After five years in the making, Microsoft last week launched its Windows Server 2008 operating system, promising better management, security and performance for companies looking to migrate from Windows Server 2003.

Chief executive Steve Ballmer talks about customer expectations, the ongoing battle with open-source rivals and Microsoft’s strategy for the future.

Will Windows Server users rush to install Windows Server 2008, or will they wait for HyperV server virtualisation and service packs before migrating?

It is possible that some people will want to wait to deploy Windows Server 2008 and HyperV together, but with HyperV the action is yet to come because 95 per cent of all servers have yet to be virtualised.

The server operating system is different from the client operating system [such as Windows Vista] in that the real question is not “do I take an old application and re-platform it to the new server operating system”, but “what is my target for my next server application as opposed to wholesale migration”.

Most customers wanting virtualisation already have VMware. How will you persuade them to switch?

Customers are interested in less complexity, simpler management and high performance. The fact that HyperV is inexpensive and integrated with the rest of Microsoft’s management tool suite for managing Windows applications gives Microsoft a real leg up. VMware only manages virtual machines, not the rest of the virtual and physical environment.

Figures from analyst IDC suggest the Windows Server 2003 systems are clawing back market share from open source,Linux-based equivalents. Why is that?

Microsoft recently entered the high-performance computing market for the first time, where 35 to 40 per cent of all Linux servers are. And Windows SharePoint Server has helped us drive more volumes in next-generation collaboration.

Databases are significant operating system loads, and we’ve gained share from Oracle and some Linux/Unix implementations. We have also seen high growth in emerging markets such as Russia. With IIS 7.0, we have the opportunity to be asked in on the web server market, which is a Linux stronghold.

Do you envisage Microsoft moving to more of an open source pricing model?

You can never say never. But we have a $10bn-plus business selling software, which is very profitable. Nobody has a business of that size maintaining software, and no company maintaining and supporting software is very profitable. I think any Microsoft chief executive would have a hard time explaining that decision to shareholders.

The company has just seen a record financial quarter. Are there any strategic changes planned over the next few years?

As we said when we announced the Yahoo bid, we would like to accelerate the online strategy, and we are doing everything we can internally and through acquisitions to push that.

We like what we are doing with mobile devices and gaming ­we bought Danger and its Sidekick software, for example ­ and we have made a number of acquisitions that have accelerated our servers and tools plans.

What is Microsoft doing around software as a service (SaaS)?

We hope to bring Windows and Office into a software-plus services world, and there are a number of things we will roll out over the year.

In the enterprise space, it’s about the online strategy and the evolution of the computing infrastructure, but we are moving rapidly to a software-plus-services strategy across all five of our major business lines.