Microsoft CEO Steve Ballmer answers questions about his Windows 8 optimism.
Microsoft and CEO Steve Ballmer have a mixed record when it comes to making big strategic bets.
The jury is still out on whether the 2011 acquisitions of Web phone company Skype for $8.5 billion and the fledgling business social network Yammer for $1.5 billion will pay off.
That is not the case with the $6.2 billion acquisition of digital advertising firm aQuantive, which Ballmer masterminded in May 2007 to counter Google's month-earlier purchase of the larger, more-established DoubleClick, for $3.1 billion. Ballmer gambled that aQuantive would help transform Microsoft into an online advertising giant on par with Google.
But in July the company took a $6.2 billion write-down — basically acknowledging the failure of aQuantive.
Meanwhile, Microsoft's online services division, consisting of Bing and MSN, last week posted a $364 million operating loss for the quarter ending Sept. 30. That came on the heels of a $8.1 billion operating loss for the division (including the aQuantive write-down) for the company's 2012 fiscal year, which ended June 30.
Bing has performed so poorly that Microsoft hasn't lived up to its milestone partnership contract with Yahoo under which Bing powers Yahoo Search, according to search expert Danny Sullivan of Search Engine Land. That development, along with Yahoo recently naming former Google executive Marissa Mayer as CEO, sparked speculation that Yahoo may switch alliances to Google after its Microsoft contract expires next year.
Ballmer agreed to answer questions via e-mail about why he's so confident that his latest big bet — on a new Windows 8 operating system which launches Friday — will succeed.
Q: How do you respond to critics who believe you've poured too much cash and expended too much management talent chasing Google's crown jewels — search and search advertising?
A: I think about search as a part of a bigger picture. It's about building systems that learn about us, and the world around us, and help us better connect with and accomplish the things that we want to do. That's the mission we've been pursuing in Bing for the past few years, and we have done a lot of work to integrate Bing across our products.
You can use your voice to search your music and videos on Xbox, or you can locate the nearest gas station on your Windows Phone. Our "Bing it On" campaign makes the point that if you are looking for a great search experience, we are better than the other guys.
Q: What makes you optimistic that the new Windows 8 interface and Surface tablet are destined to win over the hearts and minds of consumers wowed by the iPad?
A: More than 16 million people put Windows 8 preview through its paces during our development process. It is the most tested, reviewed and ready operating system in Microsoft's history. So we feel great about that.
Surface with Windows RT comes with Microsoft Office, a huge value for people who want to work or create. So Windows 8 gives people the power and mobility to effortlessly move between what you want to do and what you need to do – all from one device.
Q: Techies love the Microsoft-Nokia Windows smartphone, but significant market share gains haven't happened. How come?
A: It comes down to a differentiated approach. With Windows Phone 8, we've created a new way to think about smartphones. Our start screen with Live Tiles lets you completely personalize your phone. Our partner support is also stronger than ever. Nokia, HTC, Samsung and Huawei are revealing truly stunning Windows Phones. I'm confident in what we are bringing to market this holiday.
Q: Anything else you'd like to add?
A: Windows is always important to the company. The incredible devices that are coming to market with Windows 8 are just beautiful. They bring together the best of the PC and the tablet. They're great for both work and play. They're incredibly personal and they connect people easily to the services and content they want.
When I show these new devices to people, they are blown away with how the hardware showcases the software, and the software takes advantage of the hardware.