TORONTO — Microsoft president and CEO Steve Ballmer said Canadian IT professionals told him loud and clear they want to see more simplicity the next time the company makes changes to its software licensing programs.

Ballmer visited Toronto recently as part of Can>Win 2004, a business conference

co-hosted by Microsoft on Feb. 26. Part of his agenda involved a speech at the Metro Toronto Convention Centre, where Ballmer said a question from the audience concerning licensing headaches drew huge cheers from the audience.

“”They were like, ‘Yeah, baby, give it to ’em,'”” Ballmer said, laughing.

Microsoft caused major controversy three years ago when it began to revamp the way enterprise customers license its products. Under a program called Software Assurance, Microsoft introduced a subscription-style service that many customers said would increase their costs of using Windows and other Microsoft applications. There was also considerable confusion over the range of licensing options, which included the Enterprise Agreement, Business Open Licence or Select Licence. The programs differed in a number of criteria, including the length of agreement, minimum number of licence purchases and whether users must sign a contract. Some customers also complained about the short deadline to make decisions, which prompted Microsoft to extend it twice.

Ballmer said he lamented the way the licensing changes were handled, given that the company had wanted to offer more choice and simplicity from the beginning.

“”We had this triple-crown of backfires,”” he said. “”Do I think there’s an ongoing opportunity to improve the way our

customers license products? Yes. Will we move, slowly, ponderously, deliberately, methodically before we EVER make another change? Oh, so slowly.””

When Canadian users grilled him about licensing Ballmer said he offered a number of options, including a tool that would report to customers exactly what they have licensed. The biggest reaction, however, came when Ballmer suggested a formula that charged customers based on the number of PCs and servers they own and allowed them unlimited use of its software.

“”There was screaming in the aisles,”” he said. “”At least, it gave me some direction.””

Ballmer said Microsoft is usually hesitant to take away one option when they introduce a new one. “”I certainly had feedback, shall we say, today, that was interesting to me on the licensing front.””

While Ballmer is still mulling the future of the firm’s licensing strategy, he was willing to make one prediction most Microsoft customers will have a hard time swallowing — that security will be the company’s strategic advantage over its competition in the next two to five years.

“”It’s not a strategic advantage for us today because the theory is everybody attacks us and nobody attacks the other guy, so the other guy must be OK. It’s not that every other system out there is so unhackable, it’s just they aren’t that popular,”” said Ballmer. “”We need to be as good as we can be and we need to be better than the other guy. Today we’re better than the other guy, but we’re going to be better and we’re going to be good enough.””

While the company has been under fire for the seemingly endless security flaws found in Microsoft software, Ballmer says a new approach to the development and release of products in addressing the problem in several ways. Microsoft said this week it would partner with RSA Security to develop a SecureID card that would replace passwords in corporate enterprises.

“”We have new patch technology, smaller patches, the ability to recall a patch application compatibility issue that somehow prevents the patch,”” he said. “”There are Windows update services, new Internet firewalling for each PC. We’re working on shield and quarantine technology that provides a way to determine whether a machine is clean enough to run on a network because that is a big source of virus transmission — people are bringing a machine to work from home and introduces a virus at work. There is a full set of things we’ve talked about that we’re doing.””

Improved technology, coupled with a new development process built around releasing a more secure product both in terms of the way developers are trained and the milestones put in place when developing a product is starting to pay off, he added. For example, Ballmer said that in the first 10 months of release, Windows Server 2003 had nine important security bulletins versus 40 on Windows Server 2000.

Ballmer says IT managers need to step back from the daily grind and make sure there is a security plan in place that is continually updated.

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