He may not be an expert on the economy, but Microsoft CEO Steve Ballmer sure knows where he is going. Into the cloud. Ballmer, who is on an India visit, opened up about the potential of cloud computing, and how technology can help India do things in a conversation with Anand Mahindra, vice chairman & MD, Mahindra & Mahindra. The discussion was moderated by ET NOW's Shaili Chopra.Edited Excerpts:
Shaili Chopra: Things are not looking good in Europe. Is the crisis going to make it very difficult for technology ahead?
Steve Ballmer: Whatever happens in the economic market, it is not going to make it very tough for technology. In our industry and at Microsoft, we continue to move forward to innovate to make new products. Will there be as much money for buyers? I do not know. We will have to see what happens but the pace of innovation is not going to get slowed down, in my opinion, by whatever may happen in the economy.
Shaili Chopra: But the technology spends are often driven by what happens in the economy. To what extent do you think that is going to be fluctuate this time around?
Steve Ballmer: It is an economic prediction. It is not an innovation prediction. In this sense, you have got to separate the pace of invention from the pace of revenue growth. We will see what happens with the economy and revenue growth but the pace of invention is going to be incredibly high.
Shaili Chopra: You are optimistic this morning or are you pessimistic about Europe?
Steve Ballmer: I am not an expert in the economy. I do not pretend to be. So it will take care of itself in my opinion.
Shaili Chopra: Anand, what do you see?
Anand Mahindra: Before we let Steve go off that question, he does run not just a technology firm but one of the largest firms in the world, one of the most respected. And you are all over the globe. You are arguably one of the most recognised names. So, I still want to pursue her question Steve, what is your view of the recession in general? You have to have some kind of view. I will just come back and we had letters, the views, the double views. I heard of new one last week, the square root. Somebody told me it is going to be a square root recovery and flat. Maybe they were referring to Europe but do you have a view when you look around your global empire as to what is going to happen?
Steve Ballmer: Again, I am not going to try to factor in Europe because I do not know what I do not know. But what I would have said was the innovation cycle will allow us to grow the consumer side of the business. It would not grow quite quickly because unemployment levels were high in the developed world and in Asia where we have seen more growth, we still have some intellectual property challenges relative to running a business. 50% of business spending in the developed markets goes to IT. But we had seen some recovery of, let me say, the bottom from about a year ago and I do not expect that to skyrocket but I continue to expect some reasonable progress in IT spending by business. Europe I just cannot make a prediction on.
Shaili Chopra: What about your reflection on the US because at the end of the day there is a reaction of what happens in another developed market on United States. So, in some ways, a sentiment impact that could happen?
Steve Ballmer: I am not worried so much about sentiment myself right now. I am not worried. The thing I do not understand, I feel like I should have studied more macroeconomics.
Shaili Chopra: Okay, forget all of that. I am sure both of you are always if not single-mindedly thinking about profits and I know you keep talking about how Microsoft is the most profitable company in the world. Profits do face a whole lot of storm when all this happens?
Steve Ballmer: I do not know how you feel. I do not view myself as responsible for profit but what we have to do is do better than the guys we compete with. If the economy is going this way, we have got to go this way less than the other guy. If we are going this way, we are going to go. It is about competition. It is about innovation and competition and we are working hard on both of those. We cannot control the absolute level of the economy. So it is a different part of my brain.
Shaili Chopra: It is also competitive advantage... Anand Mahindra: That is why my answer will naturally be very different from Steve’s and he would expect it to be because I have got my accounts meeting tomorrow. So, I cannot speak too much out of turn but if you look at our last three quarters, we are heading for the most profitable year in our over 65-year-old history and even our newer companies are all going to turn in probably very high profit years. That just is a manifestation of something everybody knows that the growth in the world economy is going to be shifting to this part of the world, to India and to China and the question, of course, is... you could ask me then... what about our businesses that are dependent on the West, particularly like Satyam which obviously is an exporter to the US. We are finding recovery in the US and I have always been a bull as far as the US is concerned. The US beats itself up too much when the chips are down and it comes up much faster than people expect it to and all the signs from our IT companies are showing healthy recovery in the US. In Europe although there is a flatness, there is a recovery there. The question is square root or is it headed up.
Steve Ballmer: And we have seen exactly the same thing. I would say our experience in the developed countries matches what Anand describes and our issue in the emerging countries, particularly in Asia, does get down to an issue of intellectual properties projection for our success.
Shaili Chopra: Certainly, and especially, in the long term. But with clients like Anand, the attention might be down here in the emerging markets whenever things go bad in the developed world. What is really the story that Microsoft is chasing about allowing Indian businesses to use technology and therefore improve businesses, save costs, go into innovation? Something that you are very big on.
Steve Ballmer: I hold a consumer business and enterprise or commercial business and I hold a proposition to our commercial customers that we can help you get more and give the people who work for you better access to information to make decisions. That is our proposition in India, that would be our proposition to our customers in US, that is a proposition that we partnered with Satyam, for example, in taking the market and I see that proposition working very well here in India.
Shaili Chopra: Do you think so Anand at Satyam? Anand Mahindra: Let me bring up an old philosophy that we pursued in how to budget for IT, and you can tell me Steve if this is something you have encountered with other clients. You always have this problem of capex and how much to spend? How do you compute the rate of return on your investment in IT. It is a problem that has waxed everyone. Sometime back, I read that the Japanese companies used a very interesting rule of thumb. They said do not agonise over the rate of return because there will always be somebody on the shop floor who will say that return did not come from IT, it came from my sweat and toil. What you do is ask yourself would I be able to achieve the same customer objectives that I have without investing in that particular software or IT. If I cannot, then spend on it and do what it takes to get that customer and we have used that principle throughout. To me, that is the opportunity for any software company, and I am sure Microsoft is doing it or I would love to hear more about how Steve is doing it. How are you making yourself relevant to a client and not talking technology, not talking about costs, not talking about return on investment, just saying you know what, you are going to be dead without me. If you do not invest in this new fangled thing that I have done here, you are not going to be relevant anymore and then your margins will actually improve.
Steve Ballmer: That is a very good insight. Probably, add one thing to it myself which is that you have got to be able to say what is ‘this’ to my customer and you have got to be able to turn to your employees and say, well what does ‘this’ do for you. Will you advocate for what it means to you just as the customer might advocate for themselves. We went through a period when companies were not sure that they should give employees personal computers. This is 10 years ago. The reason why this changed was simple. Employees coming out of school said are you crazy. How can we possibly do anything without a computer? So you have two constituencies to apply Anand, once to the customer first and the employees second.
Anand Mahindra: Interesting cue to ask Steve about his favourite topic and everybody’s favourite topic, cloud computing. Love to hear from you a little primer on cloud computing. I had been using that word, spilling it out, trying to sound smart where I went and I am still confused what the hell is it, is it remove the clouds around the clouds. Demystify it for us, will you?
Steve Ballmer: I will do that. I will tell you in some senses, people are fair when they say it is a buzzword because it is not one thing. Let me tell you how I would simply characterise it. The PC has been a wonderful innovation and it has benefits versus anything else. The internet has been a wonderful innovation and we have a little thing called the browser that puts them together but they really are like two separate worlds in most cases. How do they come together? The internet is a wonderful innovation and yet most enterprises keep their IT systems separate from the internet and separate from one another for a variety of reasons of security and reliability etc. How do we let those two things come together? The mobile phone. same thing. How do we let these things integrate?
That is one aspect of the change that the cloud represents and it means we will have new tools to write programmes more efficiently with better user interface. That is what it means to technology people. On another side, the internet has been to some degree about old computing. It is about putting people closer to other people and people closer to information. We have all this amazing information on the internet and you have to look for it but we cannot write a programme that puts it together and hands it to the user. That is not how the world has worked. You do not scow economic data and then write on the internet and write in an application.
That answers exactly Anand’s question. It is just not possible today. We need to improve that. The way we interact, I can send you email, you can send me email but if the three of us wanted to just have our own little private website to set up and send around questions in advance or whatever, we would wind up just sending emails. There is no way to have a private place. Social networking is opening up our eyes. So you take two phenomenons, a new way of writing programmes and the notion of using people and data.
source: Economic Times
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