Bing to define Microsoft’s capability to innovate

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Opinion – Microsoft CEO Steve Ballmer yesterday gave a casual speech in front of more than 1500 members and guests of the Executives Club of Chicago, explaining the importance of innovation during a “reset” of the economy. The pitch for Microsoft products was careful, and, not surprisingly, focused on the next Xbox and Bing. What about Windows 7?

It seemed that Steve Ballmer was delivering pretty much on the expectations of Chicagoans when he talked about the opportunities of innovation and increase productivity during “challenging” economic times. It was what you would have expected, a speech we have heard so many times in its optimistic tone. The 15-minute or so talk avoided negativity and focused on explaining the audience that debt will not be the growth driver of the U.S. economy anymore. Instead, the power and patience to innovate and a chance to increase productivity will be key to rebound, Ballmer said. He cautioned executives that the economic environment will not be what it once was and that we are not in a “recession”. He considers it to be an “unprecedented reset” that will become the “new normal”.

“Yesterday was the exception,” he said.

In terms of innovation, he believes “there has never been a more exciting time” and, according to the Ballmer, the next ten years of innovation will be at least as good as or better than the past ten years. For Microsoft, the innovation opportunity would be to create a virtual world that closely resembles the physical world – noting that “in ten years, I don’t want to be [physically in front of this audience] anymore”, who then would be seeing and listening to a virtual Steve Ballmer. Other examples included opportunities in making communication much more digital than today, or the change in the way media publishes and sells content. But he also addressed the need to create a “better workforce,” which would result from much more focus on education, digital literacy and science. “We need to keep this the place for the best and brightest,” he said. “Just think. The future is about innovation,” Ballmer concluded his speech.

In his very own way, Ballmer delivered a very inspiring and entertaining speech, but there was virtually no pitch for Microsoft, which I personally found a bit strange, especially since Microsoft handed out copies of Windows 7 RC to every attendee. It certainly was a unique opportunity to talk to those executives about the innovation in Windows 7 and upgrade from Vista or XP to Windows 7. That pitch never came and it seemed that Ballmer avoided mentioning Windows 7, even after being asked about current software trends, at all cost.

Instead, the most important software trend at this time is, according to Ballmer, a natural user interface integrated in PCs that recognize your touch, you voice and look. He was referring to a computer that is much more personal, a computer that will reach many more people through its human-like interface and behavior. He said that this technology is “really close” to being released and the first example may be the next Xbox, which, according to Ballmer, will be released in 2010 and feature a camera to recognize and track a player’s actions.

However, in the same way Ballmer was avoiding Windows 7, he was focusing on Bing, which became the symbol of Microsoft’s capability to innovate during his speech. He joked about it, saying that Microsoft “is working hard on its 8% market share” and asking the audience to click on search advertising to help Microsoft “make money”. But there was an overall serious tone about Bing.

He admitted that if had the chance for one “do-over in his career, he “would start sooner on search,” which was remarkable statement. He described Microsoft as being the underdog in this business, as “the little engine that could”. But the company will be throwing lots of money at its search business over the next five to ten years in an effort to catch up with the “market leader”, Ballmer’s term for Google. “We’ve got our mojo now going,” he said.

Ballmer sees Microsoft’s opportunity in the fact that “the market leader” cannot “experiment as much” as someone who is coming from behind and we should expect Microsoft taking big and unusual steps at a time.

Microsoft’s current effort in search is reminiscent of the company’s effort to replace Netscape’s Navigator as the dominant web browser in the mid to late 1990s. However, it appears that Microsoft is even more serious about search, especially since search represents a direct revenue opportunity – an opportunity Microsoft recognized very late. “We always had great search technology. We always believed in search. But we did not see that business change coming and that is why we have been slow to move,” he explained.

If Ballmer’s speech was any indication, Bing is positioned to define the perception of an innovative Microsoft in the future, as much as Windows did in the past. And, from a consumer’s perspective, we should look forward to a historic battle between Microsoft and Google for the lead in search and Internet advertising.         

Wolfgang Gruener is the founder of TG Daily. The opinions expressed in this commentary are solely those of the author.