11/29/2018
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`Microsoft, Ever Hungry, Looks for New Conquests - The New York Times
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` 1997
`Microsoft, Ever Hungry, Looks for New Conquests
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`By JOHN MARKOFF JULY 25, 1997
`The Microsoft Corporation has a blunt message for the rest of the computer
`industry: The world's largest software publisher plans to continue expanding its
`empire to embrace ever-larger parts of the corporate computing and consumer
`electronics markets.
`That message, spelled out on Wednesday and again today by Microsoft
`executives as part of an annual two-day financial and technical briefing for reporters
`and analysts, comes as the software giant is mounting its most aggressive campaign
`yet to move beyond desktop PC's by aiming software at the business-network market
`and the world of digital television.
`Microsoft said today that it had shipped more than one million copies of its
`business-network Windows NT operating system in the last year and that a new
`version of the program with additional features would become available for public
`testing in September.
`The software company, based in Redmond, Wash., has long drawn the ire of
`other software developers and periodically the attention of the Federal Trade
`Commission and Justice Department by continuing to add features and functions to
`its software operating systems that subsumed individual programs previously sold
`by Microsoft's rivals.
`Now it is accelerating that strategy as it prepares to enter markets that have
`traditionally been the province of large computer systems vendors such as I.B.M.
`and the Digital Equipment Corporation.
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`Microsoft, Ever Hungry, Looks for New Conquests - The New York Times
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`For example, the company demonstrated a feature of the coming version of its
`network software, Windows NT Server 5.0, that will be called the Active Directory.
`Currently, directory software for offices networks -- which enable users to easily find
`one another, communicate and share documents -- is an important part of the
`products offered by the Novell Corporation and the Netscape Communications
`Corporation.
`''Our strategy is simple,'' said James Allchin, a Microsoft senior vice president.
`''It's integration.''
`Integration will also be the tactic by which Microsoft hopes to expand into the
`consumer electronics market. The next version of its market-dominating PC
`operating system, Windows 98, planned for next year, will be designed to let home
`computers function as interactive televisions.
`That is but one means by which Microsoft hopes to become the standard-setter,
`and software seller, for the computerized TV set-top boxes that are expected
`eventually to replace current cable tuners in the predicted convergence of computing
`and cable television. Already, Microsoft has introduced a consumer-electronics
`version of Windows, called Windows CE, that is making its way into hand-held
`computers, and is expected to be the basis of the company's set-top TV software.
`Other recent Microsoft efforts to set the digital television agenda include the
`acquisition of Web TV Networks, which offers Internet service through TV sets, and
`the $1 billion investment in the Comcast Corporation, the nation's fourth-largest
`cable television operator.
`''Interactive television for Microsoft is all about the home market where there
`are 110 million households,'' said David Readerman, an analyst at Montgomery
`Securities. ''They need to find new markets to grow in.''
`Indeed, as aggressive as Microsoft's outreach may seem, in many ways the
`company is becoming increasingly defensive. Sales of Windows 95 have begun to
`flag, and its current big product, the Office 97 suite of productivity programs, also
`slowed more quickly than expected. And for all its potential, Windows NT is still not
`widely considered a full-fledged competitor for the market-leading Netware network
`software from Novell.
`Meanwhile, many of the company's hardware and software competitors are
`banding together to promote the so-called network computer as an inexpensive non-
`Microsoft replacement for the standard PC.
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`Microsoft, Ever Hungry, Looks for New Conquests - The New York Times
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`''If the network computers catch fire at all, they have the possibility of really
`retarding growth of personal computers, and that's really scary for us,'' said Steve
`Ballmer, Microsoft's executive vice president.
`Mr. Ballmer was among the top executives who warned analysts here that
`Microsoft's earnings growth would continue to slow as the company stepped up its
`investments in sales and marketing and research and development.
`And Greg Maffei, Microsoft's newly appointed chief financial officer, warned:
`''None of us think that Windows 98 will have the financial impact of Windows 95. As
`a result we will have slower revenue growth.''
`The company also said that its stock value had reached a dangerously high level
`that might be difficult to maintain. At its closing price of $138 yesterday, Microsoft's
`shares have a stratospheric price-to-earnings ratio of 52.37.
`''The challenge is how does Microsoft sustain a $180 million market
`capitalization in the face of some of these slowing markets,'' Mr. Readerman, the
`analyst, said.
`Another challenge for Microsoft here was making its newest technology work on
`command. On Wednesday, the company's technical demonstrations were marked by
`a larger than usual number of glitches and bugs, to the occasional amusement of
`executives and audience alike.
`At one point, for example, as a Microsoft executive tried to demonstrate the
`integration of the personal computer and the television, the futuristic, shoot-'em-up
`game he was showing simply froze on the screen.
`''I guess we're basically stuck in outer space,'' he said.
`
`Correction: July 26, 1997
`An article in Business Day yesterday about a new strategy by the Microsoft
`Corporation rendered the company's stock market value incorrectly in a
`quotation from David Readerman, an analyst with Montgomery Securities,
`who was commenting on Microsoft's growth prospects. The value was
`$180 billion, not $180 million.
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`Microsoft, Ever Hungry, Looks for New Conquests - The New York Times
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`A version of this article appears in print on July 25, 1997, on Page D00001 of the National edition with the
`headline: Microsoft, Ever Hungry, Looks for New Conquests.
`
`© 2018 The New York Times Company
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