After four years in low gear, can Microsoft Corp. shift into overdrive and become technology’s hot company again?
Chairman Bill Gates said Microsoft already is a “hot, sexy company.”
Gates’ comment came in a one-on-one interview Tuesday after he unveiled the software that could shift Microsoft’s sales and the PC industry back into high gear in 2006.
The software, code-named Longhorn, is a new version of the company’s flagship Windows operating system that’s in the homestretch of development. Test versions will be done this summer, and at an industry conference Tuesday Microsoft began helping computer hardware-makers learn how to build Longhorn-based products to sell in late 2006.
“This is the decade where we can have the most impact of all,” Gates said in his opening speech at the Windows Hardware Engineering Conference in Seattle.
Gates said Microsoft is making its biggest investment ever–in people and time–in Longhorn. In the interview, he said the top priority of the product is that it be “a breakthrough, super-high-quality release.”
He said he believes that Longhorn’s biggest selling point will be new features that make it easier to organize and find photos, music, documents and other information stored on a PC.
Apple Computer Inc. has a similar system in its Tiger operating system, which debuted Friday, but Microsoft’s also lets users simultaneously search for files on other Longhorn computers on a corporate network.
Gates shared his thoughts on what to expect from Longhorn.
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Q. We heard today about how big Longhorn is to the industry. How big is it to Microsoft? Is it the thing that’s going to get the stock going, get people thinking Microsoft is a hot, sexy company again?
A. Well, we are the hot, sexy company. I don’t know what you mean. Look at our valuation versus other companies in our industry. We are the highest-valued company in our industry, and, obviously, we maintain that by doing great software work.
You’ve got Office and Windows. You can keep using those, but it doesn’t generate any new revenue to us, even though you’re getting immense value out of that. And so it’s through innovation that we’re able to have revenue at all. So to keep our incredible sales level up, that’s why we’re always doing breakthroughs in Office, breakthroughs in Windows.
Q. Some financial analysts expect your stock to start picking up in late 2005, 2006. They’re expecting a “Longhorn wave” to hit the stock. Do you expect that too?
A. The way stocks work, for any stock at any price, half the people think it will go up, half the people think it will go down. Otherwise there’s a sure way to make money, right?
The closest we ever came to saying anything about the stock was during the bubble period, when we were saying that tech stocks in general were ahead of themselves, but we knew that at the time. In retrospect, it’s even more clear.
But in general, we just talk about innovation, and that’s all our message is about.
Q. There has been a lot of talk about the comparison of Longhorn with Apple’s Tiger operating system. What’s the biggest competitor to Microsoft in 2006?
A. The biggest competitor is the older versions of our software. That’s a fact. Then we get piracy of our software, where people get the new version but they don’t license it from us. Those are the two biggest competitors.
Apple’s always had some things that they do very well. Obviously, we’ve had things we do way better than them. The fact that Windows has more than 90 percent market share is because we’ve had much better hardware, prices, applications, and all those strengths just get stronger and stronger over time. We want to make sure we’re best in every category, and so that sense of competition is, I think, healthy.
They do new things, we do new things, and users get the best of that.