News 

Why did you feel the need to give your presentation
We needed to make it clear that trying to make a good business is what has driven our decisions all along. People have tried to ascribe motives that make good stories if you believe them, but they're simply not the case in the reality. We've always approached this business from the standpoint of what's right to do for our customers. The agreement that we signed with Apple is never going to make us do things for 'religious' reasons, like porting Access because people need to see us do that in order to believe that we're committed to the platform. So absolutely the business will continue. It's a good business for us today, and we hope to make it a better business in the future, and to the extent that we can continue making that the case, we'll continue to support the Mac.

If you're a business that's thinking about the long term but taking it one version at a time, what you do is to craft plans that take you far out into the future, then you do absolutely everything you can to make sure that you meet those plans because you believe those are what will make you successful. Most of the presentation last week was designed to say here's what we plan to be doing for the next five to seven years.

Did you get positive feedback from the people who were at the event?
For the customers who were at the presentation, yes, absolutely. Most of the press also. There were some press who simply can't get beyond that there's a story here. I think it's just going to be a process of convincing them over the long term.

One analyst commented that unless this assurance comes from Bill Gates or Steve Ballmer, it doesn't mean anything.
I understand where he's coming from. He has a point to some extent. But on the other hand, Bill and Steve are good business people. What they want to do is empower management to make the right decisions for the company and for our customers. So I brief them, they share thoughts with me about what our direction should be. I spent two and a half hours with Bill Gates in July, taking him through what we've been doing, what we're thinking for the future. He was very positive and engaged for the entire time. He personally enjoys this aspect of the business. He'd like to see us knit ourselves a little more closely with other things the rest of the company is doing because they're good for customers. During that whole time I never got the sense that he thinks we ought to be out of this. He's looking to us, the people who manage the business, to tell him whether it's right to stay in or it's right to get out.

So why have people been making such a fuss about your relationship with Apple?
I think it makes a better story. If there's a threat, or there's a risk that we could be out of the business, that sells papers. Staying in is a boring thing. I think we've made a good business of it and we'll continue to do that until someone tells us to stop.

Someone at Apple recently said he's happy to support you while you adopt your .NET strategy, but like the rest of us, he's not really sure what .NET is.
I think that's the easy answer for them. I actually at one point let them off the hook by saying I don't think I've explained it to them very well. That was based on our very early discussion, but we've had follow on discussions where we think we've presented the case really well. I think I tried to do that in my presentation as well. At this point, I'm going to proceed with my plans and I'm going to assume I'm getting no help whatsoever from Apple. I'm concerned that they're not trying very hard to understand what's in it for them, and I've conveyed to them my concerns. I think there's a future pillar of compatibility between Macs and PCs called service enablement. Today if we're trying to work together, we'll email a Word attachment with comments, and it goes back and forth until we get to a point where we're all comfortable with it. In the future, we think you'll click a button in Word and the document gets posted on a secure Internet site, so there's a single copy of the document out there. We can always see exactly what the latest iteration of the document looks like. Perhaps we can even do simultaneous editing on it so everyone can see what everyone else is thinking. And it's all done in an afternoon rather than in a week or two of sending attachments around. That's the kind of thing that I think will be the next wave of features you'll see in Office as we begin moving towards this .NET future. The Windows version of Office builds on components that are provided by the Windows side of our company. Apple, by sitting on its hands, is saying we're going to sit back and let the MacBU do all the plumbing and all the features. So I have told them that I'm concerned about being able to maintain compatibility, and if that's really a goal, that should be reason enough to get involved and figure out for themselves what benefits there are. And there are many benefits that are way beyond just being able to help us maintain compatibility with the Windows version of Office. It appears to me they've got other priorities. And I'm fine with that. Whatever way they want to play it, that's fine.

So there's a degree of frustration with the way Apple's handling this.
I'm frustrated that they're relying on easy answers. What's obvious to me isn't obvious to them. I'm not in their innermost counsels consulting on what's Apple's direction in the future. I can only guess at their motives.

Maybe Apple is scared, like many Mac users, of having the way people work controlled by Microsoft.
We don't control anything. It's about the investments that you make and the capabilities that you're seeking and whether the Mac can play into that.

It's not so much a case of

ADVERTISEMENT

Microsoft controlling what's done, but there is a perception of Microsoft controlling the way that it's done. That feels like an irrational fear to me. If the products that we make address the right needs and address what customers are trying to accomplish with all the money they're spending on computers and software, to then turn around and say we don't want you to do that is just odd to me. Windows is a much more popular operating system and the PC makers who have based their hardware on Intel chips are much more popular than Apple, so it's a reality that the Mac user has to try harder to fit into the Windows world. What I was trying to do in my presentation was not to sow fear, but to sow reassurance that we recognise there are still some issues that our Mac customers deal with day in and day out. We're looking forward, we're trying to anticipate what those issues might be in the future and we're trying to address them because we know that's important to our customers. It's odd to me that so many things can be construed as having nefarious motives. What we're trying to do is make a good business. I don't have time to craft plots.

People have trepidation when there's uncertainty, and it's still unclear exactly where .NET is going.
It will be a lot easier when more of this comes out. The next nice text formatting feature of Word won't be nearly as exciting as the possibility that we can deliver a service-enabled version of Word that lets you get that get that contract done in an afternoon instead of over a two week period. That's the kind of vision that we're trying to craft. I think we're getting there, but it takes time.

How will .NET services alter the cost structure of your products?
It's very difficult to say how the business model would change. When we first addressed the notion of .NET our assumption was that the foundation would be this cornerstone service called .NET My Services, previously known as Hailstorm. This has a number of different services such as online calendaring and address book, that are fundamental building blocks for a lot of the other kinds of services you might do. Back in July the business model was that Microsoft would create a great big server farm and run Microsoft-hosted services. The feedback from our partners was that they'd like their own shot at running instances of .NET My Services that they could brand-extend. Microsoft has responded to that. In February we announced a new business model. There will be a server that you can buy and run if you're an Application Service Provider (ASP) or ISP. Back when we thought it would all be one single unified service, it made sense for us to say we'll shift from selling products for one price up front to a subscription-based model. We had so many ideas for making .NET My Services so much a part of our product that it made a lot of sense to do that. Now however that's not so crystal clear. We're having to take a step back and say what is the right model for pricing. We'd certainly like to move in the direction where we have a closer relationship with our customers, where there's an option to purchase Office for a much lower price up front but to have regular payments that you make and you get service in return. Honestly though, we haven't made any decisions on that.

What's the situation regarding Exchange compatibility in OS X? You said last July you were trying to figure out what to do. Where have you got to since then?
We have gone out and talked to every customer we can about the right way to do this. I'm hoping within the next few months to be able to say exactly what it is we do. Back in July people were asking the question already. We had just released Outlook 2001. We're surprised that so many people in the segment of the market that cares about Exchange are already asking about OS X. The issue for us is that the Outlook client that was released on Mac OS 9 is a complex set of code. It was never built with the thought that it would be ported to an operating system that's as dramatically different from OS 8 and 9 as OS X is. So it's a big piece of work to port that to OS X. It's as far as you can possibly imagine from that silly two-week port message that Apple originally came out with. We are still looking at what's the best way to address the needs of all our customers. I spend about a third of my time just talking about this issue.

And in the short term, you have a service release for Office v.X, and the much anticipated Entourage conduit for Palm for OS X.
That's coming along. We're going to try and get it out there with the service release. We're trying as hard as we possibly can. If it doesn't appear in that release at the end of May or the beginning of June, we'll post it as quickly after as we possibly can.

Any other products in the pipeline?
There are other products in the pipeline, but the main thing is that we base our whole business on Office and Internet Explorer. We're adding MSN Messenger to the mix. We're focussing on those. The other things we're working on we can't talk about right now. We get a lot of questions about products such as Money and Project, but there are factors that limit the business case of bringing those to the Mac. They both use the same database engine that runs Access. So to get either Money or Project running on the Mac, you'd have to do most of the work required to port Access to the Mac. And while we know that Access is interesting to a certain segment of our customers, the cost to port it would be pretty high. And we have a great relationship with FileMaker. We'd hate to go head to head with them.

Have recent comments made by Apple about Microsoft in the various anti-trust cases had any impact on its relationship with the MacBU?
Apple's entry into the private anti-trust suit was disappointing because we think they did it without really understanding what the benefit to them was. There was a lot of free money in there for them. The money that they talked about was supposed to be given to schools which are frankly not their customers. These are schools where 70% of all students are on assisted lunch programs, so they're not going to go out and buy $1800 iMacs. This was a great opportunity for them to sell a whole bunch of brand new computers to schools that just weren't going to be their customers anyway. But, no, it doesn't impact our working relationship today.