Microsoft CEO Steve Ballmer visited Silicon Valley on Thursday for his annual meeting with top venture capitalists to talk about Microsoft product strategy. This was his first visit to Silicon Valley since announcing the search partnership with Yahoo in July.
I had a chance to sit down with him just after that event for a hour-long one-one-one interview. In the first 10+ minutes of the interview Ballmer gives his high level thoughts on major Microsoft products and strategies (including Windows, Windows Mobile, Internet Explorer, Bing, Azure, Mesh, Natal and others), competition, the future of search and search marketing, Microsoft’s “three screens and the cloud” strategy, the recent acquisition of Interactive Supercomputing and, yes, even his thoughts on Twitter.
A few interesting points from the video interview:
- On Microsoft’s “three screens and the cloud” strategy: Ballmer says it’s a “fundamental shift in the computing paradigm.” He added “We used to talk about mainframe computer, mini computer, PC computing, client server computing, graphical computing, the internet; I think this notion of three screens and a cloud, multiple devices that are all important, the cloud not just as a point of delivery of individual applications, but really as a new platform, a scale-out, very manageable platform that has services that span security contacts, I think it’s a big deal.”
He also says that Microsoft obviously won’t be the only player in the new market, and joked that some people “for whatever crazy reasons don’t want to be on windows, might want to be on linux:”
Ballmer: Now in our own case, you know we’re going to try to share technologies, so that we get kind of synergy from a developers perspective. Windows on the phone, you know, Windows PCs controlling TVs, the Windows PC of course itself, Windows Azure in the cloud, so we have a lot of work that’s trying to share technology, but obviously you don’t want exactly the same experience on a little screen and a very big screen and a mid-size screen.
Arrington: Ok, does it work – you talked about Azure in the cloud, but does it work if somebody’s using Amazon web services or something like that. Although we’re talking more about the developer side now, but are you planning to interoperate as much as possible.
Ballmer: As much as possible implies that infinite complexity’s a good thing. Of course, it’s unreasonable to say that you’re going to completely support only your own three screens and only your own cloud. I wish that it were true. We have to make our screens and our cloud first and best, but clearly there are going to be people for example who don’t want to be in the cloud, that want to be on premise, that for whatever crazy reasons don’t want to be on windows, might want to be on linux, for gosh sakes.
Arrington: Yeah, crazy.
Ballmer: For me, I’m allowed to say that. And we need to interoperate, but we do need to be first and best in support and in integration of our own platforms.
- On search innovation: Ballmer says that search innovation, both as a product and a business model, has largely stagnated over the last five years. He also thinks competition will drive more innovation in the future. “I think if you look out the next 10 years we’re going to see more innovation in search,” he said.
- On Why Microsoft won’t build a branded phone, as they have with the Zune and Xbox: Smart phones, like desktop and laptop computers and televisions, are “non-niche devices,” which he defines as 300 million or more units per year. These markets are large enough that there will be multiple manufacturers, and it’s unlikely that any single vertical vendor will dominate the market. It makes sense, he says, for Microsoft to be a vendor of the platform and services for these types of devices. So, don’t expect a Microsoft branded phone.
I’ll call anything that’s north of 300 million a year non-niche. PC’s are not niche devices. Part of the reason I think they’re non-niche devices is, multiple people can manufacture them, they all interoperate, they work together, etc. TVs are not niche. You know, there’s more than, well over 300 million of those sold a year. They interoperate in that case mostly based on standards, but with some innovation. Phones are not niche. The categories where, I think, a single player can control a large percentage of the volume are the smaller categories. What does Apple sell every year of iPods: 30 million, order of magnitude, something like that. What is the whole video game market is maybe 30 or 40 million in units a year. But when you get these categories that are 300 million, 500 million, a billion, a billion-five a year, the truth of the matter is you’re gonna want multiple points of manufacture, with a lot of innovation around it whether its supply chain, for geographic diversity, and our basic play with our software is to try and be super high volume. So I think you can have an Apple in the phone business, or a RIM, and they can do very well, but when 1.3 billion phones a year are all smart, the software that’s gonna be most popular in those phones is gonna be software that’s sold by somebody who doesn’t make their own phone. And, we don’t want to cross the chasm in the short run and lose the war in the long run and that’s why we think the software play is the right play for us for high volume, even though some of the guys in the market today with vertically oriented solutions may do just fine.
- On Microsoft’s acquisition strategy: Microsoft acquired 15 companies in FY2009. Ballmer says to expect roughly the same level of activity in the future. “I’m guessing we’re gonna want to buy about 15 companies again next year,” he says. He says most of those will be smaller transactions ranging from $50 million – $400 million. And those companies will have to “really fit well with our technology platforms and distribution,” he added.
- When I half-jokingly asked if Twitter fits well with Microsoft’s technology platforms and distribution, he responded “Twitter would be great, yeah. I mean, not that we’re talking about buying Twitter…” And he then went on to say that he thinks the Twitter guys are “fiercely committed to staying independent.”
For the rest of the interview we took a deep dive into each of these topics, and over the next few days we’ll have a few follow up posts on each area of discussion in detail. There is some absolutely amazing content to come. The full transcript of the video is below.
Additional Posts From This Interview:
Microsoft CEO Steve Ballmer On “Moving The Needle”
Microsoft CEO Steve Ballmer: Chrome And Safari Are Rounding Errors.
Full Transcript:
Michael Arrington: This is Mike Arrington, I’m here with Microsoft CEO Steve Ballmer, hello Steve. It’s been a year since I’ve had a chance to sit down with you, you’re back in Silicon Valley – what brings you here?
Steve Ballmer: We do an annual event where we bring together venture capitalists, and try to make sure they understand where we’re going, and we understand where they’re going, cause there’s going to be opportunities for us to partner with their portfolio companies, try to get their portfolio companies to build on and alongside of things that we do. There’ll be chances for acquisition, and we do that once a year, and we happen to be doing that today. I’m down in the valley probably 7 times a year, and this is sort of more of a valley day because we’re with the VC community.
MA: The last time you were in the valley, is that when you did the yahoo deal?
SB: Last time I was down here probably was the announcement of the yahoo deal. I’ve had kind of a quiet two months of travel since I was down here at the end of July for that.
MA: I have a couple questions about that but we can hit those later. You guys have a lot of new product initiatives, I think some are big ideas, big new businesses, possibly some are what you call an enabler, something like that. You’ve got big buckets – Bing is out, Windows 7 is coming out, Azure, I think you guys have said by the end of the year, Mesh is there, Project Natal, and others. How do you feel about big buckets and all of these products – your babies?
SB: Well, it’s great to have a year where you have a lot of stuff that you can kind of be excited about, if you lead a company like ours we have a lot of very exciting products for the consumer and frankly for the enterprise customer, although that tends to get a little less press attention I would say, but it’s a fun year. It also is a good year to say then that it’s a good year to go build business and it’s a good year to lay the seeds for the next generation of businesses that can be good, and whether it’s what we’re trying to do with Bing, or do with Natal, the next 12 months is shaping up to be very promising.
MA: One of the big things you talk about is something you call “three screens and the cloud.” I’d love if you could dive a little bit into what that means from a business standpoint but also from a user standpoint and what they’re going to get out of this when it finally comes together.
SB: Yeah, the reason I like the little phrase “three screens and the cloud” isn’t just that it’s true and it’s what we started talking about it at CES but I kind of like the alliteration (?) of “Three Men and a Baby.” Every time I say it I think, “Three Screens and the cloud,” “Three Men and a Baby” if you remember the movie, but I think what it really refers to is a fundamental shift in the computing paradigm. We used to talk about mainframe computer, mini computer, PC computing, client server computing, graphical computing, the internet; I think this notion of three screens and a cloud, multiple devices that are all important, the cloud not just as a point of delivery of individual applications, but really as a new platform, a scale-out, very manageable platform that has services that span security contacts, I think it’s a big deal.
You lay natural user interface technologies on there, and platforms on there, and then you start revitalizing the UI platform. What you’re seeing on phones and TVs, people want more than what’s called the classical graphical user interface: touch, voice, camera, gestures – all of that stuff whether it’s Natal or the touch stuff, in iphone or Windows 7 or whatever it is. It is the next big generational shift in the computing platform. And people are going to want applications, I’ll call them that, or services, depending on whether you like old fashioned words or new words, but they’re going to want things that service them across those environments. So when I’m away and just have my phone with me I still may want to check in on the action – my favorite xbox competition, or I may want to play games with somebody who’s in a different environment. We’re sitting watching television, and we want to share with somebody who’s not physically present – we want that to work to somebody who might be a family member, who’s on their PC in a hotel room traveling tonight. So you got to think about it as one integrated computing infrastructure. Now, whether it will all come from one company, and what are the standards, and what are the points of proprietary differentiation, all of that’s going to get kind of played off.
Now in our own case, you know we’re going to try to share technologies, so that we get kind of synergy from a developers perspective. Windows on the phone, you know, Windows PCs controlling TVs, the Windows PC of course itself, Windows Azure in the cloud, so we have a lot of work that’s trying to share technology, but obviously you don’t want exactly the same experience on a little screen and a very big screen and a mid-size screen.
MA: Ok, you talked about Azure in the cloud, but does it work if somebody’s using Amazon web services or something like that. Although we’re talking more about the developer side now, but are you planning to interoperate as much as possible.
SB: As much as possible implies that infinite complexity’s a good thing. Of course, it’s unreasonable to say that you’re going to completely support only your own three screens and only your own cloud. I wish that it were true. We have to make our screens and our cloud first and best, but clearly there are going to be people for example who don’t want to be in the cloud, that want to be on premise, that for whatever crazy reasons don’t want to be on windows, might want to be on linux, for gosh sakes.
MA: Yeah, crazy.
SB: For me, I’m allowed to say that. And we need to interoperate, but we do need to be first and best in support and in integration of our own platforms.
MA: Ok, fair enough. Search. Congratulations, Bing is now one of the major services, they’re saying Bing has now achieved 10% of the market share, up actually quite a big percent over 8, 8 and a half – that’s a big percentage jump, and it seems to be pretty quick, and it seems to be steady and sticking. So congratulations on that.
SB: Thank you.
MA: But, search. Bing is clearly, I think everyone agrees, Bing is a good step forward. I think people who thought they would test them out, a lot of them are sticking, but looking forward 5 years from now, search innovation over the last say, 10 years has been somewhat interesting but will the next 10 years of search innovation be more interesting than the last 10 years?
SB: Let me say something dramatic – I think the first five years there was innovation in business model, there was innovation in approach, give credit to competition, the last 5 years there’s been some, quote, innovation, which is really things like digitizing, maps and books, or whatever the case may be, adding the larger content base to the corpus of information. But in some senses the UI, the approach, the algorithms have changed less in the last five years, then more … so I think if you look out the next 10 years we’re going to see more innovation in search. And, of course, that’ll be best served by good competition in the market and, y’know, at this stage, hopefully with the government approval of our deal with Yahoo, the good competition better come from us. Otherwise I don’t think we’ll see some of that innovation. But whether it’s natural language, visualization, change in the UI, change in the business model… Business model on search is making life tough for other content providers, makes life tough for some of the merchants…
MA: yes
SB: We’re not an incumbent, we can play with user interface, we can play with business models, we can do some things that maybe the incumbent can’t do.
MA: Yes
SB: And the incumbent does some things pretty well too, and we’re gonna have to hustle to catch up, and they have a lot of years of tuning those relevance algorithms, and we’ve got a lot of work to do.
MA: Though you talk about UI, you know, and sometimes it seems like people talk about search problems as, first of all, the search engine understanding the query, and I think that’s where you’re talking about UI.
SB: Well, that’s where I’m talking about natural language,
MA: Right.
SB: Actually, UI I’ll talk about the presentation of the results
MA: Literally, the sort of… visual presentation of the app.
SB: Ya, and I think it matters, actually, search isn’t unlike every other application; the way you present things actually does matter.
MA: What will your market share be in 10 years, on search.
SB: Oh, I don’t know. I mean, making forecasts is sort of not, not a sane practice. A lot more than we have today!
MA: It would be great for me if you answered, but…
(Steve laughs)
MA: The Zune HD: A hit. Seems to be a great device. Still haven’t had my hands on one. Do you have one on you right now?
SB: I don’t actually.
MA: It seems like a lot of people really like the Zune HD, it’s selling out. When you look at the Zune and the Xbox, you seem to be more than capable of creating, successful end consumer devices that are hardware tied to services. When do we get our Microsoft phone? I know you guys keep saying “We will not build a Microsoft branded phone…”
SB: Well let me ask you a question. I’m going to answer your question with a question. Which is to say, look, lets just break hardware devices into two broad categories. Really high volume, and more niche. And I’ll call anything that’s under about 50 million a year niche. And I’ll call anything that’s north of 300 million a year non-niche. PC’s are not niche devices. Part of the reason I think they’re non-niche devices is, multiple people can manufacture them, they all interoperate, they work together, etc. TVs are not niche. You know, there’s more than well over 300 million of those sold a year. They interoperate in that case mostly based on standards, but with some innovation. Phones are not niche. The categories where, I think, a single player can control a large percentage of the volume are the smaller categories. What does Apple sell every year of iPods: 30 million, order of magnitude, something like that. What is the whole video game market is maybe 30 or 40 million in units a year. But when you get these categories that are 300 million, 500 million, a billion, a billion-five a year, the truth of the matter is you’re gonna want multiple points of manufacture, with a lot of innovation around it whether its supply chain, for geographic diversity, and our basic play with our software is to try and be super high volume. So I think you can have an Apple in the phone business, or a Rem, and they can do very well, but when 1.3 billion phones a year are all smart, the software that’s gonna be most popular in those phones is gonna be software that’s sold by somebody who don’t make their own phone. And, we don’t wan’t to cross the chasm in the short run and lose the war in the long run and that’s why we think the software play is the right play for us for high volume, even though some of the guys in the market today with vertically oriented solutions may do just fine.
MA: You just bought Interactive Supercomputing a couple of days ago now. Why?
SB: Well, one of the big pushes for us, we, we’re in the server business, if you .. if you look at all the things people do with servers today, we do pretty well at most of them. The two areas in which we have, are least successful are web, where about half the web servers are Windows and half are Linux, we’re competing, and workin’ at it; and the other one is high performance computing. Scientific supercomputing-like applications. And the truth of the matter is, this is never about price, it’s always about, have we done enough to solve problems, compared with what you could do with the roll-your-own of Linux and Open Source. We took a look at it and said, no, we really want to be in the high performance computing, super computing space, and we’re gonna get after it. We’re gonna get after it with infrastructure, we’re gonna get after it with tools and applications, and as part of that strategy, we made the, uh, deal to acquire Interactive Super Computing.
MA: Okay, great. And you’ve bought fifteen companies in fiscal 09 – I think, is that right?
SB: Yeah, about right, yeah.
MA: Does that stay steady? Increase next year?
SB: I’m guessing we’re goning to want to buy about 15 companies again next year, if, just sort of a guess. Most of the things we buy are smaller. We probably pay some place between 50 million and 3 or 4 hundred million. And then occasionally we’ll do something bigger. But most of what we buy, it’ll probably be about the same order of magnitude, it’ll probably mostly be companies that have 50, 100 to 200 employees, And really fit well with our technology platforms and our distribution.
MA: Would Twitter fit with your technology platforms and distribution?
SB: Twitter’d be great, yeah. I mean, not that we’re talking about buying Twitter… I mean, the Twitter guys want to stay independent, that’s great. Using – making Twitter an asset to one of our businesses, that would be the real question for us, how does it fit, but obviously, yknow, they’ve got a lot of kind of buzz and interest at this stage, but, no, I think they’re fiercely, uh, committed to staying independent, which, which I respect.
MA: Great, thanks.
thank you for not going the installment route with this interview
no, we are. we’re just starting off with the video, which i think works better. There’s 50 more minutes to the interview, coming up.
50 minutes more video interview to follow? Hope we get a better pic of Steve at least then. Here, it looks like he looks up to you and speaks… as if you’re seated in a higher position than him (were you?)
Yes, Thanks for not interpreting it for us like the last one with Shmidt.
Thanks for the interview.
And did you, by any chance ask about Microsoft’s Courier?
and it’s amazing stuff.
Love how he upfront says user interface design and user experience is on the forefront in so many ways for technology.
Especially good point in search presentation UI, there has been almost no progress in the past 5 years.
Yes I’m impressed. I don’t really like MS products, but at least now I understand their vision
Too much stuff on one company’s plate. They need to button up. They are losing quality in products by trying to keep up with what other companies are doing. Yes M$ is a large corp. They have the numbers to match what other companies are doing. But they don’t have the combined passion and/or idealism or new frontier thinking that someone in a startup might have. So they buy them. But they will only last so long. They have to make one product and make it good.
If they have to sacrifice losing in one market so be it. But win in another.
Sounds like he’s more concerned about having the largest mobile market share as opposed to having a mobile platform people actually want. News flash: if people don’t want it(i.e. want a different platform) you won’t be the dominant market share for long.
They need to shore up. Like McDonalds did the last 6 years.
you got to love mr. ballmer, I mean who would have thought that the multi-billionaire NEW CEO has a good sense of humor – a Real Halloween treat for everyone aboard
hilarity link: http://pinoytut...lloween-costume
Way to go Microsoft!
Very interesting interview.
Follow @gatesfoundation
Awesome interview.Thanks because you posts full transcript too.Its easy to identify everything.
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Great interview. I wonder what he thinks about Yelp. Clearly Google is focused on them. But did he just call Facebook “non niche?” yeah.
Did he talk about how he will crush the iPhone?
Wonder what he thinks about Google Wave too.
well he does have a point about crushing the iPhone, is basiclaly the same strategy as in pcs only now they need a much better OS ( winmo7 )
I wonder how will apple compete with that? they seem to be happy with computers right now, at a 3% share. but will it work the same with mobile phones?
how will apple compete with dozens of manufacturers using windows mobile and creating a phone for every need ?
While I think the PC/Apple analogy applies to the cell phone biz, I wonder whether Microsoft will again be Apple’s antagonist, or if Android is taking on this role in mobile? Looks like Android is getting ready for its close-up, and may kick Microsoft to the curb.
Dozens of manufacturers aren’t using WinMo. HTC makes over 80% of WinMo phones. Everybody is leaving MS to use Android and Symbian. Apple, RIM and Palm are cleaning up the rest.
The picture Ballmer is painting of hundreds of millions of smart phones by dozens of hardware vendors using WinMo is pure fantasy. It is simply not happening. They sold LESS than 20 million WinMo licenses last year!
Who in their right mind would be leaving anything for Symbian? It’s dying on the vine faster than WinMo. Android is the vendor-neutral platform with momentum, and the real competitor to WinMo for that space.
Obviously Android is winning the mindshare battle right now, but it still hasn’t taken off immensely in terms of units sold yet. Next year will probably be the deciding year.
Really? You might want to check your numbers there, chief.
That wasn’t his point – his point is that phones are non-niche meaning that he doesn’t see a vertical integration paradigm as the optimal model.
Instead, he wants to supply the software to whomever wants to build a handset and use it. That way MS is not dependent upon that vertical integration – they are merely a supplier and can build volume.
Think about it, a vertical integration has to be tightly controlled or it ceases to be that. Look at the problems that Apple is now having with that vertical integration – people love the hardware and love the UI/OS, but are getting really angry with the application delivery layer – which Apple feels they still have to control.
SB said that he doesn’t want to deal with that – he wants volume and you can’t do volume with a vertically integrated product.
Heck, he called iPods “niche” as well since they “only” sell what – 30 mil / year?
But THAT was his point, not that MS is selling 30 mil, but that the market is large enough that it demands multiple avenues both horizontally and vertically.
Customers are angry about the AppStore? I don’t think so. The AppStore has become one of the main drivers for Apple’s iPhone marketing. What happens in the blogosphere is mostly irrelevant to Apple.
I think that WinMO7 will not be the best Mobile OS.
It is still based on sucky CE platform.
I think WinMO8 will be NT platform and then will be interesting.
you (and apparently Steve B) assume that Apple wants to beat everyone. Maybe they don’t want to be the ones with 95% marketshare on everything with all the legal issues that brings.
I think you are looking at the wrong competitor. Google are far more of a threat to the Windows Mobile platform. Android is, even it’s relatively immature state, a far better mobile OS that Windows Mobile.
I didn’t get his TV set analogy. Do TV sets have a common shared software platform? I don’t think so. TV sets are vertically integrated with propietary software by the hardware vendor. In fact, all kinds of consumer electronics are hardware/software integrated, be it disc players, still cameras or video cameras or washing machines or fridges or… The odd man out is the PC, and it’s still entirely unconvincing what kind of innovation WinMob can bring that Apple, RIM or Palm cannot.
Besides, his figures for the sizes of what he called “niche markets” are off. Apple is selling 55 million iPods per year, not just 30 or 40, and the mp3 player market it of course bigger than just Apple (Sony estimated 80 million per year in their last Annual Report). The size of the video game hardware market last year was about 50 million for home consoles plus 40 million for portables. The distinction Ballmer made seems arbitrary.
The ultimate problem with his reasoning that the moble phone market needs an independent operating system vendor: How come it already has a size of 1 billion phones per year, even though nobody cares for WinMob and 95 % of all devices sold are vertically integrated? How come mobile phones grew faster than PCs and are now cheaper than PCs and more popular than PCs?
Ballmer explained it himself: as long as Apple sticks to their own hardware, they will not cross the chasm for really large market.
If you’re Microsoft, than the iPhone share is still considered niche
If Apple is a niche player in the smart phone market, then MS has become a niche in the niche because its worldwide market share in the smartphone market fell below Apple’s this past quarter.
And RIM and Nokia have even bigger marketshares than Apple. Right now MS is a smart phone has-been.
Reading comprehension problem: he said Apple is one of the leaders in a niche market, not a niche player in the smartphone market.
His larger point is valid: when there are a billion smartphones sold, they’re not going to come from a couple of vendors, they’re going to come from a bunch of them.
No comprehension problem. If Apple is a leader in the smartphone market, then MS is a loser because its marketshare numbers are behind Nokia, RIM and Apple and Google and Palm are waiting in the wings. And when the niche market becomes the dominant market, MS will be very poorly positioned to take advantage of the situation.
Furthermore, those 30 million iPods per year which Ballmer poo-poos, totally undermined MS’s digital media strategy, gave Apple invaluable experience in creating mobile consumer devices, and set up the entire iTunes ecosystem/peripheral market which all iPhones and iPod touches immediately tap into and allows iPhone developers to sell their apps on a worldwide basis with very little overhead.
All I’m saying is that by Ballmer’s own definition, everything MS does outside of Windows and Office has been relegated to niche status. And MS isn’t making any real money off their niche products while Apple is rolling in money off their so-called niche products.
You do have a comprehension reading problem. You’re addressing an argument that SB did NOT make.
But what can you expect from Apple loyalists.
Jeff, the problem is that SB is making some extremely hypothetical argument, while the present facts speak against them. All growth in the smartphone market has come from Apple and RIM through their massive innovations, while Windows Mobile is languishing. And the market, at 150 million over the last 12 months (according to Gartner), is already too big to fit into SB’s “niche” definition, especially in the US, where now about 1 out of 4 phones sold are smartphones, and smartphones are close to actually outselling PCs, which will probably happen within the next 12 months.
That’s precisely his point. Limiting use of your product to only what you make will hinder you from really reaching market domination. It’s the same story as the PC.
In the future, most phones will be smartphones, and it will be virtually impossible for Apple to remain dominant, using their current strategy (that clearly didn’t work for the Mac).
It will be OS’s that work with several phones from several manufacturers that will be in that spot, be it Android, WinMo or some other player we haven’t seen yet. I sincerely doubt WinMo will be it, though.
People seem to forget how Microsoft came to dominate the PC market. MS DOS was jump-started by IBM, the eminent computing company of the 50s, 60s and 70s, by being included on the IBM PC, which became the instant market leader upon its introduction in 1981, through IBM’s brand power alone. Compaq and the other cloners wanted MS DOS because they wanted to be IBM compatible, not because they cared for Microsoft’s product. Today RIM and Nokia, combined, have some of the brand power IBM used to have in those days, and unless they somehow are both going to switch to Windows Mobile, I don’t see any leverage that Microsoft has.
Mr Ballmer’s niche/mainstream market differentiation theory stops to make sense when you consider that every time a new device like an iPhone comes out, it integrates a “niche” feature (e.g. gaming) with a mainstream feature (e.g. telephony), thus blurring the line separating one market from the other. Additionally, Microsoft has to rely on hardware manufacturers to create compelling devices, something that didn’t happen with their pre-Zune music player strategy.
Finally, for this software strategy to work well, MS would need phones to standardize as much as possible, creating in effect a vertical-type product designed by committee.
Well said. When a product is REALLY unique, it carves a niche for itself. Have gone over and over again his “niche” and “non-niche” theories, but still I don’t get what he means by both. What is Microsoft’s niche ultimately?
I think what Ballmer means is that there is a lot of space for competitors to be successful, and Microsoft is focused on enabling the broad market of device manufacturers, and not just a niche.
Apple can sell 30M devices a year and be very, very successful, but where do the other 250M+ devices per year come from? Who built the software that runs on these phones? Microsoft wants to be the software provider for the HTC’s, Samsung’s of the world that all compete with Apple, but collectively outsell the iphone by large numbers. See the PC vs Apple story from the 1980’s. Unfortunately for Ballmer, Android may have something to say about the mass market.
Problem is, MS sold less than 20 million WinMo devices last year. WinMo 6.5 is still not “touchified,” their WinMo app store is barely past the embryonic stage and hardware manufacturers are leaving WinMo in droves, HTC nowmakes 80% of WinMo phones now while Sony, Moto and other have left.
And worst of all MS really isn’t making any money off the mobil space. Sell 20 million licenses at $8 to $15 brings in less than $300 million a year. Meanwhile Apple is rolling in $10 Billion per year from it’s mobile division NOT including the iPod touch.
If anything, MS is the one headed towards niche status.
You ever thought of putting out a dummies guide to internet technologies available for business each year…
The problem with smart people is they forget that there are millions of not so smart people trying to figure all this stuff out. In that video he talks of stuff that a lot of small business owners wouldn’t have a clue about but have to know to really compete… You all need to make simple this stuff and make a dummies guide you can order each year focused on explaining the new technologies and possible uses.. aren’t like half of you out of work… seems to me you could make money… there are still tons of companies too small to have and it person… a lawyer… having a chapter on legal stuff. How to protect yourself… they have all these business plan software and the examples are about a plumber.. I want to build a facebook app or a website what the hell do I care about the stupid plumber.. you could even do a weekly youtube series to market it… an update vlog.. and join the partner program… when your not a technical person you want to know what is possible with all these new technologies.. what are some possible uses…
Great interview with Ballmer from what I’ve seen so far. Looking forward to the full thing as soon as it’s posted.
Good interview, screen was a little low.
I have to say that I get what he is saying about a Microsoft phone but its too bad.
They are the only ones really capable of pushing Apple to another level.
looking forward to the next 3 parts.
Excellent interview. Looking forward to the rest of it.
I don’t get why he’s so against Linux. This is something they could embrace and use – Linux itself isn’t a competitor to Microsoft. Microsoft could build on top of Linux and still maintain their brand. I didn’t really like his smirk in mentioning Linux – to me it shows he doesn’t really understand Linux. Anyway, just ranting…
OMG, did he just use the ‘d’ word?
http://blog.mom...-get-over-this/
Great catch btw. I think MS will come out ‘too strong’ in the next two years or so.
Big gulp after “you just bought Interactive Supercomputing…”
Interesting Interview !
Very Smart guy. I have a lot of respect for him.
People tend to focus on steve jobs a little too much.
He’s an excellent salesman – good enough to bullshit his company into the ground.
Lol, FYI: Microsoft is doing great with all their products, including Vista!
Sure. And what’s next from you? A ‘Monkey Boy’ jibe?
Think different or even at all.
All Ballmer talks about is future products – Natal, search, WinMo phones, but he hasn’t delivered in 8 years. Its smoke and mirrors.
The Microsoft brand has become toxic.
Is Rim, Nokia, or Apple going to put WinMo on their phones? No. Google is creating a free OS – think how developed it will be in 5 years. Office, their cash cow, will have a real tough time as free web based apps get much richer. Pouring money into Zune development? Oh, and no one will be paying for expensive MS exchange servers in the future either.
I’m very surprised shareholders arn’t calling for his head.
Oh right.
So the positive reviews Windows 7 and the Zune HD got are a figment of my imagination then?
Oh yeah, and what about the market share of the console market the Xbox 360 has?
OK.
bing, office 2007, xbox 360 in the past few years.
Windows 7/Zune Hd coming up
This is entirely off topic, but I have to ask:
What is with the stupid auto-refresh thing on the main page?!!
I know it has been there forever but I’d just like to point out: It is super annoying! I’ll be reading the introduction to an article and the page will just reload without me asking it to. Please, remove the stupid auto-reload mechanism!
Whoar, nice interview with some OMGs
Hey Mike,
You might have written for thousands of startups on TC. Can you share about yourself and TC. Was the path all smooth with TC and you? And why blog and not anything else in particular?
This interview is just an awesome reminder that you’ve grown TC from a labor of love into something that commands the time of powerful CEOs. Bravo Mike!
Well I agree with his long term vision about mobile devices and assuming they can make a better mobile OS than they currently do and is also better than the competition they just might own the market share and keep Apple as a niche (Maybe they can buy Palm OS when that co goes down and starts selling assets).
While I’m a Mac user and Apple fan I still have to respect the big vision MSFT has. They definitely shoot for the fences. Don’t let others in the valley fool you calling msft a bunch a buffoons and all the disrespect they get. There’s some very smart people at MSFT and they are capable of making some pretty great products. Good interview Michael, looking forward to the rest.
bing and natural language dont mix.
good interview, can’t wiat to see the rest of it.
Very well done and included it over at the Medical Quack as well!
Thank you…good and informative interview
Given me lots to check and follow-up…
very good information
Very interesting interview. What he’s saying about their mobile strategy makes sense and could be a pretty major contender in the field. The main issue right now is that the hardware and software isn’t truly appealing to the end consumer. If they could actually get a seamless experience across the mobile software and Windows it would be a lot more appealing. I don’t get why they fell so far behind though, this is clearly an issue that could occur again when you’re working with 3rd party hardware developers and not actually designing the products in-house.
In theory it sounds great, but in order for a seamless experience to occur between hardware and software, there needs to be a ton of communication between software maker and manufacturer.
Apple’s bet is that the best way to do this is to design both yourself. Microsoft’s bet is focus on software, and let manufacturers do their thing. I’m thinking because of their strategy, Apple’s products will always provide a better, more cohesive experience, but not necessarily dominate the market.
Microsoft has proven they can make really good user experiences when they design both hardware and software (Xbox, Zune), but Ballmer is right about the greater possibility of market dominance when you’re providing software to several products from several manufacturers.
Sadly for us though, they’re sacrificing the quality of the user experience for market dominance. We lose in this regard.
Interesting interview, though I’m surprised that he neglected to mention DubLi, which is – to my understanding anyway – one of the fastest growing companies in the US.
DubLi – who?
This is great. Looking forward to the sequel. I wish you would do more of these type of interviews.
Love the sound of “3 screens and the cloud”. Thanks for the great interview.
Agreed. I’m going to
stealuse that in a presentation next week.Thanks, very interesting interview
maybe Microsoft and Steve Balmar should focus on making a good web browser. They make web designers’ jobs very hard.
Really?
I think you missed out the word ‘incompetent’ before ‘web designers’.
No, he spelled that right, Internet Explorer (6,7,8) are the worst browsers in the world, worst JavaScript performance, worst web standards compliance.
Comments don´t work? I guess you guys want to talk to Ballmer again
The most fascinating thing for me was how naturally it’s for Ballmer think big. It’s amazing to see a person who is so used to manage something that big, and so he talks about it so casually.
this is something in Microsoft DNA that you have to admire.
I have heard that he says he loves his company. I believe he surely does
This interview is terrific. Looking forward to the rest.
The single wide angle (HD) camera sitting motionless on the desk is very effective and much appreciated. No cutaways, no pans, no distractions and excellent coverage of Balmer’s facial expressions and body language.
He mentions Linux 3 times, even without talking about device such as Android.
Taken together with the shoutout in the shareholders’ competition report he obviously sees us as more of a threat than Apple. A tacit sign of respect.
First they ignore you…
I really liked this interview and would the full length specially to view with my “geek” friends that have been pro Microsoft some been computer programmers them self. His answer on the “microsoft phone” and his very correct on what he said. It is (I guess) easier to have your software available for I think any company to use on their phones then sticking with making your own hardware, etc. Not that Rim has not done very well, it has and will keep doing better), but Rim is more open then Apple. Don’t get me wrong I have an iPhone 3G (love it) but I know how windows mobile can do some things better and hopefully with new versions it will do them. Heck it wasn’t until today that iphone users will be able to MMS!! Still I would like to see atleast one mobile device that was in stainless or scratch less black with on the bottom on chrome letter the words “Microsoft on it” and have it unlocked so anybody can buy it. If people can pay over $400 for a nokia they could pay it for the Microsoft phone.
Ballmer sniffs too much here… kinda reminds me of a Seinfeld episode… (maybe Arrington wore that same hideous sweater doing the interview)
@Arrington: Did Ballmer use the bathroom?
So by Ballmer’s own definition, Zune, WinMo, X-Box, Plays-for-Sure, Microsoft TV settop boxes and Windows Media PCs are all niche product failures? Outside of Windows and Office, everything MS has done has been a niche, according to Ballmer’s own definition.
God you are such a troll. Niche != failure. It just means there are bigger fish to fry out there. And yes, all those products are in a niche market, some of them very unsuccessful in their particular niche. Stop crying. It invalidates anything you have to say.
Who’s crying? I’m laughing. Balmer thinks he has the mobile market all figured out yet his strategy is clearly not working. That means the strategy is faulty or the product is faulty or both. Their mobile profits are negligible and their market share is consistently going the wrong direction. Meanwhile Ballmer always acts like WinMo is being used by dozens of cellphone makers on hundreds of millions of cell phones but in reality, HTC makes 80% of WinMo phones and they sold less than 20 million licenses last year. Yes, smart phones are going from niche market to mega-market status and there is a good chance MS will simply be a bit player.
Man this was a great interview, respect.
I second that…
Steve is a very nice man, but the only thing We can credit him is that he is using Microsoft’s money to open or tumble down some doors… They are working in too many different projects at the same time and fighting to much people, wait for the next Microsoft branded phone, it will be Playforsure all over again, selling manufacturers a version of WinMo and keeping some features for their own mobile. Microsoft should sit down and sincere itself about what kind of company they want to be on the market: A software company or a Hardware company, the smarter thing is to spin off the hardware company into another big M company, could be Danger, could be the Xbox, whatever, but stabbing its partners with promises of a better software for their mobile phone and at the same time creating a mobile phone. They have a real Apple-Rim-Google-Sony problem that need to be fixed ASAP.
ballmer has definitely improved… this was one of the rare interviews where he didn’t say anything stupid and embarrassed microsoft…
DubLi – who?
What is a one-one-one interview?
It’s all good folks, nothing to see here, move on:
http://bit.ly/a...l-vs-msft-10yrs
That’s not entirely fair. Since 2003, Micosoft has paid out over $5 per share in dividends, while Apple has paid none.
When was the last time Ballmer got anything right. Actually when he does it will be the first time. He lives to copy what others do.
Mike,
When are you guys going to build a techcrunch studio in the office? You guys are doing enough interviews there that it would be the logical next step. How do you expect someone to syndicate your interviews on TV when there are TV wires and coffee cups in the background.
Great interview. Wide range of topics covered in just 13 minutes – awesome!
Michael, next time please sit down to the person’s eye level. Unless you are attempting some psychological pressure tactics!
Developers.
I believe iPhone vs Windows Mobile is a false comparison. Every single mobile device vendor will likely have unit sales in that ‘niche’ range anyway.
Besides, mobile operating systems are going to be free and app stores will be web based. Apple appears to be fully embracing the mobile web (minus flash lol). So they are not exclusively “vertical” from a consumer perspective.
The action will be in the web services which will be available across the board.
Microsoft has only one product strategy. Wait for others to pave the road and then follow. They are the most non-innovative company in their space and with all that cash and employee talent, they should be doing far more than they have so far.