UPDATE: Ballmer's Business Plan

In an E-mail to employees titled The Microsoft Business Plan, CEO Steve Ballmer has presented a six-point plan for "operationalizing" the company's priorities.

According to Ballmer, there are six tasks Microsoft needs to do well to "take computing to the next level for customers." They are, in order, providing integrated innovation; delivering superior customer responsiveness; offering the best platform for developers; providing simple, high-value "experiences" and services; generating enthusiasm for the company's products; and internal improvements in employee talent and productivity.

As he's done in the past, Ballmer identified open-source products as a major competitive threat and called on employees to respond through "concentrated focus and attention."

And, echoing Bill Gates' comments at Microsoft's CEO Summit two weeks earlier, Ballmer took issue with skeptics that have questioned IT's continuing ability to give businesses strategic advantage. Advances in software, Ballmer wrote, "will be one of the biggest sources of value creation for customers."

Microsoft is thinking about ways to offer new PC support services to consumers and businesses. "Our enterprise customers would like us to help them take cost out of delivering desktop services to their users," Ballmer said. "We need an offer of managed desktop services that we can make to enterprises--with our partners--that is different from classic outsourcing." The company plans to assign some of its managers to such a project.

Ballmer expressed optimism about Microsoft's prospects for growth, but warned of significant challenges to the company in the near term. Customers "are wondering whether future IT investments will lead to another quantum leap in productivity," he wrote. "And there's still too much pain and cost associated with migrating to new versions of products."

The exec devoted a section of the 5,500-word memo to outlining Microsoft's next major PC operating system release, code-named Longhorn. The release will deliver "breakthrough basics" in the areas of deployment and upgrades, software components, reliability, security, and performance, he said, but gave no timeframe for delivering it. Longhorn will be accompanied, Ballmer wrote, by an upgrade to Microsoft's Office applications, server software enhancements, development tools, and a Longhorn version of MSN. He said more details about Longhorn would be forthcoming in an E-mail from Gates, Microsoft's chief software architect, later this year.

Microsoft's trustworthy computing initiative is "hitting its stride," Ballmer wrote, but he added the company's development units need to ensure "world-class engineering discipline and engineering basics" in response to customer feedback.