Microsoft Financial Analyst Meeting: Stephen Elop, Bob Muglia

Rob Enderle

This is the third part in the series on Microsoft's Financial Analyst Meeting from last week, focusing on Microsoft's Business Division and Server & Tools.

 

Stephen Elop: Microsoft Business Division

 

This presentation focused on Microsoft's business opportunity. They were hit twice: Folks bought fewer PCs, and what they did buy was cheaper and often used discounted Windows XP. Business volume dropped, but businesses stayed at the same price point. Redmond did have an increase in annuity revenue for things like Office, SharePoint and Exchange, where companies sign long-term contracts. This division is clearly proud it's kicking Notes butt, with 50 percent growth for Exchange and 20 percent growth for SharePoint. Even Microsoft Dynamics is growing around 40 percent.

 

The improvements in both Outlook and Excel in Office 2010 look to be some of the largest and most user-focused this decade. If you have a stuffed mailbox like I do, you'll probably love what is coming. Elop also highlighted voicemail integrated with e-mail, something I'm still personally waiting for. (You can get it as a small business through services like RingCentral, by the way.) However, they also showcased real-time video conferencing from a PC to HP's Halo system, which can be initiated out of Office and appears to retain much of the high-definition experience. Halo is a system that typically costs between $300K and $500K installed.

 

Bob Muglia: Server & Tools


 

Bob is very proud that he is taking share from Linux and currently running at 75 percent market share in the server space. He is also proud that he is taking share from Oracle, though the 1 percent share growth he is highlighting seems almost like a rounding error. Microsoft appears to be making massive inroads against VMware with Hyper-V. It is currently winning, according to Bob, seven out of 10 deals. System Center is growing at 30 percent.

 

He seems proud of his Spark programs. These are programs that are driven into schools and startups at prices approaching free . There evidently has been a lot of take-up.

 

Bob decided to do his own business intelligence demo. I can't tell you how often I wonder whether an executive can actually use a product they are pitching. Bob evidently can. He demonstrated how he likely gets Steve Ballmer to free up money for his division, showing how rapidly applications can be created that roll up business information into executive dashboards. The message: This is evidently so easy even an executive can use it.

 

Bob really loves Azure, Microsoft's cloud solution. While it results in a 20 percent savings to customers, the revenue increase to Microsoft is massive and costs are disproportionately small, potentially increasing related margins dramatically. Evidently, at Microsoft, they really love the cloud.

 

He brought out Debra Chrapaty of Microsoft's Global Foundation Services. She is clearly not used to large audiences. Stage fright set in big time. She walked through the significant work they are doing in their business on-line services, including improvements in energy efficiency, modular construction and cooling. They evidently roll prefabricated containers on truck beds into a preconfigured site and can be up and running with a major server farm in a matter of days at a new site. It is kind of amazing.

 

(To read transcripts or see videos of these presentations, visit Microsoft's Press Room.)



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