May 13, 2009, 1:06 PM — Growth will have to come from higher productivity and innovation when the economy begins to recover, Microsoft CEO Steve Ballmer told developers gathered Wednesday in Hyderabad for the company's India edition of the Tech Ed conference.
The IT industry will have a starring role to play in that recovery as customers focus on improving productivity and innovation, Ballmer said in his keynote address, which was webcast.
A lot of the productivity growth in businesses comes from IT, Ballmer said. IT also continues to innovate and those innovations are needed by companies in other industries as well, he added.
The global economy is getting "reset" in a "once in a lifetime" type of economic change, according to Ballmer. Businesses and consumers were borrowing too much money, using that credit to fund capital expenditure. IT accounted for 50 percent of capital expenditure in the U.S., he said, and consumers borrowed money against their homes to pay for electronics such as PCs and flat-panel displays among other things, he added.
"So we get, if you will, some air coming out of the economy, and the economy is resetting," Ballmer said.
Microsoft announced in January that it would cut 5,000 jobs worldwide. The company may have to revise that plan if the economic situation in the U.S. dramatically worsens, Ballmer told reporters in Mumbai on Tuesday.
Ballmer also dismissed rumors that the company plans to acquire SAP. Speculation in this connection was fueled by Microsoft's move on Monday to raise US$3.75 billion through a debt offering.
Microsoft will continue to invest in new products and technologies, including cloud computing, despite the recession, Ballmer said at Tech Ed.
The company also continues to invest in search and expects that there will be more innovation in search in the next 10 years than in the last 10 years, Ballmer said. The user interface for search has not changed and a current peculiarity of search is that users have to enter fewer search terms for more accurate results, he added.
Search needs to become more semantic and understand what users want to search for, according to Ballmer.
"The guy who is not the market leader has a lot more permission to shake things up," he said, referring to Microsoft and search, without talking about specific plans.