Ballmer in London: Microsoft’s cloud investment will deliver in long run

Microsoft chief executive Steve Ballmer has said the company’s continued heavy investment in cloud computing will pay off “in the long run”.

Insisting that the shift to the cloud was one of the most important changes in the history of IT, Ballmer said: “I’m not going to apologise for our investment in cloud computing. We have to invest in the long run and not just the short term. We’re sticking with what we believe in.”

Yesterday, Goldman Sachs downgraded Microsoft stock to neutral, warning that a slower PC refresh cycle and the growth in tablet competition would hold back the company. Microsoft has reportedly committed around seventy percent of research and development staff to focus on cloud computing.

Speaking to students at the London of School of Economics, Ballmer said he was aware of the challenges associated with moving Microsoft into cloud computing and away from a pure on-premise setup.

“Of course we will have more competitors,” he said. In addition to the “current” competition including Oracle, IBM, Amazon, Google and Apple, Ballmer forecast a fast changing industry in which new competitors would grow rapidly and others would disappear.


Ballmer said IT and processing staff were right to acknowledge that cloud computing will automate a number of processes and take away a proportion of jobs. He forecast that 10 to 15 percent of jobs could be affected over time.

But he added: “Companies have a long backlog of things they want to build. I think what will decrease is maintenance spending, while spending on development will go up.”

Ballmer defined cloud computing as “using the internet and new devices in innovative ways” to access information and to collaborate. Businesses working with Microsoft cloud computing products include McDonald’s, GlaxoSmithkline, easyJet, Aviva, Coca-Cola, Aon and Clifford Chance. Microsoft’s cloud products include the Business Productivity Online Suite and Azure.

Addressing regularly voiced concerns over security, privacy and availability, Ballmer made clear that Microsoft took these concerns seriously. “These are challenges that are the fundamental responsibility of every participant in our industry. We have to get it right.”

But he added: “We see the shift is happening and there are a raft of benefits. Cloud computing helps you learn, decide and take action. It will boost social and professional interaction, it drives server advances that in turn will drive the cloud, and it drives smarter devices.”

Copyright © 2010 IDG Communications, Inc.

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