07/13/2011 11:41 am ET Updated Sep 11, 2011

Steve Ballmer -- "You Need to Decide If You're Coming With Us"

Day 1 of the Microsoft Worldwide Partner Conference. The keynote was interesting both for what it said as well as what it did not say:
  1. No mention of SharePoint and SQL Server was mentioned only in passing. This doesn't mean either is going away -- they are a key part of the foundation for many of Microsoft's products. But it is interesting that neither is being discussed with partners. Especially SharePoint which is a powerful weapon for Microsoft's dominance of the cloud. Interesting that they got no love.
  2. Microsoft is all in on the cloud. Early on Steve Ballmer said partners "need to decide if you're coming with us." So for partners, you either jump all in on the cloud or Microsoft is going to leave you behind. Harsh but I think this is a good decision -- half-assed doesn't get it done. And Microsoft has clearly decided that the future is cloud-centric.
  3. The cloud and Bing is where you saw enthusiasm and a lot of discussion from Ballmer. This is where I think you are going to see the most effort and the most interesting new technology come from Microsoft over the next year. Dynamics (ERP/CRM) and Windows Phone came in a decent second in terms of attention and enthusiasm. But for both Dynamics & Phone the discussion was market share -- nothing about what is coming that will have them kick ass over Oracle and Android/iPhone.
  4. When Steve Ballmer came out for the second time, he referenced the tweets about the keynote he read while Tami Reller was talking. So if you want a direct line to Steve -- tweet about a keynote while he is off-stage.
The keynote was at the Staples Center which was packed (trick -- show up just as the talk is starting -- they threw open the VIP seating to anyone because the main seating was filled). It was a really good start with a moving film about the tsunami in Japan and a company that created an app to help people find their families -- created and live in three days. And then the dance group World Order which was really cool. Big rounds of well deserved applause for both.

Ok, so we have Microsoft and 15,000 of its BFFs there. First up is Jon Roskill (who did a good job as M.C. and chief cheerleader). He first talked about Microsoft having 640,000 partners. Some people think Microsoft should instead focus on maybe 1,000 partners but I think there is a lot of power in having this immense number of small partners because those numbers add up. (There have been recent changes in the partnership system that will probably significantly reduce the number of partners who don't sell Microsoft software -- which I think will hurt Microsoft.)

Next Jon gave a shout out to IAMCP (good group). And in that the camera shot to a group of students that are part of IAMCP -- hilarious, as all the students were wearing t-shirts that had on the front "HIRE ME." Props to them for an innovative way to find a job.

Jon closed out with a short discussion of the future of Microsoft -- mobility and the cloud. He was very specific that Microsoft's focus here is not opportunistic, it is central to everything they are doing. Where Microsoft focuses it goes all in and is willing to spend billions and take years to win if that is what is required. Looking at Windows Phone specifically -- Microsoft is not going away. They may win this round, or they may have to keep trying -- but I don't see them giving up.

And with that Steve Ballmer took the stage. Steve looks and acts about the same as back in the early 90s (which has its good and bad points). The first part of his talk was "cloud, cloud, cloud." This was when he was very direct -- "decide if you're coming with us." He talked about Azure, Office 365 (Office was discussed a lot in the keynote -- but always in the context of Office 365). And then he once again discussed "cloud, cloud, cloud."

Next Steve talked about the Imagine Cup, which is a country level and then international competition between programming teams (using Microsoft software of course). It was really cool seeing the teams, what they had created, and how enthusiastic they are. A special shout out for the all-girls team from one African country -- good to see a tiny bit of gender balance.

Steve then discussed the breadth and integration that Microsoft has across the software infrastructure and the tremendous advantage Microsoft has due to being far beyond anyone else. (This is very true -- the development environment on .NET where everything is a tightly integrated whole is far superior to Java, where pieces come from multiple vendors and interface awkwardly.)

He next talked about Windows discussing how other operating systems have 20 million users -- "and that is too many." But he then followed up with Windows has 350 million users and the last he checked 350 was a lot more than 20. Steve seemed pretty comfortable with the dominance Windows presently has (which is different from the time of OS/2 vs. Windows when the goal was 100%). Steve also admitted that Windows Phone has very little share.

Steve next shot into Bing, where he gave an intro of it being a platform for partners and then turned it over to Stefan Weitz. Stefan then demonstrated some cool functionality including showing results from friends (via Facebook), displaying intelligent results where it's a click to make a reservation, buy tickets, find deals, etc. And the most interesting is they are using geo-tagged pictures to show the inside of buildings for a map location (which will bring up some very interesting privacy issues when it's a private residence).

Steve and Stefan did not talk specifically about how they are going to make Bing of value to partners -- but they clearly have that in mind based on both what they said and the time devoted to Bing at the show. I don't think Google needs to be worried, but they should be concerned. And all of us will win as they compete on making search better.

Okay, back to Steve as he shot through a number of items. Microsoft Dynamics got a bit of talk, mostly thanking partners for sticking with it and listing out how well it's doing. But nothing about where it's going or how it's going to compete with Oracle & SAP. (By comparison, one of the two main topics at the OracleWorld keynote was their new ERP/CRM systems and where they are going). So Dynamics is alive and getting attention -- but no idea if anything special is planned there.

More discussion of Office 365. Clearly from how it is discussed, tying Lync to it, etc. the future for Office is collaboration through the cloud. And in the Steve brought up the Skype acquisition. He then shot in to how Lync is still the communication platform within the enterprise but Skype exists to talk to people not connected on Lync. And that was it for Skype. (I wonder what is going on there as seven billion is a lot for communication with people not on Lync.)

Steve then got to Xbox where he showed LiveTV (I want one), Kinect (I threw my shoulder out playing Wii so I've never tried it), and Bing via the Xbox (basically voice recognition). They spent some time here showing what it can do and discussing bringing Kinect to business apps (so we'll soon see people all dancing through contortions at their desks to control Office -- that will be entertaining). Once again they didn't discuss much in specifics as to how this will be of advantage to partners. I think in the case of Xbox they realize they have some very powerful technology here and are trying to figure out how to leverage it. So we could see some interesting things come out here... maybe.

Steve then turned it over to Tami Reller and went offstage (to read Twitter). Tami's presentation was almost pro-forma, giving a good try as to why partners should get their clients to upgrade to Windows 7 (Windows XP is still the dominating platform -- by far). But I think Microsoft realizes that there isn't much more they can do to try and increase upgrades. This was totally a by the numbers argument which was best illustrated by who was presenting this -- the CFO of the Windows group. (Windows 7 is better than Windows XP -- but XP gets the job done, so I understand why many companies are not upgrading.) She did show a little of Windows 8 but nothing new.

One interesting point is Tami said that Windows 7 required less hardware than Vista and Windows 8 will require less than Windows 7. Now beating Vista was easy as it was such a mess, but going forward, saying that hardware requirements will hold steady or decrease -- that doesn't make sense. If you only get N clock cycles, you either have to significantly improve the code in places to free up cycles, or you have to replace cycles by removing some code. That does not allow you to add new functionality. For example, a windowed UI takes a lot more processing than the old DOS text UI. Focusing on writing efficient code and only executing the code necessary is a very good thing. But moving forward, adding new functionality will increase hardware requirements (imagine the UI we could have if all systems had high-end 3D graphics cards).

And then we came to the end with Steve back up on the stage. He closed out observing that the economy is still stuck in a malaise but that I.T. sales are growing. (This is actually bad news for the job market -- companies are investing in improving efficiencies. That means more IT sales but even fewer jobs long term.) And with that the keynote ended.

My Thoughts

First off, kudos to Microsoft for a much better keynote than the one at OracleWorld. At Oracle it was so bad much of the time I just browsed the web (especially the HP part). This one was sometimes boring but mostly interesting and never painful. So well done by that measure.

Second, there is a lot of discussion about the future of Microsoft. Microsoft's approach in the past was to let others discover what the new hits will be, then come in second and dominate. And that approach no longer works. So Google, Facebook, etc. not only discovered new hits, but have been able to retain them. But with that said, Microsoft still owns the desktop and is still one of the few major players on the server. There is a lot of power in those positions. And they're still fighting. Will they ever again dominate like they did in the 90s? No. But in many ways that period was an aberration. They do remain one of the major players and they do remain very competitive.