While tech spending has not evaporated, Microsoft chief executive Steve Ballmer said on Tuesday that most companies have mandated that their IT departments cut a significant percentage from their budgets.
"To save five to 10 percent, you have to save a little bit on a lot of things," Ballmer told ZDNet UK's sister site, CNET News.com, on Tuesday, in a joint interview with EMC chief executive Joe Tucci. "It's not like there's nothing new getting done. Some new projects are getting killed. There's pressure on vendors to reduce prices."
Tucci said he is seeing similar pressures due to the weakening economy. "Most of our customers are dealing with some element of their own restructuring," he said. "They are trying to cut costs. They want quicker [return on investment]."
Tucci and Ballmer spoke with CNET News.com at the Plaza Hotel in New York, where the two executives were meeting with several dozen chief information officers and announcing a three-year extension of the companies' joint sales and engineering partnership. The two companies have been partners in some areas since 2003, although the efforts have expanded significantly in recent years.
EMC and Microsoft are working together in a number of areas, including security, virtualisation and document management as part of the extended deal, which will now run until 2011.
Ballmer noted that while partnerships often either break down or prove to be irrelevant, that hasn't been the case with EMC. Ballmer said he was initially somewhat sceptical as to the amount of overlap the two companies would have, but said he was happy that Tucci's optimism proved right.
Still, the partnership makes for strange bedfellows in a couple of areas, particularly virtualisation. EMC, after all, bought virtualisation leader VMware in 2004. Although EMC has spun VMware out as a separate public company, it still owns the bulk of the shares of VMware, Microsoft's biggest competitor in the virtualisation market.
"We're not sitting here pretending we are partnering with VMware," Ballmer said. "There are things we try to cook up with those guys, but let's put that aside. That's more competition that needs to take into consideration what customers want."
But there is more to EMC and virtualisation than its stake in VMware, Ballmer said.
The storage business is also being transformed by virtualisation. "While Joe may own 80 percent of VMware, he still thinks it is a good idea to sell jointly in areas where perhaps, we'll win as opposed to VMware."
Tucci said that although it's a win-win when customers buy both EMC and VMware, he's also happy to sell storage gear that runs in conjunction with Microsoft's Hyper-V virtualisation product.
"If you look for that alliance or partnership to be perfect where there's like zero areas of overlap," Tucci said. "I'm not sure that's physically possible with two powerful companies."
