Microsoft CEO Steve Ballmer gives more color commentary

Microsoft CEO Steve Ballmer, known for his tendency to make interesting remarks, recently delivered some stinging words of criticism on competitor Apple, which he says charges users $500 extra "for a logo".  Now Ballmer is back on the record, delivering more commentary and there are even more nuggets in this recent interview with BusinessWeek editor Stephen Adler at the McGraw-Hill media conference.

Ballmer critiqued Apple's iPhone versus Microsoft's “touch” offerings in Windows Mobile 6.5, stating, "Windows Mobile 6.5 has touch on it. The way Apple does touch drives cost. They way they do it on the iPhone is not an inexpensive component. We’ll do it in a way that you can afford to do it on most phones."

On Apple's spending he comments, "There are plenty of areas where we spend less than the competition. Apple, for instance, spends much more (proportionally) on marketing than we do."

Yet, he also had some words of praise here and there for his competitor, stating, "No doubt that Apple does a nice job in video and music services," and later noting that the new Microsoft stores pay some homage to Apple; "Apple actually sells about half of all Apple machines through its stores or online."

Still, his comments clearly convey that he believes Microsoft is the superior competitor, not only in the OS and PC industry, but in the gaming, search, and cell phone industries as well, where Microsoft has yet to obtain a dominant market share.

Ballmer laid some criticism on Yahoo and the state of innovation in the search business in general, stating, "We had to start essentially from scratch about 6 years ago. Essential thesis: Most of the innovation is still come in search. Search hasn’t changed much in the last 5 years, 10 years. It’s gotten somewhat better, but at the end of the day you search to do something, you don’t search to find links to web pages.”

“We think there’s a lot of innovation yet to come. We’ve learned that cost of just getting into the game - the table stakes - is a lot higher than we realized in R&D, capex. Google (GOOG) is making that investment, Yahoo can’t, we are."

He says that he would be pleased with even minor search share growth stating, "If we can just get 15 or 20% in the next few years, that’s a big step up."

Kumo, Microsoft's upcoming successor to Live Search was hinted at, but few details were dropped by Ballmer.

For those wondering on a Yahoo-Microsoft partnership retry, they're left guessing as Ballmer played his cards close to his chest, stating,

Principles first: Whether or not there’s a partnership to be had with Yahoo, we think our own innovation… it’s not about Yahoo’s technology. It’s really about getting the pooled volume, because you actually can improve your product faster if you have more users. If you have more advertisers, you can improve the product as well. There are returns to scale. And putting the scale together is valuable.

With that as context, we’re largely on the same strategy, with or without a partnership with Yahoo. I’ve talked with Carol briefly, over the phone. I’m sure when it’s appropriate, we’ll have a chance to sit down and talk. I’ve known her for years. She’s straightforward and friendly and when she’s ready, we’ll have that type of discussion. Whether a deal gets done or not, who knows. People at our two companies talk all the time.

A final note and one of the more interesting items in the interview when the interviewer queried "Whither Zune?" referring to Microsoft's MP3 player offering, which, while full-featured, has struggled to gain market share.  Ballmer after much previous praise for some of Microsoft's other struggling products like Live Search actually seems reticent for the first time in the interview, responding, "We’re going to keep going I won’t say full steam ahead, because that implies acceleration of investment, but we’re going to sustain our investment. We like it and the future may be the software/ecosystem on other devices."

"People Don't Respect Confidentiality in This Industry" -- Sony Computer Entertainment of America President and CEO Jack Tretton

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