Microsoft execs spend day with financial analysts outlining future

The most jaw-dropping number of the day Thursday: $169 billion is how much Microsoft has returned to shareholders over the last 10 years through dividends and stock buybacks.

That was a closing note from Chief Financial Officer Peter Klein during Microsoft's annual meeting with about 180 financial analysts.

But apparently $169 billion isn't enough. During the question-and-answer session, the second question was about when Microsoft might give back more of its current $40 billion cash pile.

Microsoft had annually increased its dividend but kept it flat last year during the economic downturn. Klein said the board will review the dividend this fall.

Reading between the lines, it sounds like the dividend will resume its annual increase.

"I would imagine our philosophy and operating principles will be consistent with what they've been in the past," Klein said, after noting that the dividend in the past went up every year.

Wii's inspires

Xbox controller

Nintendo's Wii gave Microsoft its initial inspiration to give the Xbox motion-control capabilities that ultimately became the Kinect system.

That's according to a brief history of the project from Craig Mundie, chief research and strategy officer, on Thursday.

Mundie said the project drawing heavily on advanced research began about four years ago, when Microsoft was battling with Sony for the hearts of hard-core gamers.

Nintendo's Wii showed there was "another demographic and a different class of applications" for gaming, he said.

"It certainly showed that there was a market-expansion opportunity in the gaming business if we were able to do something completely different," he said.

Rather than imitate the Wii, Microsoft decided to take it further and develop a controller-free system. At first it seemed impossible, but "we went from impossible to shipping in about three years," Mundie said.

The Kinect, which goes on sale this fall for $149, also offers a glimpse of tomorrow's computer interfaces, Mundie said.

COO Turner

outlines plans

After outlining a four-point plan for winning business customers, Chief Operating Officer Kevin Turner criticized Microsoft's biggest cloud competitors.

• On Google and Salesforce.com: "Their capabilities are far short of what we're doing from an Azure perspective."

• On Amazon.com: "It only provides a limited set of platform-as-a-service capabilities." Also, "There's no partner or hoster story with Amazon."

• On VMWare: Turner said Microsoft's beating VMWare with a better and less expensive virtualization offering. "We see this as a really tremendous growth opportunity for us.

"Clearly the sweet spot we have for our company — the most profitable part of our company — is providing this IT as a service for our customers," he said.

Turner also mocked Google's online productivity apps, saying the company's adding features like a ruler that Microsoft's offered in its products for more than a decade.

Microsoft's now winning back customers who tried Google applications and are returning, he said.

"Some of those that have actually gone are coming back, and we're welcoming them with open arms," he said.

Microsoft servers are also gaining share against Linux, and its database revenue is growing faster than IBM and Oracle, Turner said, continuing his skewer tour of the world's major software providers.

Brier Dudley: 206-515-5687 or bdudley@seattletimes.com.