Integrated innovation is all about Microsoft's growing number of "systems" of products. The Windows Server System and the Office System 2003 and "Jupiter" e-business server families are three of what could evolve to become a handful of tightly integrated families of products from Microsoft. And each of these families is designed to be further integrated with other groupings. The idea takes Microsoft's "Better Together" campaign to the nth degree.

Improving customer responsiveness is an ongoing mission for Microsoft. Microsoft employees need to do more to reach out and talk to the developer, IT professional, SMB and consumer audiences at which its products are targeted. Microsoft's new charter – to enable customers and employees to realize their full potential" – speaks to this goal.

Ballmer wants the company to go back to its developer roots with its "best for developers" missive. There is a lot of focus on Visual Studio these days – in terms of making it a great standalone development platform, as well as the preferred platform for Microsoft's next-generation products like "Yukon" SQL Server and BizTalk Server 2004.

The "experiences and services" referenced in Ballmer's memo include things such as Microsoft's next-generation subscription services – things like the now-in-beta PC Satisfaction Trial (designed to provide Windows users with guaranteed virus protection and security – for a price). Microsoft also is working on delivering its next Windows client, Longhorn, as a series of components which can be tailored to specific users' needs (a k a "experiences").

Read More About the PC Satisfaction Trial Here

"Telling the Microsoft story" is something in which Microsoft is dabbling lots these days. The company is stepping up its outreach to various online communities and forums via new Web sites and programs. A growing number of Microsoft employees (in excess of 150) now sport Weblogs where they air their views on a variety of subjects. Ballmer also is encouraging employees to use the Web for design discussions with customers and testers, and to post builds of its products more frequently online for feedback.

Check Out the MS Watch Microsoft Bloggers Index Here

Finally, building the talent pool continues to be a top priority for the company. Microsoft Chairman Gates and Chief Technology Officer David Vaskevitch have been working on devising a methodology for targeting early and attracting to Microsoft rising stars, like Information Worker Corporate VP Peter Rinearson.

So, while Microsoft is undeniably obsessed with the growing customer interest in open source in tight economic times, it's hardly the only challenge ahead for the software giant.