He recently introduced two key products designed to strengthen Microsoft's control of personal computers: the Vista operating system and the Microsoft Office 2007 suite of applications.
Strong starts for each helped fuel a 65% profit surge in the just-ended quarter.
Efforts to expand into other fast-growing markets pose big challenges. The Zune music player has made scant inroads against Apple's iPods. The division that includes its Xbox 360 video game console lost $315 million in the quarter. And MSN Search attracts 10% of online searches, according to Nielsen/NetRatings MegaView Search.
Now Ballmer, 51, must chart a course for Microsoft (MSFT) as Chairman Bill Gates prepares to give up his day-to-day role next year. Ballmer says he's confident his investments will pay off over the long term as rivals such as Google take the early lead in emerging businesses on the Internet.
Q: People get passionate when Apple comes out with something new — the iPhone; of course, the iPod. Is that something that you'd want them to feel about Microsoft?
A: It's sort of a funny question. Would I trade 96% of the market for 4% of the market? (Laughter.) I want to have products that appeal to everybody.
Now we'll get a chance to go through this again in phones and music players. There's no chance that the iPhone is going to get any significant market share. No chance. It's a $500 subsidized item. They may make a lot of money. But if you actually take a look at the 1.3 billion phones that get sold, I'd prefer to have our software in 60% or 70% or 80% of them, than I would to have 2% or 3%, which is what Apple might get.
In the case of music, Apple got out early. They were the first to really recognize that you couldn't just think about the device and all the pieces separately. Bravo. Credit that to Steve (Jobs) and Apple. They did a nice job.
But it's not like we're at the end of the line of innovation that's going to come in the way people listen to music, watch videos, etc. I'll bet our ads will be less edgy. But my 85-year-old uncle probably will never own an iPod, and I hope we'll get him to own a Zune.
Q: Would you agree with Steve Jobs that music companies should get rid of the digital rights management that makes it hard to copy songs?
A: I will not either agree or disagree. Every recording artist, in my opinion, is entitled to make their own decision. And I don't think Apple or Microsoft should be imposing its will on folks, because people will have different economic interests, different things to think about. We're a company that makes tools, and we're going to enable people to use those tools and make their own judgments as individual artists.
Q: When can we look forward to a Zune phone?
A: It's not a concept you'll ever get from us. We're in the Windows Mobile business. We wouldn't define our phone experience just by music. A phone is really a general purpose device. You want to make telephone calls, you want to get and receive messages, text, e-mail, whatever your preference is. The phone really is kind of a general purpose device that we need to have clean and easy to use.Read more at http://www.usatoday.com/money/companies/management/2007-04-29-ballmer-ceo-forum-usat_N.htm