Tenacity and Patience

With regard to the advertising market, Ballmer said that while Microsoft does not like being in third spot in any market, "I think we have shown we have the tenacity and patience and innovation to succeed," he said. "People said we wouldnt succeed in the browser market, with Windows, or against Novell. I think we have shown that we have the innovation and patience to succeed here as well," he said. Ballmer also did not totally discount IBM as a competitive threat, especially with its services-based business model, but noted that others like Oracle have the same business model as Microsoft, which is outselling both Oracle and IBM on the database front, he said. Asked about Google and the threat it poses, Ballmer said it is one of the two companies ahead of it in the advertising revenue front, so that does indeed make them a competitor. "The question I asked around this is whether we have done everything we need to do to embrace the advertising business model and provide the tools that drive this," he said, adding that Microsoft has an incredible amount of focus in this space as it is key to the future of other Microsoft businesses. The way advertising got bought and sold will be fundamentally different going forward. Microsoft will create its own services like Windows Live, enter into partnerships with others, and do acquisitions to help it bootstrap the advertising market, Ballmer said. To read more about Windows Live for developers, click here. While Microsofts online environment is where people spend a lot of time, that does not mean that environment is where they spend the most, he said, adding that its Hotmail, Instant Messaging and MSN assets have a lot of traction, particularly outside of the United States. "But we are still hard at work on our own services, but with the user in control. Windows Live will allow a customized, personalized view, with Microsoft creating an ecosystem around search that would allow the user to be in control," Ballmer said. Next Page: Embracing change.