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SAN FRANCISCO Microsoft (NASDAQ:MSFT) CEO Steve Ballmer pulled no punches in his appearance here at the Web 2.0 Summit Oct. 18. He livened up a relatively controversy-free show by poking fun at Google’s (NASDQ:GOOG) Apps cloud collaboration software, the Android mobile operating system and even Apple’s (NASDAQ:AAPL) iPhone.

Ballmer last spoke here at the Web 2.0 Summit in 2009, just a handful of months after the company launched its Bing search engine to challenge Google. When it launched in May 2009, Bing had about 7 percent search share from when the product was dubbed Microsoft Live Search. Ballmer proudly noted that Bing has risen to grab nearly 15 percent market share today. Google is No. 1 with 65 percent search share.

He added that Microsoft went from the No. 3 U.S. search player to the No. 2 search player in that time. Ballmer was factoring in search market share from Yahoo (NASDAQ:YHOO) whose search engine Bing powers. “Together with Yahoo, we’re between 25 percent and 30 percent market share,” Ballmer correctly noted, adding that this is important not only for market share purposes but because it mean Bing has more data to access.

He also exhorted the audience to try any search they want on Bing and Google. He said Microsoft’s internal tests indicated 70 percent of the time users won’t care what search engine they are using, while 15 percent of the time users will prefer Bing. Google will be the preferred search engine the other 15 percent of the time.

Web 2.0 Summit co-host John Battelle asked Ballmer if search is as important now to Microsoft as it was three years ago, given all the information discovery users are doing on social networks such as Facebook and Google+.

Ballmer replied that the core notion of Bing lies in understanding the world in a variety of different ways geographically, timelines, people, user interests and privacy and that it is of greater importance today than it was then.

Battelle also asked whether Microsoft wants to play big in social; the company currently partners with Facebook and Twitter to index social data on Bing. “Have you decided to punt on social, or are you going to surprise us at some point?” Battelle asked.

Ballmer replied cagily that the word social is as “broad as all get out,” adding that Facebook has come to define social and that Microsoft enjoys working with them. He noted that the 50 million people who use Xbox Live socialize just playing it.

He also pointed out that Skype, which Microsoft just acquired for $8.5 billion, adds significant social connections via voice over IP. “The acquisition of Skype is a big step along that path that is all about connecting you to other people,” Ballmer noted.

mospagebreak title=Ballmer Head-Butts Yahoo

Then the conversation got a little more interesting. Battelle asked Ballmer whether he was glad he didn’t buy Yahoo for $44 billion. Ballmer smiled and said:

You know, times change. Times change. You ask any CEO who might have bought something before the market crashed in 2008… Hallelujah. Putting everything else aside, the market really kind of fell apart. If Yahoo accepted our bid, we would have accepted it, we would have bought the price or whatever and then we would have closed post-Lehman Brothers. Yeah, sometimes… you’re lucky.

Battelle then pivoted the conversation to the cloud, asking Ballmer how Microsoft’s shift to the cloud from its position as the dominant packaged software was going. Ballmer said it’s going quite well and that when it comes to enterprises moving to the cloud for productivity and communications, Microsoft is “winning, winning winning, winning.”  

When Battelle asked who Microsoft is beating, Ballmer replied immediately: “Google.” He added that 98 percent of the time Google Apps is the competitor Microsoft is beating in competition with its Office 365 suite.  He said customers are much more ready to accept applications in the cloud rather than whole platforms in the cloud.

In the so-called platform as a service (PaaS) arena, Ballmer credited Amazon Web Services with getting a nice jump on the rest of the market. However, it will take a lot of years for customers to move their line of business applications to the cloud. Microsoft, with its virtualization technology and private cloud/public cloud, is well-positioned to compete with Amazon, VMware and others in the space, he added.

Turning to the mobile market, Ballmer said Microsoft is working hard with hardware makers to make phones, tablets, convertible computers and other devices based on Windows 8. Microsoft will support touch, natural user interface and speech on Nokia devices. However, Microsoft has no plans to build its own phones or tablets, preferring to “enable hardware innovation,” he said.

The conversation got livelier when Battelle asked Ballmer to sell him on why he should buy a Windows Phone instead of an iPhone. Ballmer said this holiday season there will be attractive Windows Phones and iPhones for consumers, but that consumers may prefer the Windows Phone 7 experience of having Bing search and social contacts front and center on the phone rather than seas of icons and “blah, blah, blah” consumers have to wade through.

The audience laughed. “Bing is there to help you get things done,” Ballmer said, adding that while Apple has done nice things with Siri in its new iPhone 4S, Microsoft has been doing some of the speech-recognition and natural-language processing stuff for years with TellMe. This is only partly true. No other company has combined natural-language processing with context the way Siri has.

Battelle then put the same question to Ballmer, but with an Android smartphone subbing for the iPhone. Ballmer said: “You don’t need to be a computer scientist to use a Windows phone, but I think you do to use an Android phone.”

It will be interesting to see whether Google’s social guru Vic Gundotra, who left Microsoft to join Google because he believed Microsoft didn’t grasp the paradigm shifts to mobile and the cloud, responds during his time here tomorrow.

Until then, Ballmer clearly entertained the audience more than any other speaker at the Web 2.0 Summit through the first two days. 

To read the original eWeek article, click here: Microsoft’s Ballmer Bashes Android, Google Apps, iPhone: Web 2.0 Summit