Steve Ballmer on Web 2.0

Steve Ballmer is being interviewed by Walt Mossberg on stage at D5. Dan Farber is blogging the talk over at ZDNet. Here are the Web 2.0 takeaways:

Ballmer is pushing the inter-relatedness of software and Web services. "We staked our ground... on that value proposition." Mossberg is asking Ballmer about Silverlight running on Linux and the Mac, given that theory. Ballmer says, "Some things will run better on Windows. People ought to be able to exploit the local richness if they want to."

Now Ballmer is showing the new "Surface" computer. OK, not Web 2.0... but I think it'd be pretty cool to interact with a Web site on a flat table. It's not a consumer product... you'll see it first in casinos and retail locations like TMobile. Look for it later this year.

The Surface computer will interact with devices (Bluetooth and RFID, I think) so you can easily transfer photos from a camera that has a wireless connection. In retail locations, you can drop your loyalty card on the screen, and it will know who you are and show you deals or help you out in other ways. The TMobile demo is that you can put two devices in the store side-by-side on the table, and it will display the differences between them.

Walt: Let's talk about Google. Why are you losing share in search?

Ballmer: "We are well down the learning curve and we continue to innovate... Our results keep getting better."

Walt: Why are you now in the advertising business?

Ballmer: "All media will be delivered by IP over the next few years."

It's a big opportunity, he says. Ballmer adds that the "killer app" of advertising is search. Microsoft has software and a search engine, now it has an advertising platform too.

Oddly, Ballmer simply will not say the word, "Google." He prefers, "the market leader." Because: "The leader may change." Silly.

Ballmer's example of how Microsoft will innovate in advertising: ads will get smarter. On the Web, the ad will know more about the potential buyers looking at it and the sellers behind it. He's talking about giving both parties more control over what they see, and also (I think) providing software that lets marketers make more user-aware and interactive ads.

On innovation in the search experience: "You ought to expect innovation in the user interface." Like what? Better results from multiword queries, he says. OK... but more, please. If that's all we have to expect, Microsoft search is going to stay in its trailing position.

Will Microsoft sell phones? Ballmer: "No."

Furthermore, "I know I said the same thing about music players..." but phones require an operating system, and Microsoft wants a big share of the 1.2 billion phones that are sold each year. Ballmer thinks the way to reach that goal is to get in via software, not sell hardware.