Microsoft looks for more elbow room By Kristina Shevory http://news.com.com/Microsoft+looks+for+more+elbow+room/2100-1022_3-6090529.html
In the midst of its biggest expansion in nearly a decade, the world's largest software company has suddenly found itself with a major setback: not enough room to grow. Microsoft--in the midst of a bitter rivalry with Google and Yahoo--snapped into action this April, saying the company would spend about $2 billion on new technologies to reinvigorate itself. Then last month, Microsoft's chairman and co-founder, Bill Gates, announced that he would leave his day-to-day role at the company in two years. Easier said than done, at least when you consider that the company, which houses more than 30,000 people on its sprawling campus in Redmond, Wash., suddenly will have to make room for up to 12,000 new bodies. It will spend $1 billion to expand that campus by more than a third, or 3.1 million square feet, during the next three years. That includes new leases and the purchase and construction of 14 buildings. For a modest-size real estate market like Seattle, those are staggering numbers. The Redmond you'll see even in a year will make your eyes pop," said Lou Gellos, a Microsoft spokesman. "It's going to be a very different campus." Microsoft is expanding beyond the boundaries of its current site, adding two buildings in a downtown Redmond shopping mall for a total of three, and consolidating its North American sales headquarters staff in a new skyscraper under construction in nearby Bellevue, Wash. By next summer, Microsoft will take over 15 of the 28 floors, or 320,000 square feet, in the office tower. "They're pretty much leasing up all the vacant office space in Redmond," said Rob Odle, director of planning and community development for the city of Redmond. Microsoft had planned to add 2.1 million square feet over 15 to 20 years, but overcrowding at its headquarters and a heated battle with Google and Yahoo forced the company to step up the pace. The move comes none too soon. The latest version of the Windows operating system, Vista, has been hit with delays and will not reach store shelves until January. The update of Office business software, which was to be released this year, will not be out until January. Google has started making inroads in office applications, one of Microsoft's core businesses, with its release of spreadsheet and word processing software. Google, the search giant, has also overtaken Microsoft in online searches and accounted for 49 percent of them in May, versus 10.6 percent for Microsoft, according to Nielsen/NetRatings, a New York market research firm. "They see themselves as somewhat beleaguered, and that's been their pattern since the beginning," said Rob Helm, director of research at Directions on Microsoft, a research firm in Kirkland, Wash., that tracks only Microsoft. "There's always been a bogeyman driving significant parts of their business strategy." Microsoft's increased spending should be a boon for the Seattle area, where unemployment has stubbornly floated from 4 percent to 5 percent for well over a year. The company plans to hire 4,000 to 5,000 new employees this year, more than half of whom will be located in the United States. (Microsoft would not say how many people it expects to hire in Redmond.) For every new technology-related job, nearly four new jobs--mostly in the service sector--are created in Washington State, according to the Technology Alliance, a state trade group based in Seattle. "The real reason you want these jobs is for the multiplier effect," said Bill McSherry, director of economic development at the Puget Sound Regional Council in Seattle. But some local residents do not applaud Microsoft's expansion. For them, it means increased traffic, higher home prices and crowded parks. Roads are clogged and median housing prices on the Eastside, the area east of Lake Washington where Redmond is located, have soared 17 percent, to $484,500, in May from a year ago. "There are two times a day when people come and go to Microsoft that traffic is so bad you have to stay home," said Jack Bittner, 59, a resident of the Grasslawn neighborhood, which is next to Microsoft. "It's almost gridlock now." Bittner and his wife have even considered selling his house, which they bought for $86,000 in 1987, and moving to Bellingham, a city north of Seattle. He expects he could get around $600,000 for his four-bedroom ranch. Transportation has become the largest issue for the growing region. And for its part, Microsoft has vowed to spend $35 million on transportation improvements in Redmond, including an overpass over Route 520 near its campus, sewer upgrades and turn lanes on nearby roads. But even a sizable cash infusion would merely be a temporary solution to a problem that has been steadily worsening for years. The area's roads and bridges, some of which are earthquake hazards, already struggle to handle the company's 30,000 employees. The Route 520 bridge, which crosses Lake Washington and connects Seattle to Redmond, was built in 1963 to handle 15,000 vehicles a day. Now, 115,000 vehicles cross it daily. Increased traffic, windstorms, earthquakes and boating and traffic accidents have further shortened the bridge's life and required extensive repairs. State officials worry a strong windstorm or earthquake could damage the bridge beyond repair. "The economic impacts would be catastrophic," said John Milton, SR-520 project director with Washington's state transportation department. "It's the feeder for two of the major employment centers in the area." Privately, Microsoft officials bristle at the notion that the transportation burden is theirs. But Microsoft's size makes it a convenient target for complaint among Redmond residents. "Almost immediately after Microsoft began expanding in the late 1990's, the traffic in our neighborhood just went nuts," Bittner said. "That makes me not too excited about this expansion." Reply with a "Thank you" if you liked this post. _____________________________ MEDIANEWS mailing list [email protected] To unsubscribe send an email to: [EMAIL PROTECTED]
