Newsmaker: Microsoft: We're in 'fighting shape'

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Gates: Is it a better competitor once they stick ads in? That's the thing that's so goofy, I don't get it.

Actually, that was one of the few announcements in our industry that was sort of a fraud that actually was unmasked by the press; the first ever was that Sun-Google thing where people were saying, well, what the hell is this?

Ballmer: You could say we've gotten into fighting shape by fighting a worse competitor, i.e., a tougher competitor, true free versus ad-funded.

What about Google?
Ballmer: What's the expression? "To a man with a hammer, everything looks like a nail?" If you know how to sell advertising, everything is going to look like an advertising problem. I think people like to say the same thing about us. We know how to collect money, charge for software, so everything has got to--that's why in answer to your question I was very precise. There will be things where subscriptions make the most sense, there will be things where advertising makes the most sense, and there will be times you just want to own the damn thing.

One thing I will say, we have a big advertising business today. We're over a billion bucks in advertising, and we're going to grow the hell out of our advertising business, and we're going to grow the hell out of our packaged business, and--oh, by the way, subscriptions is a relatively small thing. We're going to have a big subscription business, too.

So we need to have all three muscles or we are vulnerable, but nobody else is even trying to have all three muscles.

How do you grow the advertising business, though?
Ballmer: It takes you awhile. First of all, advertising isn't all about search. Search is a good vehicle for advertising, but there are other good vehicles for advertising. We basically have held share over the last couple of years. Some other guys have gained a little share, but we've basically been relatively flat on share and growing nicely with the market.

How do you grow? You have exciting experiences that people want to participate in, whether those are communication or search or content.

Search is bad today. The average search takes five minutes. It doesn't really understand what's local versus what's not local.

--Gates

We're going to continue to build out our experiences, and frankly, I think we can get smarter and smarter about how we monetize--smarter in two senses, smarter about picking advertising content that people want to see, as opposed to just the advertiser wants to see. I think there's a lot of work to do there, and I think we can be smarter about making our online experiences even more immersive than they are today, where people want to stay in them for a longer period of time, and the longer they spend, the more opportunity we have to deliver that relevant advertising.

Are there any ideas out there you're thinking of for search to actually make it more interesting and attractive?
Gates: Well, search is bad today. The average search takes five minutes. It doesn't really understand what's local versus what's not local. You know, you type in "pizza" it's going to tell you about someplace 1,000 miles away. It doesn't understand the context of are you trying to get advice for using the product or buying a product--Are you an expert? Do you want the historical data? Do you want the most recent data?--all of these things that can be done.

Ballmer: Half the searches don't give you an answer that you wanted anyway.

Gates: And so search is not personalized right now, and we've been making some advances. We've been driving our relevance up and up and up, and we have this way of really slotting in third-party expertise and letting you do some programmatic things against search.

In the months ahead, we'll be chronicling some of the business model changes, some of the software breakthroughs that we're going to have there.

We've got to get music in cars, music on phones, music throughout the house.

--Gates

One of the things you are talking about at CES is music, and obviously you guys for a long time have said choice, big ecosystem will win out eventually. For the time being, Apple has got one family of players and one music store, but they seem to be cranking out stuff pretty fast, and consumers still seem to be going there. What do you think you guys and your partners have to do to change that?
Gates: Oh, we've got to get music in cars, music on phones, music throughout the house.

Ballmer: We do need a more consistent experience. That doesn't mean it's bad to have a variety of devices. I think that's great. But there are some things we need to make sure are more consistently delivered across the portable devices.

Let's face it, when it comes to actually using it on the PC, our stuff is still the most popular stuff out there. It's not true in the portable device space, and I think we have to do some stuff to simplify the experience across the portable device and the PC, and that's an important part of what we need to do. And we give credit--Apple has done some things right, and it's worked for them.

Do you guys need to go further into the hardware? I mean, obviously you don't generally get into the actual making, Xboxes aside, but could you do more reference designs?
Ballmer: We do need to have greater simplicity in the way the devices work with the PC, and we'll work with our partners on that in a variety of ways, including where it's appropriate for reference designs.

More Newsmakers

[rcrusoe]

Because they don't take American Express

IMO, anytime someone mentions their competition it says to me
that they consider them a serious competitor.

Sounds like Open Office and Google are keeping folks awake at
night in Redmond.

[David Arbogast]

WHAT

>>anytime someone mentions their competition it says to me that they consider them a serious competitor

Did you just mention Microsoft?? Then you must consider them to be serious competition! Watch out!

Hey... when an interviewer asks questions, you answer. Just how much competition exists for Office? What are they going to compare themselves to? WordPerfect 5.2 for DOS ?!?

I think it was an informative interview. They are obviously jazzed about XBox 360 and it sounds like they've put in far more effort developing a plan for competing with Google than most people on this site would ever give them credit for. Good questions. Good answers. Thanks, CNet.

[Jake Leone]

Microsoft bows to Chai knees censors, joins Chai knees in Murder Inc.

This is article is all about what Microsoft says its agenda is. Microsoft's real agenda is money, and they don't care how many people have to die in order to get that money.

Microsoft recently destroyed a blogger's site (completely deleted and banished) because he had useful information about corruption in Chai nah. They did this because the Chai knees state is worth billions of $$$ to Microsoft.

The only reason why Microsoft exists is because people have given their lives to preserve the Constitution of the United States.

But the hedonists at the top of Microsoft don't care about human rights.

Frankly, those who deny FRED OHM to others deserve it not for themselves. Banish these hedonists to Chai nah.

Microsoft is actively destroying Fred Ohm of the press in Chai nah. Microsoft is actively allowing unchecked corruption to continue, and loving it. The Chai Knees government kills and imprisons all who point out any governmental corruption.

There is no check an balance in Chai Knees government. The fat cats at the top can do anything they want.

Microsoft is now a full partner in Murder Incorporated.

[Jonathan]

Actually from where I?m sitting...

Microsoft is about as weak as they have ever been. Lets see. Off the top of me head...

-360's launch was hardly spectacular with key titles still being held up along with, depending on who you talk to, massive, or not so, hardware issues.

-More Windows XP security holes that are hitting mainstream TV news.

-Next generation OS that is "on track" for a fall release. Never mind the fact that MS can't make up their mind if they really are going to move their graphics display subsystem out of the kernel into user mode. No one can get a straight answer from them for an OS that should be going gold in aprox 7 months.

-All the while a fairly large number of users and companies haven't upgraded from 9x or 2K to MS's flagship XP OS 4 years after it?s shipped.

I'm sure there are more complaints and criticisms, and no doubt some fanboi is going to pick apart my critical views of the company but the simple fact is Microsoft is putting on a brave face right now. (Like they were expected to do anything else.) Microsoft is taking some body blows in just about every department. Frankly even with a spectacular launch of Vista, I don?t believe it for a second because of the nature of this overhaul, I think they are in for some serious challenges in the next couple years and frankly I don't believe MS is nimble enough nor "wise" enough to counter those challenges. Microsoft has crafted Vista around today?s challenges. Microsoft is incapable of seeing 5 steps infront of them. Look at how Mr. Gates ?discovered? the internet at the 11th hour for Windows 95. Even though Vista is expected to be highly modular and more nimble when it comes to underlying upgrades I really don?t expect it to cope with future challenges. Frankly Microsoft is ?stuck?, for lack of a better term, with Vista for the foreseeable future and as competitors such as Google, Linux, Apple, Yahoo, etc start to expand into new areas I don?t think Microsoft is going to be able to adabt in a timely manner. Time will tell though.

[FisherKingKQJ]

prepaid

That reminds me,they didn't mention the prepaid and local this time. I heard Diners Card and Amex are the next Visa and MasterCard. :) :) :)

[Blito]

Meanwhile, after a busy day crushing Chinese dissidents...

I think Bill Gates should take on more of a consulting role for the rest of the industry. he's too industrial. This way he won't be trying to do everything himself. He is very smart and likable obviously, and with a great business foundation in beautiful Washington State where allot of the industry is.
They still don?t seem to be in the ?online? mode ala Google. Online advertising is better and MS still wants to charge upfront even after they said they were moving into the ?Live? era.

Basically the best software model today is SOA (Sevices Orientated Architecture) and they aint using it. Hello???