Microsoft's CEO Steve Ballmer has said that the company should emulate Sony and Google and build a presence in the gaming and online services market. He said that to continue to grow, Microsoft had to operate successfully in multiple markets - a phenomenon he calls being "multi-core".
Ballmer said that the company had two successful strands to its business - desktop OS and software, as well as server software -making it a two-core company, he said at Microsoft's annual Financial Analyst Meeting. This is something he argued no other major technology company has ever done, though IBM comes close with its hardware and services business, he said.
But Ballmer hopes the company will develop more core businesses with its entertainment and online services strategies. "There really is a Sony that lives inside of us," he said. "There's an aspiring Google or Yahoo that lives inside of us."
To create a multi-core company, Microsoft must continue to build out businesses in markets other companies have already created. It used that strategy with success to create the Xbox game console, and it is currently doing that in other markets, such as web-based services, business intelligence and high-performance computing, Ballmer said.
"You have to confront the question: Is it OK to get into some area of endeavour when you're not first?" he said. "It's always best in our business to be first. We want to be first. But are you prepared to get in and innovate and try to get growth in areas where you're not first in the market. As investors, you have to understand that we think that's important."
Even as it continues to plug away at new markets, Microsoft also is learning from mistakes it has made in its core businesses, Ballmer said.
Referring to how long it has taken the company to release the next version of the Windows client OS, Windows Vista, he said the company will never again take five years to develop an update to a major product. The most up-to-date release of the Windows client OS, Windows XP, was released in late 2001, while Windows Vista is pencilled in for release in January 2007.
"We will never [again] have a five-year gap between the releases of major products," Ballmer said.