24/7 Wall St. Exclusive Interview With Steve Ballmer, CEO Of Microsoft

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24/7 Wall St. had a chance to interview Steve Ballmer, CEO of Microsoft (NASDAQ: MSFT) on a few subjects including why some large companies were late to the search business, his view of how the market has traded Microsoft’s stock after the Yahoo! (NASDAQ: YHOO) bid, and what happens to Windows and other software products the company markets when more products are delivered directly over the internet.

24/7:  Why did all the large internet companies fail to see the vast market for search when Google (NASDAQ: GOOG) was just starting to do well five years ago? It seemed to have stepped through a very big door without much resistance.

Mr. Ballmer: Five years ago, search was in its infancy.  Even today, it’s an area that still has a lot of room for innovation.  If you look at the number of companies working on search-related technologies today, you see that it’s actually a lot broader than the narrow definition many apply to it. 

Five or ten years from now, search is going to look a lot different than it does today.  The search user experience that we’re accustomed to today—the white box and ten blue links—is going to evolve.  The ability for search engines to really understand human intent is going to advance.  There are opportunities for innovation in vertical search scenarios—shopping, local search, entertainment, etc.  There are opportunities in business search—Some of the work companies like FAST have been doing in this area is pretty amazing.

This is an area where we’re investing to win over the long-term.  If you look at our progress in just the last couple of years, we’ve really come from nowhere quite quickly, we’re in the game today as an aspirant, and we have a great offering in the latest release of Live Search. 

24/7: The logic of the Microsoft offer to buy Yahoo! seems plain enough. Why does the market seems to reject it by moving Microsoft’s share price down?

Mr. Ballmer: Not really much I can say here, or speculate on the market reaction.  We’ve made the offer, we think it’s a strong offer, and we think it represents very good value to shareholders and customers.

24/7: Can you see a time a decade out where most of Microsoft’s software is delivered over the internet and works remotely from your servers? Does that do any damage to the current model of the software being pre-loaded onto PCs?

Mr. Ballmer: It’s not a zero sum game.  We see a world where software and services combine to provide the best of both worlds—the richness of desktop software with the scale and reach of the Internet. In a software+services world, computation and storage will be done both in the cloud and on the client—whether the client is a PC, a TV, a phone, or another device.  Applications that reside on the client will be updated and managed with the Internet as the hub.  Business models will evolve as well, and if you look across all of these changes, we’re positioned very well for that wave.

24/7 :Thanks

Douglas A. McIntyre