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Microsoft looks to enlist European partners in SMB push

Executives talk the talk in Lisbon

Despite the growing profile of Linux, continued security concerns and an anti-competion ruling from the European Commission, Microsoft faced no coup d'etat when it rolled into Lisbon on Portugal's revolution day, this Tuesday.

Instead, the company's Executive Partner Summit was attended by European IT companies looking for peace of mind and prosperity. In that, Microsoft promised to deliver.

"We are in the midst of an IT rebound in the Europe, Middle East and Africa (EMEA) region," said IDC analyst Thomas Vavra, kicking off the summit. "And software is the most dynamic subset of the IT market in EMEA."

In Europe, the lion's share of the market comprises small and medium-sized businesses (SMB) which Microsoft has set its sights on, not only to sell its ubiquitous Windows operating system, but also to target with new business applications. Furthermore, the EMEA region holds some of the emerging markets where Microsoft sees big potential for growth.

"We are very focused on emerging markets, in Asia, Russia, Africa we see an explosion," Microsoft CEO Steve Ballmer said in his keynote address.

At the summit on Tuesday, business applications were the talk of the day, and Microsoft's local partners were the key to targeting SMBs in EMEA.

"I want you to know that I'm committed to the partner model and I have a fundamental optimism about the business," Ballmer said.

And Microsoft's success so far in the SMB market has apparently made the software maker a necessary partner for some European IT services companies.

Thomas Wagner, of Switzerland's Wagner AG Informatik Dienstleistungen said that up until a few years ago his business was "an IBM shop".

"We were really dedicated to IBM but then some of our customers started demanding that we offer Microsoft support," Wagner said. While his company doesn't use .Net or Microsoft applications, it provides Microsoft infrastructure on the back end to be able to support customers' small business applications, like collaboration tools.

Business applications represent a lucrative opportunity for both Microsoft and its partners, Ballmer said, before rattling off an acronym-filled list of business software products on the horizon.

Microsoft plans to target the market with business intelligence, supply-chain management, customer resource management and enterprise resource management tools, Ballmer said. While personal productivity was the mantra of the past, business productivity would be the next big boom in software, he added.

The company's Office software is still key, and will serve as a sort of gateway to other applications. Ballmer mentioned an upcoming demonstration with Siebel Systems Inc. in which a CRM application will be accessed from Outlook.

But while Ballmer highlighted exciting new areas of growth, the company is still clearly concerned with addressing lingering issues. The growing popularity of Linux, especially among Europe's public sector, is a concern. During his keynote address, some partners asked Ballmer how to deal with competition from Sun Microsystems's StarOffice alternative.

"Write me – we'll send in the cavalry," Ballmer quipped. However, among partners the concern seemed more serious.

Microsoft's general manager for platform strategy, Martin Taylor, was working to allay these fears.

Speaking to journalists at the summit, Taylor said that Microsoft "was really trying to understand the trajectory of Linux," and had set up a Linux research and development lab at the company’s headquarters in Redmond.

While he said the company's initial response to the open source threat was "denial," then "an emotional reaction," he added that he felt good at this point that the company was taking a rational approach. It's trying to better understand Linux and learn from it, he said.

On security matters, Microsoft is also trying to take a more measured approach, and according to company executives it is paying off.

After all the work the company has done in the last year on security, such as delivering Windows XP Service Pack 2 and dedicating more time and resources, Ballmer said he believes the situation is improved.

"I really feel that we've made a year of progress but I know that we are not where we want to be or where you need us to be [on security]," Ballmer told summit partners.

Notably absent from Ballmer's address was news on the European Commission ruling last March that Microsoft had abused its dominance in the PC operating systems market to gain advantage in related markets, such as media player software.

The Commission ordered Microsoft to pay a fine of €497 million, or over US$600 million, offer a version of Windows without its Windows Media Player, and give rivals enough code to build competing server software that works with Windows.

The company has appealed the case, and has asked for a suspension of the remedies, pending appeal.

When asked Tuesday if he had discussed with partners the possibility of being denied a suspension, Ballmer said no. "And not one partner has asked about it," he added.

Perhaps by all appearances, revolutions did not seem afoot.


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