Hummer Winblad’s Ann Winblad interviewed Microsoft CEO Steve Ballmer this evening at a Churchill Club event in Silicon Valley. The live video stream is embedded below.
The early part of the discussion focused on Microsoft’s views on web based software offerings from companies like Google and Salesforce. Ballmer says apps don’t really belong solely on the client or in the cloud, but rather a “software plus services” approach that distributes processing and storage across the cloud and the local machine or device. This hybrid approach, known as Windows Live Wave 3, is being rolled out now and major announcements will be made at the upcoming Microsoft PDC conference in Los Angeles. Windows 7 will also be available for the first time at the PDC.
Ballmer also talked about Microsoft’s only money-losing business unit - online. He admits the company is a distant third in search, but claims second in “advertising software.” He says he remains committed to finding a way to win in search, and in fact says that Microsoft is the only company in a position today to compete with Google in search. He reiterated that they would continue to commit 5-10% of total operating cash flow for the foreseeable future to try to gain search share.
When Ballmer talks about search, he’s really talking about advertising, since such a high percentage of online advertising flows through the search engine. He also stressed that Microsoft is the only company that can compete with Google as the advertising market continues its digitization.
“We need to fundamentally redefine the search experience and the search business model,” he said early on.
Ballmer and Winblad also discussed the mobile market. Ballmer is focused on the smartphone market, where Microsoft software is a major player. 125 million smart phones will be sold this year, he said, and that will grow to a billion in five years. He says proprietary hardware/software stacks (iPhone) will have trouble competing with the more open approaches, such as Microsoft, Android, Symbian, etc. He ads a caveat, however: users won’t trade off usability just to have different hardware choices. The operating systems must work seamlessly across different hardware configurations.
“The smartphone market today is a lot like the PC market in 1983,” he said.
In response to a question about acquisitions v. internal research, Ballmer says they buy about 20 companies a year and will keep spending $9 billion or so a year on research and development. Most of those acquisitions are under $100 million, with a handful of larger ones. “We’ll keep buying about 20 companies a year.”
Winblad finished the interview by asking Ballmer how hard he’s found it to steer Microsoft without the recently retired Bill Gates. Ballmer was diplomatic in his response. The company is very diverse in its goals and revenue streams, he says, and so the leadership team as a group has to lead the company.
One of Microsoft’s biggest challenges is to focus on what’s really important for the company, he said. The urgent drowns out the important, he added, and they have to focus on long term growth strategies. “The decisions on what to invest in are the most important.”
Ballmer also let off a few zingers in the Q&A session.
- One attendee complained about the unreliability of Windows - Ballmer said he’d fix his computer himself after the talk before giving a more serious answer.
- When asked about advertising supported websites, Ballmer stated that there are very few sites that can run their business on advertising alone today. He used Facebook (a Microsoft partner) as an example, and said there was still a lot of work to be done there to figure out monetization.
- In response to one question about education, Ballmer said he thought we weren’t doing enough to teach our children about computer science, and that computer programming knowledge should be a requirement for high school graduation.
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I dont know what msn search could do…its just so crappy…i mean the ppc area cos i have used it. yahoo ppc is better than msn although google adwords is still the king. they should just shut down the msn adcenter as its going no where. period!
the funny thing is, Live Search is actually pretty good. I use different search engines every month, and there’s really no difference among the big three as far as I’m concerned.
Mike,
I completely agree to you… I switched to Live search couple of weeks ago and loving it.
I’m not sure how much Microsoft pay Michael, but Live search is pretty crappy. I couldn’t get good search result. Seems like the results are tainted with advertisers shat. Try searching for a product, u get a company’s selling the product instead of a website telling about the product. Dumb.
Except - There is…
Search for “diesel safe for work” on google & then on live
Search for “how to install jdk on leopard”
Search for “limite magazine”
Google picks up new memes/updates faster and provides a better top 5 results. Seriously.
live.com design is nice and the search is good but boy if you are an advertiser…adcenter is no place to go at all. I know they still got fans though. lol
Michael,
There are significant differences across the top three search engines and if you fail a user two or three times you basically lost them and Google still remains superior in most of the major areas:
*Google is still superior in overall relevancy
*Google is superior in freshness (if you post a new blob post and you have a site that more then 50 people visit per month) it will get into their index in less then an hr.
*Yahoo is superior in overall assistance — helping users formulate queries
*Google is far superior to Yahoo and Live in most countries other then Japan, Tawain, and a few other countries.
*Live is coming on strong across the board quality, freshness, comprehensiveness, but still has a ways to go.
Steve is right — you need to *redefine* the search space to get competitive…building a search engine that is 5% better then Google will have minimal impact on the market at this point.
I really like Live, but I feel like something is missing there.
Maybe in a true communist state it would be most efficient to shut down Adcenter and consolidate all search advertising monetization in Google. But in reality direct competition is pretty much necessary for innovation.
Yeah. MSFT the innovator… hahahahaha…
Windows Live Wave 3… hahahahaha…
MSFT branding insanity continues, and they still want to undermine the Internet in any way they can. If only they had invested all of the money they spent on trying to hold it back on innovating IN TUNE with the Web, they could be the most dominant and likely respected Web company today by far (due to being the most lavishly funded).
But no, instead they had to keep trying to defend an ancient OS code base for PCs that’s become almost unserviceable. It’s truly sad when one thinks about it.
“Probably the biggest ad network for websites is Google’s Adsense network”. Wow, Balmer’s a genious - he’s probably right !
I think I am going to use windows live for now on
cool stuff. last question “how does ms execute in this perfect storm enviorment”, ballmer was hesitant to answer. he changed it to not a perfect storm but to a perfect opportunity. meaning MS has the money to buy any damn thing they truly want everything is just a matter of when they want it. they dont have to execute. they have to spend money.
if mike says the big 3 are the pretty much the same does that mean that we are experincing a search engine apex of evolution. i mean these 4 or 5 billionaire behemoths dominate over 95% of the market. its gonna take something truly unique to break this tyranny.
ClassLocator.com
I use Live for two reasons:
1. It’s just as good as google; and
2. I’m sick of google dominating the web. We need more competition.
competition doesn’t come from people using inferior products… microsoft needs to make significant tangible imporvements to thier product to get people to use their products…
Thank you!!! Well said
(durrrr)
> “The smartphone market today is a lot like the PC market in 1983,” [Steve] said.
I am a bit young to really know if that is true, but I would be curious if someone would compare and contrast. I think the simile might break down when considering the distributed nature of web applications and the existence of web browsers, feed readers, instant messengers, etc. Also, in my experience, mobile applications are a bit simpler to implement than desktop applications. They are less monolithic. Mobile apps like Qik.com are probably going to work on nearly any new or popular mobile device, so consumers won’t necessarily need to flock to one mobile platform over another. And another possible example - someone implementing, say, restaurant management software might choose some touch screens and an OS like Android, iPhone, Windows. Someone running a restaurant won’t have some “main computer” to run the system on. The touch screens and OS will only be used for restaurant management. The software is bundled with the hardware.
And by the way I have to agree with Arrington on the similarities among the major search engines. Google search is similar to Yahoo! search is similar to Live search. A lot of what differentiates Google from the rest is brand image. Their brand image is related to their reputation for performance and usability, but it is also related to a lot of other things.
I use Google because I like their look and feel, and I like that they are not Microsoft. Microsoft is anti-Unix-like, and I like Unix. So I have a preference for the Google brand. I also use Google search because I just like a white screen and visual consistency. I don’t want my search page to look “noisy”. And I do like Gmail, Google Maps and image search, which are sort of integrated with Google Search. Sort of.
“He used Facebook (a Microsoft partner) as an example, and said there was still a lot of work to be done there to figure out monetization.”
Wow! It still amazes me how far FB has got without getting this figured out.
How many TC50 demo’s did we read about that said “what’s your monetization strategy” and making it clear that without this they were going to find it difficult to get VC funding, never-mind anything else.
Yet FB appears to completely blow that argument right out of the water.
Maybe FB is the exception which proves the rule? I dunno, but it seems a bit at odds with everything else we hear on monetisation.
TC is my homepage. I use it because it’s user friendly. It has been a great forum for self expression. I am learning and becoming more powerful everyday. In the near future efficiency and location will rule the internet making 17.5 million results for a search term “plumber” obsolete. It was fun in 1999. Now its time to get serious. Integration, Location, Language, Personalization is the future of the internet. First major search company to offer “natural language multichannel location based strategic niche offerings” will be the next great “Location Engine” of tomorrow.
MyLocator.com-find yourself
Typical stypid Microsoft. Can’t create any innovative products, so they send their pumkin headed executive around to make MS investors feel ok about their money going down the tubes. Apple and Google are the new cool companies, and Microsoft is like Goodyear Tires. I can’t think of one product that Micorosoft makes that anyone uses anymore. And Live Search is a total joke–I will never dirty my computer by trying it. Balmer, go back to your pumpkin patch and leave technology to people who actually have brains and talent (e.g. my hero Steve Jobs). I would rather be consumed by rabid hamsters than use a Microsoft products. PS. Zune sucks.
Word?
Excel?
Powerpoint?
useless rant
Live search and image search is what i use! Ask is also good!
This was the first time I’d heard Ballmer speak in person and in a free-flowing Q&A format (rather than a more scripted speech). Most everyone I spoke with afterwards found him to be quite a straight shooter - he didn’t shy away from their position in search - and remarkably funny and charismatic (Mike captured a few of his “zingers,” there were a series of others sprinkled throughout). Love him or hate him, it’s easy to see how he can rally the troops through sheer passion and exuberance.
hey Joel, didn’t see you there.
I was at the Hummer Winblad table (courtesy of being funded by Ann, the moderator …) - no wonder we didn’t see each other, though, it was a packed house!
Sheer passion and exuberance is an understatement… have you seen the sweating Ballmer “Developers, developers, developers…” chant video?!? It’s quite the sight to behold.
Google it.
@Alex
Dude just shut the fuck up a go to sleep please!
i have switched over to Live Search and I dont feel the difference as well.
Just a quick semi-correction on the Wave 3 reference…,
Wave 3 isn’t their approach to software and services they have been doing it is the 3rd major iteration through their beta and user testing cycle(s).
As they have moved through the various cycles they are updating existing products/services with new features and fixes, as well as introducing entirely new products/services.
Ballmer understands that MSFT has to redefine search in order for them to make headway. Since Google claims search is “90% solved”, lol, there may be an opportunity. As his scorecard moves to handsets, it will be interesting to see how things change, since Google has the brand, but is starting from zero.
Also dismissed Apple as a perpetual niche mobile player by dint of their closed sw/hw system, following in their familiar footsteps. (perhaps a happy niche…)
World is small. Ann Winblad is a former girlfriend of Bill Gates…
I have been using Live as my primary search engine for the last year. As a developer it does a great job of returning relevant answers to my queries. Occasionally I run the same search through Google and get 95% of the same results usually in a slightly different order.
If Google were to disappear completely this afternoon I wouldn’t even miss it.
$9 billion?
Is this verifiable?
It’s in their 10K report, well 8.2B for their fiscal year, and increasing.
http://sec.gov/Archives/edgar/.....tx31450_19
promoting Windows Vista or windows 7?
i was at microsoft vc summit 2008 (palo alto) steve was keynote. you can read 1hr speach here http://www.microsoft.com/press.....ummit.mspx . it was interesting, my colleagues have audio stream
Great, the usual haters. Windows Live and Live Search have their own unique features that I like (Image & Video search, Messenger, Writer, etc.), and Google has it’s own nice stuff (ads, web search, etc.).
Some people like to rag on MS, without even trying their stuff. Or just using it only for a few minutes and finding a reason to say “yuck” and move somewhere else. Microsoft’s making some progress, just slowly.
Will on window live now. He is a genius.
is it me or does this video keep starting over and stopping and starting… Can we post it somewhere else?