On July 9th, I did an onstage interview with Microsoft CEO, Steve Ballmer, at Microsoft’s annual Worldwide Partner Conference. The venue was Toronto’s Air Canada Centre – home of the Toronto Maple Leafs NHL hockey team and Raptors NBA basketball team.
Watching Ballmer prepare for the interview backstage was a revelation. He paces the corridors, practicing his lines in his booming stage voice. That big voice is Ballmer’s signature characteristic. Think ESPN basketball announcer Dick Vitale or a public address announcer at a professional boxing match. LOUD! BIG! DRAMAAAAAATTTTTIC!
At one point Ballmer stopped to look at a photo of some vintage Maple Leaf players. Ballmer smiled and pumped his fist. “MY MAN – FRANKIE MAHOVLICH!!!”
As recounted here, Ballmer’s big voice came in handy 90 minutes later when his lav mike failed at the end of his onstage presentation. Ballmer boomed on without the mike, and 16,000 people had no trouble hearing him.
Immediately after the onstage interview, Ballmer and I retreated to the green room and had a quieter conversation.
FORBES: Big day for you. How does this rank with other big days in Microsoft’s history?
STEVE BALLMER: It’s up there. Microsoft’s founding [in 1975] is at the top. That was the day that somebody said software is going to be a real business. There were software companies in 1975 — I mean, not many — but they mostly did apps. But Microsoft’s founding was when somebody said, hey, software is a basis for business. That’s what Bill Gates and Paul Allen did. That turns out to have been an amazingly correct and important thing, correct and important for Microsoft and correct and important for many, many entrepreneurs who have come since.
FORBES: I remember that Gates had to defend that idea that software could be a profitable business. Remember his February 1976 letter he sent the Homebrew Computer Club telling them to stop stealing software?
BALLMER: And that was just defending software amongst the cognoscenti. I remember when I told my parents I was going to drop out of school to go join a software company for personal computers, and my dad asked what software was. My mother asked why would a person want a computer. I mean, they were both interesting points at the time.
FORBES: You were talking about big days in the history of Microsoft.
BALLMER: The launch of the IBM PC in 1981 was another big day for us. That’s when the notion of the microprocessor as the engine of computing got legitimized. It wasn’t the first PC but it was the major step.
Then the launch of Windows 95 that was big for everybody, big for Microsoft, big for the industry. That’s when the PC hit the mainstream market, when the total size of the computer market grew up. People had a hard time learning DOS and everything else that came before it.
FORBES: Aren’t you forgetting the Macintosh in 1984?
BALLMER: A great computer and all that, but computing was not a mainstream phenomenon until the 1990s. I mean, really it’s hard to think that’s only 17 years ago.
FORBES: So you’re saying that today’s announcements about Windows 8 are really in the top four of Microsoft big days.
BALLMER: With Windows 8 we think we usher in a new round, a round of mobility, a round of natural interface. The cloud makes computing in a sense more seamless, more transparent, kind of more every day, more every minute than ever before. I think that’s very powerful.
FORBES: Back in 1975 Bill Gates’ vision was a computer on every desktop. If you were to rewrite that today, what would the mission be?
BALLMER: We actually did do this a few years back. We talk about empowering people and businesses to realize their potential. We think of computing devices as tools — tools to entertain you, tools to amaze you, tools to let you be amazing.
But if we were trying to write it the original way, I guess it would be a computer on every desk, every pocket, every watch, every data center, every everything. But in a sense technology is a tool of sort of individual choice, individual creativity, individual empowerment, individual access, and mobility sort of just brings that more to the fold. My kids will never understand that it used to be kind of hard to access and find things, and know what the world knows and see what the world sees. Yet it becomes easier and easier every day.
FORBES: In early 2000, Microsoft’s market value went over $500 billion. Do you think this has distorted people’s expectations for Microsoft? I’m thinking of the recent Vanity Fair article that said Microsoft’s last ten years have been a “lost decade.”
BALLMER: It’s not been a lost decade for me! I mean, look, ultimately progress is measured sort of through the eyes of our users. More than our investors or our P&L or anything else, it’s through the eyes of our users. We have 1.3 billion people using PCs today. There was a time in the ’90s when we were sure there would never be 100 million PCs sold a year. Now there will be 375 million sold this year alone. So, is it a lost decade?
The stock market has always had its own meter. Sometimes it’s ahead of itself, sometimes it’s behind itself. A broken watch is right twice a day. Ultimately all Microsoft can do is focus in on doing exciting products, which with Windows 8, with Office 15, with Surface, with the new PPI technology, with what we’re doing with Skype, where we’re going with Bing and Windows Phone and Xbox. We think we’ve got the most exciting stuff we’ve ever had. Number two is how do we do from a profitability standpoint. If we deliver exciting products and we make more money, eventually that will translate into rewards for our shareholders.
FORBES: Has Microsoft’s historic success made it vulnerable to disruption? Put another way, how do you find that sweet spot between building on Microsoft’s legacy, which still has momentum, and figuring out the next wave — when and where to jump in?
STEVE BALLMER: The truth of the matter is it’s hard to invent anything. It’s hard to invent a new thing, and it’s just as hard to invent another new thing. I think we’ve been pretty successful, but it’s hard. It is hard. I think we’ve done a pretty good job of it. We not only did Windows, we did Office. We not only did Windows and Office, we actually were the company that really drove PC chips into the data center. That was us! Seventy-five percent of all the computers that get installed in data centers these days are actually Windows Servers. It’s quite phenomenal, if I don’t mind saying so myself. Now we are driving into the living room through Xbox.
Will Microsoft be disrupted? I don’t know. So far we’ve done a pretty good job of avoiding it. It doesn’t mean we’ve done a perfect job, doesn’t mean there aren’t things of which I’d say, gosh, I wish we had invented that or we were first to this or that or the other thing. But nonetheless we’ve done a pretty amazing job.
The one thing that I think separates Microsoft from a lot of other people is we make bold bets. We’re persistent about them, but we make them. A lot of people won’t make a bold bet. A bold bet doesn’t assure you of winning, but if you make no bold bets you can’t continue to succeed. Our industry doesn’t allow you to rest on your laurels forever. I mean, you can milk any great idea. Any idea that turns out to be truly great can be harvested for tens of years. On the other hand, if you want to continue to be great, you’ve got to bet on new things, big, bold bets. It’s in our value statement; you go to our website.
And you’ve got to be patient. I think our patience and the fact that we make bold bets is well understood: Xbox, Bing. Our patience with those bets I think is starting to show some real return in terms of great products.
FORBES: Well, Micrsoft’s persistence is legendary. It is often said that Microsoft often stumbles on the first two versions of a product, then nails it on version three.
STEVE BALLMER: I don’t know if that was a compliment or not, but nonetheless most most big companies either don’t have the gumption or the resources to make a big bet. We made a big bet on Xbox and I’m glad we did. We made a big bet on Bing, I’m glad we did. Bing hasn’t derived full financial return, but man, we have a product that delivers more relevant results than Google, and is more differentiated for social and for our Facebook partnership, than anything out there.
I love what we’re doing with Windows 8, and it’s a bold bet. We’re reimagining our number one product. That’s cool. But it’s not for the fainthearted. It takes a certain boldness and a certain persistence.
FORBES: Speaking of boldness, is Microsoft becoming a hardware company? Last month you introduced your tablet computer, Surface, and today you introduced the 82-inch collaboration screen as a result of your acquisition of Perceptive Pixel. What’s this hardware stuff all about, Steve? Are you really entering the hardware business, or are you trying to push your hardware partners to get better?
STEVE BALLMER: Well, Microsoft has long had the capability to design, distribute and service hardware. If you look at cloud data centers, only Google runs a bigger cloud infrastructure than we do between Bing and Hotmail and everything we do. People think of Microsoft as a software company, yet we build everything from devices like Xbox and Surface to cloud data centers.
FORBES: Fair enough, but still, building your own tablet computer – Surface – seems like a departure.
BALLMER: With Surface we’re not opening up new ground in terms of having hardware capability. What we wanted to make sure was that no stone is left unturned in terms of really showing Windows 8 in its most innovative form. With Windows 8 you can get a tablet and a PC in a single package, and I think Surface probably proves that as well as anything.
Our goal is not to compete with hardware partners. The bulk of our Windows volume is going to come from our hardware partners. Here at the Worldwide Partner Conference in Toronto, which you graciously helped moderate, you have a chance to really see some of the exciting new designs that our hardware vendors are doing.
FORBES: You’ve been Microsoft CEO for twelve years.
STEVE BALLMER: Twelve and a half, to be precise.
FORBES: Twelve and a half. What’s it been like? How would you say you’ve changed over that period?
STEVE BALLMER: Hard! It’s like raising children. You can think back and say, gosh, I remember when, but every day it doesn’t feel like things are changing as much as they are. In 2000 Internet was just coming. The [U.S. Justice Department’s] legal challenges were in front of us instead of behind us. If anything, people worried that there’d be nobody else around besides Microsoft, but business is different and more competitive than it’s ever been today. The size of the Microsoft has certainly changed. Our revenue has tripled. Xbox didn’t exist in the year 2000, Bing didn’t exist in the year 2000, Skype didn’t exist in the year 2000, just to pick a few.
In the year 2000, people were still saying Microsoft would never be an enterprise company. Now a lot of people wonder whether Microsoft is still a consumer company! I mean, really? But I’ve got to tell you we had no enterprise street cred in the year 2000. We were still trying to prove ourselves to enterprise IT managers.
So, the world has changed completely in the 12 years, and the company’s changed. I’ve had to change and grow in different ways as a leader. You know, we’re more diverse. We’ve always been more diverse than most guys in our business but we’re more diverse than we were in 2000, both in terms of the product set that we have in market, as well as kind of the business revenue streams in front of us.
And it’s been both exciting and challenging and yet you look forward and you say no reason why the next 12 years, for me and my successors, won’t be every bit as challenging, exciting and fun
FORBES: In the 1980s and 1990s, you Bill Gates formed one of the most productive partnerships the American industry has seen. Do you miss Gates? How often do you talk to him now?
BALLMER: Well, yes, I miss him! But he’s been gone — it’s been four years since Bill was full-time at Microsoft, and six years since he announced he wouldn’t be. And things start to change when you announce. So, you could say that Bill’s been gone for half of my tenure as CEO at least.
Now, I was the junior member of the duo until Bill asked me to be CEO in 2000, but I miss him, and yet I’ve grown to have a really good bond with a number of new people, which has also been phenomenal.
Bill’s in a day or two a month, just brainstorming with groups, talking about their plans, ideas for Office and so on. He’s on e-mail pretty regularly, I would say, on Microsoft matters.
FORBES: Does he still come into the office?
BALLMER: A couple days a month. But he’s on e-mail pretty much every day with some ideas And this doesn’t count any of the time he spends as a Microsoft board member. But he’s clearly part-time. We don’t have a dependency in any way, shape or form. We run the business every day. And yet, hey, he is the most incredibly smart guy I’ve ever known, and we work uniquely well together. Sure I miss him.
FORBES: Do you miss Steve Jobs?
STEVE BALLMER: I never worked very closely with Steve Jobs.
FORBES: I mean do you miss him as a force in the industry?
STEVE BALLMER: I don’t …
FORBES: Not a trick question, but I’ll restate it. From the very beginning, Apple and Microsoft have had rivalry. This rivalry has forced Apple and Microsoft to constantly raise each other’s game. So when I look at all of Microsoft’s cool announcements today in Toronto – Windows 8 for PCs, tablets and phones, a new Office that is cloud-based — I see a Microsoft that was forced to improve because of Apple’s tremendous success during the last ten years – and especially last five years – of Steve Jobs’ life.
STEVE BALLMER: The life of Steve Jobs is felt in terms of the good work Apple is still doing. It’s felt in terms of the challenge that it presents to us. How long does that last? I don’t know. Obviously Steve did amazing work, Apple did amazing work, and Microsoft is doing amazing work. It’s always great when you get a lot of people pushing themselves to do better, be better, invent better, better serve, better lead customers in new directions.
FORBES: Last question. My 16-year old son is an Xbox fanatic. He wants to know what you have in the pipeline.
STEVE BALLMER: Well, of course, I couldn’t tell you the stuff that we haven’t announced but he’s going to love Halo 4. [Ballmer switches to his Dick Vitale voice.] HALO 4, BABY!!
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