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Microsoft: Growth Happens

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REDMOND, Wash. — As Microsoft gets ready to report its fiscal 2007 earnings next week, the company’s seemingly endless building boom shows no signs of slowing, and neither does its penchant for acquiring more property.

For instance, late last month, Microsoft (Quote) purchased two data centers with 250,000 square feet of raised floor space that it was already using in Santa Clara, Calif. And just last week, the company announced it is opening a new software development center in the Vancouver, British Columbia area in Canada.

But the biggest changes are happening right in Microsoft’s back yard – literally.

Last week, the company agreed to purchase 28 acres of prime real estate adjacent to its nearby secondary campus – dubbed Redmond West or RedWest for short – from electronic gaming giant Nintendo of America.

A Microsoft spokesperson told that the company does not yet have firm plans for what the land will be used for – though RedWest houses employees working on MSN and Windows Live.

However, the company’s existing facilities are constantly overcrowded – so much so that Microsoft also recently leased 1.3 million square feet of office space in Bellevue, near Redmond.

On top of that, Microsoft confirmed it’s also in the midst of building more than 3 million square feet of new office space in 14 new buildings near its already sprawling campus in a massive redevelopment effort.

The reason is that Microsoft’s hiring frenzy has continued unabated. “They hired 10,000 new employees just last fiscal year [2006] alone,” Matt Rosoff, analyst at industry newsletter Directions on Microsoft, told

In fact, traffic and parking have become such an issue that part of the major campus redevelopment effort will include a four-story underground garage — built to hold 5,000 more cars – topped with four new buildings, the company spokesperson said.

The company is also constructing a new building to house its Microsoft Research division.

Therefore, some of the impetus behind the building spree can be blamed on the extra employees Microsoft already brought on board during fiscal 2006 and 2007.

“Part of it is just to alleviate [existing] overcrowding on campus,” Rosoff said. “They need a lot of space for all of those new folks.”

Microsoft executives traditionally provide financial analysts and press with perspective on the fiscal year as well as plans for the future at this time of year. Thursday, July 19, Microsoft will hold a conference call to report its revenue and earnings for fiscal 2007, which ended June 30.

Then, a week later on July 26, Microsoft will host a gathering of financial analysts in its campus conference center to give them a day-long presentation on what happened in fiscal 2007, including typically new hiring numbers and growth statistics, and what they’re likely to do in the current year — fiscal 2008.

In fact, company CEO Steve Ballmer may have given away a little of his hand this week at Microsoft’s Worldwide Partner Conference in Denver. Speaking about the company’s accelerating software-plus-services initiative, which includes various Live services, he alluded to Microsoft’s plans to scale up to handle massive volumes of users and data.

“Just as when we got started in desktop computing the first thing we built was an operating system, the first thing we did when we got into enterprise computing was build a server platform … we are in the process today of building out a services platform in the cloud,” Ballmer told the audience.

That is likely to require thousands upon thousands of servers in multiple data centers around the world as the company attacks staunch competitors like Google and

“I think what we’ll see is that the model of computation moves … over time to a model in which more and more of the back-end shared computation is not only done on customer premise, but it’s actually done on these large geo-scaled services,” Ballmer added.

It won’t be cheap, but at the same time, Microsoft’s growth seems to be on the rise – not on the wane.

“[The building boom] certainly does suggest that they see their growth continuing,” Rosoff said.

This article was first published on

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