Microsoft COO Sees Customer Caution

In a speech at the London School of Economics, Microsoft COO Kevin Turner said that customers are are no budget cycles "which is helpful, but ... they're still being conservative."

Microsoft is still seeing a lot of interest in its Windows 7 computer software launched last year and a new budget cycle will help a gradual recovery in business spending, its chief operating officer said.

"We have a lot of interest in the Windows 7 refresh," Kevin Turner told an audience at the London School of Economics on Wednesday. "There's lots of momentum around that."

Turner said Microsoft would sell 300 million copies this year of Windows 7, the new version of the software that runs more than nine in 10 of the world's PCs, but said the picture was mixed globally, with varying rates of economic recovery.

The company has sold 90 million copies of Windows 7 so far since its October 2009 launch.

"One absolute I can tell you is that at least in 2010 most people are on new budget cycles, which is helpful, but ... they're still being conservative," he said. "I think it's going to be more a gradual thing."

Microsoft shares were up 0.4 percent in New York at 1520 GMT.

Strong sales of Windows 7 helped Microsoft post a bigger-than-expected 60 percent jump in quarterly profit in January, and it said it expected business technology spending to recover this year. But the world's biggest software company made no specific profit or revenue forecasts, citing economic volatility.


In his speech, Turner said it was "time to get back to business" after what Microsoft has repeatedly called an economic reset, rather than just a recession from which the world economy would simply recover.

He said Microsoft's own spending would not return to previous levels in many areas after cost cuts, but Microsoft was at the same time increasing research and development spending to a record $9.5 billion this year, more than any company.

Microsoft was keen to invest in fast-growing, emerging economies, Turner said, but would continue to be cautious about China because of widespread piracy.

"Until we can work with China to respect intellectual property -- I think the last numbers I got were about 98 percent usage share and about 10 percent paid share -- I think it's a real barrier from a software standpoint," he said.

"Clearly, there's work to be done by the Chinese government to improve IPR (intellectual property rights), or else that nation won't achieve its potential, in our view."

Asked about rival Google, whose activities Microsoft has urged competitors to complain about to competition regulators, Turner said: "Every competitor we have makes us a better company."

He did not comment specifically on complaints to the European Commission about Google's practices -- some of which Google has said came from companies related to Microsoft.

Copyright 2010 Reuters. Click for restrictions.

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