Steve Ballmer makes a long-term overseas investment for Microsoft

Ian Lamont — Fri, 01 May 2009 08:06:33 -0400

You have to hand it to Microsoft. The software giant has taken its share of drubbings for software missteps and strong-armed business tactics. But when it comes to opening up international markets, Microsoft has been very successful, often because the company will do whatever it takes to get on the right side of local officials.

An appearance in Moscow last week by CEO Steve Ballmer demonstrated that making key local partnerships, announcing major investments, and lavishing praise can open doors and set the stage for future expansion abroad.

According to Microsoft, Ballmer announced Russian investments totaling 10 billion Rubles (about $300 million). The investments included:

* Free Microsoft software licenses for 1,000 Russian start-ups through 2011
* Expanding the number of local computer training centers around Russia, and teaching 300,000 locals "e-skills," which Microsoft says will help them get jobs and become better citizens of the "information society."
* Partnering with local universities to provide government-certified IT training
* Launching Microsoft DreamSpark – a program aimed at getting students involved in programming and IT -- in Russia

Of course, the products featured in the training are Microsoft's. So while the company is incurring real costs in setting up these programs and building out the facilities, they are also establishing Microsoft-centric skill sets which will help the company expand its Russian footprint in the years to come.

But Ballmer's appearance included something else. According to the Moscow Times, he also heaped praise upon local officials for their efforts in fighting the global recession. Never mind the Russian government's attempts to stabilize the Ruble by burning through its foreign currency reserves, or its leaders' tirades against the United States for causing the global economic slowdown. The Microsoft CEO praised the "amazing work the Russian government is doing" to boost the economy.

The statement might seem strange to American ears. But these comments have to be read in context of where they are said. In Russia, China, and other international markets which lack transparent legal and regulatory systems, the playing field is very uneven. Governments often play favorites. Companies from Western countries can be hurt by geopolitical shifts, historical grievances, and connections with the wrong locals. Foreign executives tread carefully with their marketing and public comments, and sometimes say things that might be laughed at back home.

Trying to say or do things the American way can backfire. Michael Dell discovered this when he tried to offer help to Russia at the World Ecomic Forum in Davos in January. "How can we as an IT sector broaden the economy as we move out of the crisis?" Dell asked Russian Prime Minister Vladimir Putin during a panel session. He got a sharp response from Putin, who apparently saw the offer as an insult. "We are not invalids," Putin declared. "We do not have limited capacity. People with limited capacities, abilities should be helped ... developing countries should be helped."

Ballmer's approach -- spread the wealth and pour on the sugar -- was received much more favorably. Ultimately, it has a much better chance of opening doors overseas and helping Microsoft achieve its long-term strategic plans.

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Steve Ballmer makes a long-term overseas investment for Microsoft