there in front of people every day."
Many corporations continue to use Windows 2000 and Office 2000, while holding onto licenses entitling them to upgrade to Windows XP and Office 2003, says Paul DeGroot, licensing analyst at Directions on Microsoft. Ballmer's task: persuade them to purchase new licenses this spring giving them the rights to upgrade to Vista and Office 2007 any time in the next three years.
Microsoft is "desperate to change" the mindset that current desktop software is "good enough," DeGroot says. "Why buy new licenses when you still aren't using the stuff you bought three years ago?"
Vista and Office 2007 are designed to tie in with new Windows server programs as well as Windows Live, a new initiative now undergoing testing, which will consolidate Hotmail.com, MSN Messenger and other similar services Microsoft is developing.
Web-based services have become popular with companies because they are cheap to use, easy to deploy and can run on cellphones and PDAs. Rivals Google, Yahoo and Amazon have begun offering an array of Web-based services that don't require Windows or Office.
Ballmer traveled to New York "to make sure these companies understand what's coming up and why it's worth paying for these upgrades in advance," says Matt Rosoff, tech industry analyst at Directions on Microsoft.
On another front, rivals such as IBM and Sun Microsystems have been refining desktop systems based on the free Linux open-source-code operating system. "Viable choices exist," says Charles King, principal analyst at Pund-IT.
Ballmer disparaged IBM as a company hungry for consulting fees. "We're talking about making people in business more productive every day," he said. "IBM is talking about doing a project."