While Wall Street doesn’t want to talk about anything Microsoft-related other than Redmond’s bid to acquire Yahoo, Microsoft has lots of non-Yahoo-specific investments in its future.

Microsoft CEO Steve Ballmer outlined Microsoft’s top eight growth targets during his annual “Strategic Update” for Wall Street analysts in New York on February 4. Ballmer repeated several times during the hour-long presentation that “growth will require investment.” He noted that his view of what constitutes “long term” is “five to seven to ten years” out — most likely a lot longer than the typical three-year timeframe typically envisioned by analysts and shareholders.

Ballmer’s top growth picks are almost identical to the ones he outlined during last year’s Strategic Update. On Ballmer’s 2008 list of arenas where Microsoft believes it can sustain three-quarters of a billion dollars or more in new margin growth:

1. Windows on new PCs: It’s not the fastest growing part of Microsoft’s business percentage-wise, but Windows sales still remain one of the biggest chunks of Microsoft’s total revenues. Ballmer played up “emerging markets” in developing countries as the arena likely to grow the fastest, but acknowledged that lower PC prices will reduce the amount Microsoft can earn per copy of Windows on new PCs in developing countries. Microsoft will continue to invest in R&D, marketing, the next version (Windows 7) and “building consumer excitement” here, he said.

2. Corporate desktop value: Ballmer played up th applications and services that Microsoft “upsells” to business users as a continued growth driver. He cited Office 2007, Windows Server (especially in the lower-end of the market), Dynamics ERP and CRM as examples of hot products.

3. Server units: Microsoft is putting a lot of eggs in its server-investment basket in its fiscal 2008 with its Windows Server 2008, SQL Server 2008, Visual Studio 2008 launch on February 27. Ballmer said to expect Microsoft to “democratize virtualization” — presumably with its Hyper-V virtualization product due to ship in final form later this year. (For the next few months, Hyper-V will be beta code only.)

4. SMB (small/midsize business) wares: Microsoft is continuing to pour money into its online services on both the consumer and business side of the house and is expecting big payoffs, both through online-advertising on these properties, as well as through subscription sales of them. Ballmer said to expect Microsoft to introuce equivalents of Windows Live for businesses, but didn’t say more on that front. My guess: Ballmer’s talking Forefront Online, Business Intelligence Online and other forthcoming Microsoft-hosted services which the company will unveil in the next 12 months.

Full Story At Source

Send via e-mail | Submit to Digg | Add to Live Favorites