Web 2.0 Summit: Microsoft CEO Steve Ballmer

Microsoft CEO Steve Ballmer takes the stage and, after a few strained references to his infamous “Developers, developers, developers, developers” video, the conversation begins.

“So how’s that Facebook deal working out for you?” conference program chair John Battelle (of Federated Media Publishing) asks. “Are you making money?”

“Rumor has it that we’re not,” Ballmer replies, adding “Mark [Zuckerberg, Facebook CEO] says we’re happy with it, so I guess we’re happy with it.” (See, what’d I tell you: Microsoft’s got itself a hell of deal there.)

Battelle asks about Microsoft’s massive aQuantive acquisition, wondering what its next $6 billion acquisition will be. Ballmer dodges a bit. Battelle circles back: “OK, how about the next $15 billion acquisition?”–referring to Facebook’s supposed valuation.

Ballmer evades again, saying: “E-mail me at Microsoft.com if you think you’ve got something worth buying.”

Moving onward, Battelle recalls Ballmer’s infamous “one-trick pony” description of Google. Is that one-trick pony in search still a one-trick pony?

Well, Ballmer replies, let me tell you what I meant when I said that. (Ah, we need to revisit that one now that Google shares are at $600-plus, do we?) According to Ballmer, everyone is a one-trick pony: Cisco with its routers, etc. Correction, he clarifies: Everyone but Microsoft is a one-trick pony. Microsoft is a two- to three-trick pony.

Is search one of those kids you’d hit on the back of the head and tell to do better? Battelle asks. Uh-oh, Ballmer’s getting his “Developers-developers” face. “Absolutely not,” says Ballmer. “Absolutely not. I would say to our search team ‘Hey, you’re just 3 years old and we’ve got you in there playing basketball with the 12-year-olds. You’re growing up quick, you’re getting better every day, EVERY DAY! And hey, you might not be able to dunk now, but when you’re 6 or 7 or 8, you’re going to dunk, and YOU’RE GOING TO DUNK ON THE OTHER GUY!’ That’s what I’d say.” Laughter and applause all around. A great moment, really.

Battelle: What are you happy about and unhappy about Microsoft?

Ballmer: At end of the day, happy with anything, but everything needs a little bit of improvement. Like asking someone what they think of their kids. Vista and Office 2007 had a phenomenal launch. … There will be more operating system and Office releases. … In enterprise business is going gangbusters. … In advertising and online, in some sense more nascent, but the work is cut out for us. … We’re a relatively small player relative to the leader. … We’ll sell 20 million Windows Mobile devices. … What’s not to like about Halo 3?

Conversation shifts to a demo of Microsoft’s new Popfly mashup tool, a piece of software that allows nonprogrammers to build applications without having to code. “This is designed for some of that end-user ‘programmer’ somebody who doesn’t necessarily have to be a conehead,” says Ballmer.

Battelle asks about the new online personal productivity application suites that have been popping up lately, suites like Google’s. Is Google Docs a good product?

Ballmer: “For our customers? No. If users want to do something they would do in Word or Excel, Word and Excel is the best place to do it.”