Ballmer: Current Woes Won't Halt Tech, Microsoft - Page 2

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Ballmer also outlined his thoughts on Microsoft's push into another hot area of technology -- virtualization.

While discussing competition with market leader VMware and others in the field, Ballmer said the technology has been very expensive to date and that Microsoft sees an opportunity to "democratize" it with lower pricing.

"We've had a great reception," he said, noting the recent release of Microsoft's Hyper-V hypervisor.

"If you want virtualization on 80 percent of servers, you better not charge three times the cost of the servers," he said to laughs from the crowd. "In many ways, VMware has taken a perfectly good approach, but it's not going to lead to a high percentage of servers. The guy who's the market leader should recognize that, and you've seen VMware try to respond."

Ballmer said less than 5 percent of servers use virtualization, though a much higher percentage could benefit from it. In addition to price, he said virtualization's acceptance is being held back because it requires different management than the rest of the datacenter.

Victory over Apple, RIM in smartphones?

Ballmer also described another industry in which he believed some of the high-flying players weren't maximizing their opportunities.

In the world of smartphones, Ballmer said BlackBerry maker Research in Motion and Apple, with its iPhone, could make lots of money, but he claimed their business models limit their potential growth.

"It's easier when the software is more coupled with the hardware like with the BlackBerry and iPhone," he said. "Google plays the game more like we do and Nokia went from ... proprietary to open source."

Ballmer said the next five to ten years will see potentially be a billion smartphone devices in the market. In that environment, "software will trump the guys who are more proprietary," because mobile operating systems like Windows Mobile and Google's new Android will be able to run on more devices.

"We have, ironically, the most mature platform and over 65 vendors building devices" based on Windows Mobile software, Ballmer said.

Asked about Apple's (NASDAQ: AAPL) growing popularity and if it was a threat in the enterprise, Ballmer said it shouldn't be if Microsoft and its many partners, like Dell, HP and others, do their job right.

"If that happens," he said, "it's hard to see a reason Apple can gain any kind of footprint in the enterprise."