Ballmer: We need to be more disruptive in search

PALO ALTO, Calif.--While trailing Google badly in search has lots of disadvantages, it also opens some doors, says Steve Ballmer. And, he said, it's time Microsoft starts walking through more of those doors.

"We are going to have to be more disruptive," Microsoft's CEO said in response to a question at the end of a speech at Stanford. He pointed to Live Search Cashback as one example and hinted of changes to come in terms of the search user interface and new types of partnerships with content creators.

Google has the economies of scale and the money to invest in more areas than Microsoft can afford to, he noted.

"We're not just a No. 2 or 3 player," Ballmer said. "The No. 1 player is a lot bigger than us."

Ballmer said Microsoft can't afford to outspend Google in the search business or participate in each facet of the business.

At the same time, he said, Microsoft has less revenue to protect and can afford to take more risks.

"There are some things we have an opportunity to do precisely because we are not the market leader," he said. "We can experiment with new business models. We have less to lose than the market leader does."

Not everything will work, though, he said.

"We'll try some new products that are going to be a disaster," he said, pointing to Microsoft Bob as the canonical example from the company's past. "It wasn't terrible...it flopped miserably, but I am glad we did it."

He was also asked about Yahoo, with which the company had unsuccessful acquisition talks and with which Microsoft has continued to have on-and-off negotiations over some sort of a search partnership.

"I still think there exists an opp to have a better search product by having more customers," Ballmer said. "That may or may not at some time happen. There may or may not be appropriate discussions (happening now). I choose not to comment."