CEO Steve Ballmer 'Underpaid,' Microsoft Says

CEO Steve BallmerMicrosoft CEO Steve Ballmer received compensation valued at $1.38 million this year, according to documents filed this week with the U.S. Securities and Exchange Commission. His total package is up roughly 2% compared to 2010, when he received compensation valued at $1.35 million.

[ReadL CEO PAYDAY: What tech's top execs raked in for 2010]

Ballmer's 2011 pay package consists of a $682,500 salary and a $685,500 bonus (half of the $1.37 million bonus he was eligible to receive). He also received a modest $11,915 in perks, which consist of a 401(k) company match and imputed income related to Microsoft's benefits program.

At his own request, Ballmer didn't receive any stock awards or option awards in 2011.

"As in previous years, Mr. Ballmer's incentive compensation opportunity for fiscal year 2011 was limited to a cash payment of up to 200% of his fiscal year 2011 base salary, consistent with his request that we not award him equity compensation," Microsoft said in its annual proxy statement.

Ballmer's compensation is significantly lower than that of his peers, the company claims. According to Microsoft's analysis, the CEOs in Ballmer's peer group, on average, receive a $1.4 million base salary, $4.5 million cash bonus, and a total compensation opportunity of $15.8 million. By comparison, Ballmer received a $682,500 salary and was eligible for a $1.37 million bonus -- making his total compensation opportunity worth just over $2 million.

"As the principal leader of Microsoft, Mr. Ballmer focuses on building our long-term success, and, as a significant shareholder, his personal wealth is tied directly to Microsoft's value. While the Committee and the Board believe Mr. Ballmer is underpaid for his role and performance, they have accepted his request," Microsoft said.

Even within Microsoft, Ballmer is the lowest paid of the five "named executive officers" listed in the company's proxy statement. The most highly compensated of the five is Kevin Turner, Microsoft's chief operating officer. He netted $9.3 million in 2011, up 17% from $7.9 million in 2010.

CFO Peter Klein received $3.5 million in total compensation, down 3% from $3.6 million in 2010. Steven Sinofsky, president of Windows and Windows Live Division, received $7.2 million. Kurt DelBene, president of the Office Division, received $6.2 million. (Neither Sinofsky nor DelBene were among the Microsoft's named executive officers in 2010, so there are no prior-year compensation figures for comparison.)

The company, meanwhile, grew revenue and income by 12% and 23%, respectively, in its 2011 fiscal year ended June 30. Revenue came in at $69.94 billion, up from $62.48 billion in 2010. Net income hit $23.15 billion, up from $18.76 billion in the prior year.

For more information about enterprise networking, go to NetworkWorld. Story copyright 2011 Network World Inc. All rights reserved.

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Microsoft Cracks Live Migration Problem

With the next release of Windows Server operating system, Microsoft has conquered one of the thorniest problems in virtualization: moving an operational virtual machine (VM) across a wide area network (WAN).

Microsoft unveiled this new feature at the Microsoft BUILD conference, being held this week in Anaheim, California. It will be available in Microsoft's Hyper-V version 3 hypervisor, included in Microsoft's next server operating system, Windows Server 8.

The capability, while viable in only a handful of use cases, nonetheless shows Microsoft's growing expertise in virtualization, analysts said.

With live migration, a working VM is moved from one computer to another without any disruption of the services offered by applications within the VM.

Most server virtualization software providers, including Microsoft, have long offered live migration within a local network. A far harder problem has been to offer the ability to move a live VM across different subnets, or separate WAN sub-networks. Network latencies and network addressing complexities have made this task a challenging one.

At the BUILD conference, Microsoft program manager Ross Ortega explained how the new technology worked. Essentially, each virtual machine gets two IP (Internet Protocol) addresses.

One address is the home address for the VM itself, which it uses to communicate with the rest of the network or, if accessed publicly, the Internet. The second IP address will be available for the local data center.

"The trick is to keep these mappings between the two address spaces," said Bill Laing, Microsoft corporate vice president for the server and cloud division, in a subsequent interview.

Microsoft is not alone in offering this capability. VMware, in its VXLAN offering, also offers the ability. This solution, however, requires Cisco networking gear using the Overlay Transport Virtualization (OTV) technology.

Long-distance live migration has been a research topic in the virtualization community for several years, though it is useful only in a limited number of situations, said Chris Wolf, a Gartner research vice president covering virtualization.

Replicating a VM memory state over long distances can take a considerable amount of time, Wolf noted. It could be handy for emergency situations, such as when a data center is threatened by an upcoming flood or hurricane, and its contents must be moved to another facility. But, given the sizes of most data center-run systems, it is likely that only a handful of VMs would be moved in time.

During another presentation at BUILD, Brian Dewey, Microsoft group program manager for Hyper-V noted one way around this problem. Administrators could also save VMs on thumb drives or optical disks, and then ship them to the new location, where the VMs could then be incrementally updated with the latest changes.

Another possible application of the technology would be in permanently migrating systems from one data center to the next without incurring any downtime, Wolf said. Such work would be necessary in data center consolidation projects, for instance.

Beyond the practical uses, the new capability carries symbolic importance for the company as well, Wolf said. It shows Microsoft is knowledgeable enough with this emerging technology to stay on the frontier of its developments.

The technology "marks a point where Microsoft will ship the first real formidable challenger to VMware vSphere," Wolf said.

At BUILD, Microsoft touted a number of other new features to make Hyper-V and Windows Server more competitive with VMware as well. The company debuted the ability to do live migration of the VM's virtual hard disk. Scalability was also touted: the new software will able to support up to 32 virtual processors for each VM, and each VM can now appropriate 512 GB of memory. A new virtual file system, VHDX, can be used to create virtual storage disks up to 16 TB in size.

Joab Jackson covers enterprise software and general technology breaking news for The IDG News Service. Follow Joab on Twitter at @Joab_Jackson. Joab's e-mail address is Joab_Jackson@idg.com

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Microsoft Throws Support Behind USB 3.0 With Windows 8

Microsoft is incorporating a software stack in its upcoming Windows 8 OS to natively support devices based on the USB 3.0 interconnect, which is in a battle for adoption with Intel's Thunderbolt.

USB 3.0 is the successor to USB 2.0 standard and can transfer data 10 times faster between computers and external peripherals such as cameras and storage devices. Most laptops and desktops today come with USB 2.0 ports and many PC makers are offering USB 3.0 ports as an option. The current Windows 7 OS does not include native support for USB 3.0, but device makers offer drivers to ensure products are compatible with the OS.

The growing support for USB 3.0 and wide usage of USB 2.0 was a compelling reason to improve the USB software stack, said Dennis Flanagan, Microsoft's director of program management for the devices and networking group, in an entry on the company's Building Windows 8 blog.

"By 2015, all new PCs are expected to offer USB 3.0 ports, and over 2 billion new 'SuperSpeed' USB devices will be sold in that year alone," Flanagan wrote.

Microsoft is writing a new software stack and controller for Windows 8 based on the "design principles" of USB 3.0, which will bring plug-and-play support for new devices such as external storage, webcams and keyboards, Flanagan wrote. The company is retaining the existing software stack to support older USB devices.

But there are few USB 3.0 devices available today, so to create the new software stack the company had to simulate and build virtual USB 3.0 hardware, including ports, hubs and devices.

The hardware support for USB 3.0 is also growing. Intel has already said it will integrate USB 3.0 support in chipsets for processors code-named Ivy Bridge, which will reach PCs early next year. AMD has already integrated support for USB 3.0 in its Fusion chipsets, which are already shipping for PCs.

USB 3.0 transfers data at speeds of up to 5 gigabits per second, which is slower than the transfer speed of rival interconnect technology Thunderbolt. Developed by Intel, Thunderbolt can transfer data between host computers and external devices such as displays and storage at up to 10 gigabits per second. Thunderbolt has been viewed as an alternative to USB 3.0, but Intel has the said the technologies are complementary. Apple uses Thunderbolt in its products.

Thunderbolt currently supports the PCI Express and DisplayPort protocols, and the interconnect does not require any OS support beyond existing software stacks for those protocols, an Intel spokesman said in an e-mail.

But Microsoft's backing will aid the fast growth of USB 3.0 and provide higher transfer speeds for consumer devices, said Jim McGregor, research director at In-Stat.

"Thunderbolt will be one of many peripheral options available, just like IEEE1394 and Firewire, but I think USB will be the predominant interface because it is so heavily tied to the largest growth segment of the market, mobile devices, for both interconnectivity and power," McGregor said.

Thunderbolt is based on copper wires, but ultimately will be based on optical technology. That will boost the interconnect's transfer speed and distance, Intel has said.

"[USB 3.0] will still not be as fast as the Thunderbolt optic link, but copper never will be as fast as optics," McGregor said.

Wireless charging could trump both USB 3.0 and Thunderbolt, provided it takes off, McGregor said. The transfer speeds may not be as fast, but device makers are showing interest in the technology, he said.

"It may eventually eliminate the need for peripheral connectors on mobile devices and then everyone will look to wireless interfaces," McGregor said.

Other than enthusiast users, drivers aren't something average PC users need to worry about, but native support for USB 3.0 in Windows 8 can't hurt, said Nathan Brookwood [CQ], principal analyst at Insight 64.

"When they are talking about the history of Windows 8, they are going to be talking about the user interface and ... touch," Brookwood said.

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HP's PC Spinoff Puts Heat on Microsoft with Windows 8

Hewlett-Packard's spin-off of its PC business will put pressure on Microsoft to "hit the ball out of the park" with Windows 8, an analyst said today.

"This is concerning no matter how you look at it," said Wes Miller, an analyst with Kirkland, Washington-based Directions on Microsoft, a research firm that specializes in following Microsoft. "HP has been a very strong partner of Microsoft for a very long time, so you have to ponder the change in its strategy."

A sale of HP's Personal Systems Group (PSG) is an indication of the decline in the importance of the PC -- and thus Windows, which powers the vast majority of personal computers -- in favor of other devices, including smartphones or tablets that run other operating systems, said Miller.

And that puts the heat on Microsoft to crank out another OS winner.

"This re-emphasizes the need for Microsoft to hit the ball out of the pack with Windows 8," Miller said.

Windows 8, which doesn't yet have an official release timetable, will radically revamp the 21-year-old operating system's look and feel and will run on tablets, Microsoft has said.

Joining the Spin-offs

HP has confirmed that it is shuttering its webOS-based device business -- including the just-launched TouchPad tablet -- and looking at "strategic alternatives for its Personal Systems Group" that may include "a full or partial separation of PSG from HP through a spin-off or other transaction."

"HP sees the future where the PC is not the focus," said Miller, "just like IBM did in 2005."

Six years ago, IBM sold its PC Company Division to China's Lenovo.

But a sale or spin-off of HP's PSG -- the world's largest seller of PCs last quarter, according to Gartner -- doesn't mean the death of the personal computer.

"PCs will remain highly strategic because they run the apps that run businesses," said Mark Margevicius, a research director at Gartner. "The fact that everyone is struggling [selling PCs] does not makes the platform any less strategic to business. PCs are a worldwide, 100-million-unit business. It's not dying in any way."

The PC sales attributed to HP won't suddenly evaporate because the division is run as a separate entity, or sold to a rival, said Margevicius. "Ultimately, someone will own the business."

For the short term, then, Microsoft is unlikely to notice any difference in Windows sales.

However, like Miller, Margevicius saw the move as a signal of a troubling trend.

Tablet Troubles?

HP will retain the webOS operating system it acquired last year from Palm, but it will halt development and production of any tablets based on webOS.

HP's webOS-based TouchPad went on sale only a month ago, and several former Palm executives, including former Palm CEO Jon Rubinstein, currently have high positions in HP's Personal Systems Group.

"HP tried to put the defibulator on its PC business with the TouchPad, but it's not yielding the kind of results it wanted," said Margevicius. "The patient isn't dead, but it's moved into assisted living."

Ironically, Miller saw the withdrawal of HP from the tablet hardware business as a win for Microsoft.

HP made it clear that it was betting on its own webOS, rather than Windows 8, for its tablets. By exiting the market, it means that there's "one less partner" to convince that Windows 8 is the right OS for tablets.

"For Windows 8 to succeed [on tablets] Microsoft needs a partner that's passionate, and one that will work with Microsoft to make a great tablet," said Miller.

Both Miller and Margevicius attributed the decision by HP to dump the PC side of its business to the small, fragile margins on Windows-based personal computers.

"This is MBA 101," said Margevicius. "This part of their business may be attractive from a legacy perspective, but it's the part of [HP's] business that generates the least amount of revenue. And HP is run by someone with no strong ties to hardware. [Leo] Apotheker has three things in mind: software, services and support, and not particularly in that order. All those businesses are far more profitable than PCs."

HP hired Apotheker, a former CEO of German software and support giant SAP, as its president and chief executive in September 2010.

Margevicius said that Dell, the world's No. 2 PC seller, will likely reap the most benefit from HP's ridding itself of its PC group. "Dell will be viewed as the vendor that is safe and solid," he said.

For more enterprise computing news, visit Computerworld. Story copyright © 2011 Computerworld Inc. All rights reserved.

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