SAN FRANCISCO—Microsoft CEO Steve Ballmer refused to say whether the software company was looking to buy either Yahoo or Facebook, despite much prodding from John Batelle, the co-host of the Web 2.0 Summit here Oct. 18.
But Redmond does expect to acquire about 20 companies—from $50 million to $1 billion—every year for the next five years, including companies that use open-source software, he said.
"We have a great partnership with Facebook on the advertising front. We love Facebook and well see where that takes us," was all that Ballmer would say with regard to a potential acquisition.
Asked if it was making money from the Facebook deal, Ballmer evaded the question by saying the rumor was that it was not. "But we are learning more and more every day and I am delighted about where we are and what we are learning," he said.
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With regards to Yahoo, Ballmer said it was a great company and Microsoft had a good, constructive relationship with it. He also acknowledged that many people assumed that because "the No. 1 player [Google] is so much bigger than No. 2 and 3, it makes sense for a couple of them to join together."
But Microsoft believed in its path of independence "and we really like what we are doing. At some point maybe it [a merger/acquisition] would make sense, but thats not where we are going," he said.
After shelling out $6 billion in cash to buy aQuantive, which owns interactive ad agency Avenue A RazorFish, Ballmer said "there are not many potential acquisitions in the $6 billion to $15 billion range, and on all of those that there are, I will say no comment."
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As expected, Ballmer also announced the public beta release of Popfly, a tool built on Microsoft Silverlight that lets people build and share mashups, gadgets, Web pages and applications.
Asked what he was happy with and what needed improvement at Microsoft, Ballmer said he was happy with everything, but that it all also needed improvement. "We are going gangbusters in the enterprise space, but there is so much there that we havent even touched," he said.
Microsoft had come from nowhere quickly in terms of search, he said, and was a relatively small player in terms of the market leader in that space [Google]. "So in every area, there is a lot of good and a lot of room for improvement," he said.
With regard to his previous description of Google as a one-trick pony, Ballmer said that comment needed to be put in context. Technology companies historically started out in a specific area and then filled out around that.
But Microsoft already had two tricks: it had started out as a desktop company, but was now also a big player in the enterprise space and was trying to be a three- or four-trick pony, unlike Google, which seemed to be wed to one business model and one technology area, Ballmer said.
"But, to become this multiple-trick pony, we have to give our staff the independence to pursue new and strategic areas. And once we find something exciting, we move very quickly," he said.
Turning to Microsoft Office and Office Live, and the threat to these from many of the online competitors, Ballmer said Microsofts job was to deliver productivity.
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Asked what he thought about Google Docs and Spreadsheets, Ballmer said it was a good, simple collaboration tool but could not do what most of its customers used Word and Excel for today.
To achieve Microsofts stated goal of building an advertising business that accounted for 25 percent of its revenue, Ballmer said the company had to do a number of things well: firstly, it had to do search well as the most lucrative advertising came out of search; secondly, it had to be good at community and communications; and, thirdly, it had to have a very strong advertising platform that could deliver across all models.
The ad syndication model would be redefined over the next five years as it was rather narrowly defined today, Ballmer said, adding that most syndication currently involved simple text ads with no guaranteed delivery. "The ad platform has to evolve to give guaranteed delivery and to include the rate card rather than just through syndication," he said.
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