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Ballmer keeps close watch on Apple and Android

During a midyear update with analysts, Microsoft CEO says the company is focused on competitors Apple and Linux, with Google's mobile operating system close behind.

Microsoft CEO Steve Ballmer knows not to blink.

On the desktop front, Microsoft is not discounting the approximately 1 percent market share gain Apple has garnered in the past year, bolstering its position as the No. 4 player in operating systems behind Linux, said Microsoft CEO Steve Ballmer, during a midyear update with analysts Tuesday.

"We're very focused on both Apple as a competitor and Linux as a competitor," Ballmer said.

And concerns regarding Google's open-source mobile operating system Android are not far behind.

"I think the dynamics with Linux is changing somewhat," Ballmer said. "I assume we'll see Android-based, Linux-based laptops, in addition to phones, and we'll see Google more and more as a competitor in the desktop operating system business than we ever have before."

Last month, for example, a report surfaced that raised the question of whether the Android operating system had recently been successfully ported over to a Netbook.

"The seams between what is a phone operating system and a PC operating system will change, so we have ramped our investment in the client operating system," Ballmer said.

And on the mobile operating system front, Windows Mobile ranks third, with Apple's iPhone fourth and Google's Android currently a blip on the radar, but nonetheless a concern for the Redmond giant, Ballmer said.

"The truth of the matter is all the consumer market mojo is with Apple and to a lesser extent BlackBerry. And yet, the real market momentum with operators and the real market momentum with device manufacturers seems to primarily be with Windows Mobile and Android," Ballmer said.

He added he sees competition in the mobile arena occurring on two fronts: one is selling mobile-related software independently from the hardware, which may explain the software giant's reported interest in launching a Windows Mobile online applications store. The other front is a combination of software, hardware, and services bundled together, similar to Apple's iPhone or Research In Motion's popular BlackBerry.