Microsoft CEO Looks Ahead at Social, Mobile Plans

Says he was 'lucky' that Yahoo deal fell through

Microsoft CEO Steve Ballmer seemed even more ebullient than usual while onstage Tuesday at the Web 2.0 Summit. He was there to deliver a message, sometimes in sales-pitch mode, sometimes in full-volume holler: Microsoft may be lagging in some key areas, but he isn't giving up.

In mobile, it might seem like Apple's iOS devices and Google's Android have captured the loyalty of both consumers and mobile app developers, but Ballmer said Microsoft would take some of that attention back this holiday season via the launch of the first Windows phones from Nokia. Earlier Windows phones may not have looked as sleek as the competition, but he said the new devices would be "very beautiful."

Why would someone choose a Windows phone over a competing device? Ballmer said that it's designed to put the most relevant information and social updates "front and center," rather than overwhelming you with the "sea of icons" like you see on an iPhone. As for Android, Ballmer said, "You don't need to be a computer scientist to use a Windows phone. I think you do to use an Android phone."

When interviewer John Battelle asked whether Microsoft is interested in getting more involved in the phone manufacturing process, instead of just building the operating software, Ballmer demurred, then when pressed, he laughed and said, "We have been very successful enabling hardware innovation, and we will continue to do so. Thank you for your suggestion."

Ballmer also said that Microsoft had no intentions of following Google into the social networking market. He suggested that Microsoft already offers a number of social tools, like the Xbox Live video gaming network and the recently acquired Skype, but it won't be building a full-fledged Facebook competitor. (Microsoft is a major investor in Facebook.)

"We've picked our play," Ballmer said. "We're adding connectivity to people into our core products."

As for search, another area where Microsoft seems to be chasing Google, Ballmer noted that the company's search engine Bing is now up to 15 percent market share. That's "still small," he said, but asserted that it's pretty good for a product that launched three years ago, and sets the foundation for future growth. He challenged the audience to compare the search results in Google and Bing, arguing that 70 percent of the time they wouldn't see a meaningful difference, 15 percent of the time they'd prefer Google, and 15 percent of the time they'd prefer Bing.

One component of Microsoft's search business is its deal with Yahoo. The company famously tried to acquire Yahoo for $44 billion back in 2008—a high price given Yahoo's declining fortunes and its current market capitalization of $20 billion. Looking back at how the deal fell through, Ballmer said, "Sometimes, you get lucky."

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