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Ballmer on the hot seat at Mix

Amid hard-hitting questions from Guy Kawasaki, Microsoft's CEO talks about why Microsoft needs Yahoo and why its battle with Google is a zero-sum game.

LAS VEGAS--At Microsoft's Mix conference here Thursday, CEO Steve Ballmer said online advertising is "the next superbig thing" but admitted that the company is well behind Google.

"Despite the fact you could say we are not where we'd like to be, and we could have gotten started a little bit (earlier)," Ballmer said, "we are very committed. We have a long way to go, and (acquiring) Yahoo seems to be a way to accelerate that."

At the Mix trade show in Las Vegas, venture capitalist Guy Kawasaki skewers Microsoft CEO Steve Ballmer (in a light-hearted manner) with pointed questions and comments about the Yahoo bid, Google competition, EU fines, and Vista struggles. Ina Fried/CNET

Asked by venture capitalist Guy Kawasaki in an onstage question-and-answer forum where things stand on the Yahoo front, Ballmer replied, "We've made an offer," and then he shrugged and paused. "We made an offer. It's out there, baby."

Ballmer said that while Microsoft is trailing Google, it is like the Little Engine that Could.

"I think we have worked really hard to make it clear that we have real commitment, real aspiration, and real tenacity about being a very serious player in the world of search and advertising," Ballmer said. "Advertising on the Internet is a big thing and will be the next superbig thing. There is no question about that. Search is, in some senses, the killer app of advertising."

Asked whether Ballmer had a dartboard with a picture of Sergey Brin and Larry Page on it, Ballmer said he's not very good at darts. But, he said, Google is clearly in his line of vision.

"We have to have a strong position in online search and online advertising," Ballmer said. "In a sense, it's a zero-sum game. There's (a fixed number of) searches per day, and I want a larger number of those searches."

"It may be my last breath at Microsoft, but we are going to be there," Ballmer said. Kawasaki was quite pointed with Ballmer, starting out by asking about Yahoo and imploring him not to throw a chair. (A former Microsoft executive said in a deposition that when he told Ballmer of plans to go to Google, Ballmer threw a chair. Ballmer has denied he ever did such a thing.)

"Don't go monkey on me, either," Kawasaki said, a reference to Ballmer's infamous "Developers, Developers, Developers" speech.

Ballmer grabs Kawasaki's MacBook Air out of an envelope. Ina Fried/CNET

He asked Ballmer whether Apple was like a little chihuahua that Microsoft kicks around. Ballmer didn't take the bait. Kawasaki is a former Apple fellow.

"Apple does a pretty good job," Ballmer said. "I'm not going to take anything away from them. "At the end of the day, we have a much bigger footprint."

Kawasaki alluded to the fact that the Mac is gaining share on Windows.

"The last time I checked, there were still a lot of governments that said we have a very high market share," Ballmer said.

"Like the EU," Kawasaki interjected.

"No comment," Ballmer said.

Kawasaki kept the barbs coming. "What's the deal with Vista? Seriously."

Ballmer noted that it is the second most popular operating system in the world. Kawasaki pointed out that most people don't have a choice and get it when they buy a PC. Ballmer then reached and grabbed Kawasaki's MacBook Air out of an envelope.

"Is this running Vista?" he asked.

Kawasaki said that it wasn't. The two then debated the merits of the machine.

"Don't you want a machine this light?" Kawasaki asked, with Ballmer saying his Toshiba laptop weighs less.

"That thing is missing half the features," Ballmer said, referring to the MacBook. "Where's the DVD drive?"

The two eventually got back to Vista. Ballmer said that while there have been some negative comments from users, Vista has done well for the consumer market.

"I think we'll start to see more uptake in the business market," Ballmer said.

Kawasaki was hard-hitting in his questions, touching on nearly all the software maker's sore spots--regulatory troubles, the resurgence of the Mac and its tough time competing with Google. But the jabs were delivered and taken with a smile, making it one of the most enjoyable sessions I can remember.

The one question Ballmer refused to comment on was his reported interest in the Seattle Supersonics. "I'm not talking about that today," he said.

After performing a remixed "Monkeyboy" dance, Ballmer quipped to the person who asked him to do it, "If your buddy behind you just gave you a buck, I want 50 cents."