Apple 2.0

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Steve Ballmer on the iPad: The transcript

July 30, 2010: 7:11 AM ET

"We'll talk about about slates and tablets and blah, blah, blah, blah."

Ballmer at the financial analysts meeting. Image: Microsoft

No, those aren't the notes of a reporter who couldn't keep up. That "blah, blah, blah, blah" -- taken from the official transcript of Microsoft's (MSFT) annual financial analysts meeting Thursday -- is how Microsoft CEO Steve Balmer introduced what he said was one of the top issues on his mind: the competitive threat of Apple's (AAPL) iPad.

Press accounts of the meeting captured the key quotes:

  • "They [Apple] sold certainly more than I'd like them to sell"
  • "We've got everything on our side if we do things really right."
  • "Some of you will say, well, when? When? And I say, As soon as they're ready."
  • "It is job one urgency around here. Nobody is sleeping at the switch."
  • "We're coming full guns. The operating system is called Windows."

But to get the full flavor of the train wreck that is Steve Ballmer in 2010 -- a salesman whose only answer to technological change seems to be the operating system he inherited from Bill Gates -- you might want to hear the quotes in context. The webcast of his performance is available here. We've taken the 12 iPad-related paragraphs from the transcript and pasted them below:

Slide: Microsoft Corp.

STEVE BALLMER: Now, we've got some other competitive actions coming back, and we'll talk about slates and tablets and blah, blah, blah, blah....

Today, kind of I'd say one of the top issues on my mind, let alone on your minds, one of the top issues on my mind, is, hey, there is a category that we've had Windows on for actually a long time.  We've had Windows 7 on, tablets and slate machines now for a number of years, and Apple has done an interesting job of putting together a synthesis and putting a product out, and in which they've -- they sold certainly more than I'd like them to sell, let me just be clear about that.  We think about that.  We think about that in competitive sense.  And for us, then, the job is to say, Okay, we have a lot of IP, we have a lot of good software in this area, we've done a lot of work on ink and touch and everything else -- we have got to make things happen.  Just like we had to make things happen on netbooks, we've got to make things happen with Windows 7 on slates.  And we are in the process of doing that as we speak.  We're working with our hardware partners, we're tuning Windows 7 to new slate hardware designs that they're bringing them to market.  And, yeah, you're going to get a lot of cacophony.  There will be people who do things with other operating systems.  But we've got the application base, we've got the user familiarity.  We've got everything on our side if we do things really right.

We'll get a boost sometime after the new year when Intel brings its new Oak Trail processor to market.  Oak Trail is designed to be lower power.  Lower power is good in a lot of ways.  It leads to longer battery life, no fan, lower kind of noise levels, a lot of less weight -- a lot of things that people like.  And as focused as we are on this category, our partners are also focused in on delivering the systems and the chips that will enable kind of our architecture to continue and our software product to continue to move on.

So, we think about these devices and I don't think there really is one size that fits all.  I don't think everybody wants a slate.  I've been to too many meetings with journalists who'd spend the first 10 minutes of the meeting setting up their iPad to look like a laptop.

Laptops actually are well designed for a lot of things.  I notice they are all light.  In fact, if you look around this room, they all weigh zero pounds, because they're just sitting on the table, you are not holding them and you don't set them up when you want to type, and they prop up -- they have good attributes.  But some people are going to want that form factor.  Some people are going to want probably a screen that they take with them and maybe they throw it back into the keyboard.  Some people are going to want a device that is screen and keyboard that spins around for inking purposes.  Some people are going to want things very light or very cheap or very expensive or very powerful.  All of those things are going to be important, and we've got a push right now -- right now -- with our hardware partners.

Some of you will say, well, when? When?  And I say, As soon as they're ready.  They'll be shipping as soon as they are ready.  And it is job one urgency around here.  Nobody is sleeping at the switch.  And so we are working with those partners, not just to deliver something, but to deliver products that people really want to go buy...

From the Q&A:

SARAH FRIAR: Sarah Friar from Goldman Sachs.  I really appreciate the format and I like the questions on the board, and I think you have gone a long way to answering a lot of them.  But I know you have been bombarded all day with questions about tablets and the iPad, and I still don't feel we're hearing a clear articulation of what is Microsoft's strategy to address that impact.  So, is it a third way, a new operating system, that will go to that?  Are you going to support our architectures different? You did the architectural license a few weeks back.  I mean, it feels like right now you're not completely clear, which is why we're not hearing that message.  Or I just want to give you another chance to maybe give a succinct, "Here's our response."

STEVE BALLMER: No, that's actually helpful.  I would have said I thought we were completely clear.  We're coming full guns.  The operating system is called Windows.  No -- there's -- let me be unambiguous.  A new Windows Phone for screen sizes that, let me just say, are, you know, sort of bigger than three or four inches -- the answer is Windows Phone.  We are in the game.  We're all in the game today with Intel architecture machines.  We've got improvements coming from Intel.  We're driving forward.  We're unambiguous about that.  Now, where we'll go and what's going to matter -- I said also in my remarks that in no way will we allow hardware to be the impediment.  We will embrace what we need to embrace over time in terms of hardware evolution.

But you say to me are we going to see slate?  Yes. What processor are they going to have?  They are going to have an Intel architecture processor at least in any foreseeable future.  Are they going to run Windows?  Yeah.  Will it be tuned?  Yes!  And we are going to sell like crazy.  We are going to market like crazy.  We have devices that will run more applications, that have as much content, that have anything you want on the planet.  And we have an ecosystem of developers that know how to write applications for that thing.  Believe me, as I think everybody knows, you can buy two PCs for the price of one iPad -- two netbooks today for the price of one iPad.  So, people are sitting there over-celebrating bomb costs and blah, blah, blah.  We and Intel can get our job done and know how to make money.  There's good money for everybody in the ecosystem to go make.  I talked about power.  We've got work we have to do with hardware partners, with Intel.  There's certainly some work to be done there.  And over time where we go is where we go.  But at least in the timeframe that which anybody does these models, for example, let's go.  Let's go and we'll be in market as soon as we can with new devices, whether that's, you know, really, really soon or just really pretty soon.  I'm going to wait until I have the device that I want to hand you and tell you to go use, or a collection of devices.  I think that would be the appropriate time to say it is time. But it ain't a long time from now.  Pardon my English...

On the netbook, nor the slate, if it's two weeks one way or the other, or it's a month, I mean, let's not speculate, let's merely say when you get your Windows 7 machine, it will print.  Let's just start with that.  I mean some people actually like to print every now and then.  Ours will print.  I'm not trying to say that other guys aren't doing good work.  I'm not saying that.  We've got to ‑‑ come on, every day.  Every day you come to work you have to prove yourself, prove yourself, prove yourself.  We'll prove ourselves. ...

I relish the competition.  I relish holding up those couple of machines today that I wanted to hand you.  It's not today.  I'll relish doing it tomorrow.  Bring on ‑‑ particularly if with the application base, with the tools that we have, with the user understanding and momentum and everything going on, we can't compete with ‑‑ particularly whatever the weird collection of Android machines is going to look like, shame on us.

Apple is Apple.  They're always a little tougher to compete with.  They're a really good competitor, and tend to be a really high-priced competitor.  People worried a little bit about our bottom costs.  They've got a lot of margin in those devices, which creates a lot of room in which to operate.  Okay.  We've competed with Apple before.  I talked about that.

We've been competing with Macs, and I notice in this audience you get one profile for the 93 percent of people almost who agree with us every day about laptops.  We're going to have things that should be interesting to them.  That doesn't mean it's not going to be exciting.  That doesn't mean you're not going to have to pay attention to shareholders.  It certainly means we've got to pay attention.  But, at the end of the day kind of what makes life kind of interesting, kind of fun, and you're going to see very interesting things.

See also:

[Follow Philip Elmer-DeWitt on Twitter @philiped]

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About This Author
Philip Elmer-Dewitt
Philip Elmer-DeWitt
Editor, Apple 2.0, Fortune

Philip Elmer-DeWitt has been following Apple since 1982, first for Time Magazine, and now on the Web for Fortune.com.

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