February 15th, 2007
Ballmer's list: Microsoft's CEO shares his top nine Microsoft growth picks
Microsoft CEO Steve Ballmer has come up with a list of the nine "opportunities" where he believes Microsoft can sustain a half billion or more in new margin growth over the next three years.
On February 15, Ballmer shared that list with Wall Street analysts and shareholders who participated in a forecast-update meeting. Ballmer ranked from largest to smallest (in terms of revenues, not percentages) the product arenas on which he's counting for the biggest growth for fiscal 2008 through 2010. He told Wall street that none of these segments requires any new, massive investment for success.
Ballmer's guaranteed nine growth spots:
1. Windows client revenues from OEMs (PC makers and system builders)
2. "Desktop value" revenues derived from corporations (big enough to have an IT department). This sounded like Office revenues
3. Server revenues — Windows Server, database, security products. Ballmer said he sees this as an arena where Microsoft has a good opportunity to grow its business vis-a-vis Linux
4. "Mature desktops" — i.e., add-on revenues in corporations where there's already some penetration of Windows and Office. Client-access licenses are a key growth driver here.
5. Emerging market savings — especially due to Genuine Advantage Initiative anti-piracy crackdown campaigns/mechanisms
6. Advertising — especially via adCenter, Microsoft's online ad system — and the properties fueled by it
7. Xbox, particularly in dollars derived from Xbox Live, attached hardware and attached software
8. Sales of Office to small businesses and consumers
9. Windows Mobile operating system sales to cell-phone and PDA makers
Ballmer also shared with Wall Street analysts on Thursday another list. This was of six additioanl opportunities where Microsoft may derive longer-term growth, but where he admittedly had "less visibility."
Ballmer's next six high-growth picks:
1. Savings from cutting piracy outside major corporations. Genuine Advantage anti-piracy crackdowns among small-business and consumers
2. Office Live
3. Business services, particularly the Exchange/Office Communications Server hosting that the company is testing with three or four large customers. (I believe this is a reference to the Microsoft "Energizer" pilot.)
4. Zune MP3 player and all the attached hardware/software/services which will accompany it
5. TV, particularly IPTV
6. Healthcare. Ballmer hinted that Microsoft will go public soon with an offering on the consumer side of healthcare. (I believe this will be the Windows Live for Healthcare service I heard about a while back.)
I was surprised that Windows Live — supposedly one of Microsoft's most important strategic efforts — didn't make either of Ballmer's lists. Ballmer did mention services, but talked about it more from a platform perspective, than as a bunch of individual point products.
"We need a strong services platform" akin to Windows client and Windows server, Ballmer told analysts. "We are building a cloud platform."
The cloud platform is Microsoft's evolving "Cloud OS" that will consist of a set of services that are an adjunct to Windows.
Would you add — or cut — anything from Ballmer's quick-hit-pick lists? Places you don't or do see Microsoft being able to count on strong revenue growth for the next three years?
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