Ballmer live at D: It's Bing

CARLSBAD, Calif.--Microsoft CEO Steve Ballmer kicked off his speech Thursday talking about the economy, though he also plans to show off Microsoft's revamped search engine within minutes.

In a speech at D: All Things Digital, Ballmer was asked by moderator Walt Mossberg to discuss the economy and how long the downturn will last. Ballmer said that he didn't expect the the economic collapse to be a 50-year-thing, but it won't turn around in three months either. (Thanks for narrowing that down)

"People generally agree this is a different recession," Ballmer said. "To think that things would be back in a year seems naive to me."

Had the economy not tanked, Ballmer said the company's research and sales and marketing would have continued to improve.

"You'll do less new," he said, in today's economy.

Update 8:20 a.m. PT: The talk is turning to search. Ballmer says Microsoft is willing to "upgrade" its talent when necessary.

"We're obviously where we are in search, " he said. "We want to do better, no question." 8:22 a.m. PT: More on search.

"It takes persistence," Ballmer siad. "We certainly flailed with Windows before we got it right."

Now showing video on the introduction of search. Jokes about their naming plans and failed Yahoo bid.

And it's... BING.

"We wanted something that unambiguously said search," Ballmer said, explaining why Microsoft decided to rebrand Live Search.

8:30 a.m. PT: Ballmer now talking about why Bing. He said the company wanted something that was short, could be used as a verb and didn't have "negative or unusual" connotations.

He put the renaming in context.

"This is a very important step," Ballmer said. "It doesn't substitute for innovation."

Yusuf Mehdi comes on stage to demo Bing.

Ballmer interrupts to position how far Microsoft has come.

"There's no way to just change the whole game in one step," he said. "There's a lot of unmet needs in this category."

8:35 a.m. PT: Demo showing some of the key features. For example, search identifies best match, sometimes hiding other results when there is one clear match that someone is looking for.

Also includes customer service phone numbers when you search for a company like Amazon.com or Microsoft itself.

8:40 a.m. PT: Now showing the main interface of Bing--it's left hand navigation and breaking down of searches by categories. It's a mix of human and computer categorization, Microsoft said.

On the video search site, when you hover over a thumbnail result it starts playing right from the thumbnail.

8:45 a.m. PT: On to product search. Mehdi howing how it includes user and professional reviews gathered from a variety of sites.

Travel search gets integration with the Farecast site Microsoft bought. Farecast helps predict whether current rates and fares will go up or down.

Mossberg hits on one of the questions I raised about all the integration of content from other sites directly into Bing.

"How about all these people that expect to make money off their Web sites," Mossberg asks.

"Were not trying to get in the way of copyright holders," Ballmer said. "We're not trying to live off other people's work. We are just trying to make a good product."

Ballmer notes some of different ways content gets there. Some is licensed he said, other is what can be crawled "under copyright law."

"We license content to be in here," Ballmer said. "That's a way to do it."

8:45 a.m. PT: Mossberg asks Ballmer what makes him think this will do the trick. Ballmer says that phrasing implies things will change overnight, which they won't.

"My timeframe is 'lots of years'" Ballmer said.

Mossberg noted that Ask had an improved engine at one time that gained share after a relaunch, but the gains faded.

"Ask was not consistent," Ballmer said. "They didn't keep pounding and pounding."

8:55 a.m. PT: So how much is Microsoft spending on ads?

"We'll have a big budget," Ballmer said. "It was big enough that I had to gulp when I approved it," he said, adding that a gulp in a $60 billion company is a big thing.

8:57 a.m. PT: The talk is shifting to smartphones.

Ballmer, not surprisingly, tries to paint the PC as the more important mobile devices.

"Most wireless data goes over PCs," he said. "It doesn't go over phones."

That said, Ballmer agreed that "smartphones are going to increase like crazy."

He said that 500 million smartphones a year are going to be sold over time. "I want to sell a very significant percentage of all of those through our partners," he said. "That is very important financially to us, strategically to us."

8:59 a.m. PT: The talk turns to Netbooks.

Walt Mossberg notes that the research the conference organizers did shows most people don't plan to buy a Netbook even when the economy improves. Ballmer says that has more to do with "fuzziness" around the Netbook brand. He said the figure would be a lot higher if the question asked how many people plan to by a notebook computer.

9:01 a.m. PT: Windows 7 is "on track" for holiday season.

Mossberg asked about enterprise adoption. Would Windows 7 be faster than Vista?

"Vista was faster than XP, ironically," Ballmer said. "Windows 7 has the potential to be faster still than Vista (in the enterprise)"

9:04 a.m. PT: On to questions. The first one comes from a venture capitalist that sees the new Office "ribbon" user interface as a productivity drain.

Ballmer said that "any time you make any change in the user experience of any thing you are going to have people" that don't like it.

"When they change the (Wall Street) Journal, I always hate it for a while," Ballmer said. "Software has that same characteristic."

9:05 a.m. PT: Next question is on search. User asks whether if he is searching for a "Hilton" in "Paris" he gets the result he wants or, perhaps some other result would come up.

(I'll do that search and let you know what happens).

9:07 a.m. PT: Esther Dyson asks about Microsoft's healthcare business.

Ballmer said that the company is investing in several areas, including business intelligence that can merge together several different electronic health records.

That's important, Ballmer said, because it is unlikely that even as records go digital that people will have just one place where all their health data is stored. "You are going to have several records," Ballmer said.

9:04 a.m. PT: A question on Netbooks and Windows 7. Ballmer says computer makers will be able to use Windows XP as well as many versions of Windows 7.

Have you met with Yahoo recently?

"I think there's a lot that can make sense in terms of a search partnership, not an acquisition," Ballmer said. "Whether such a thing will happen I don't know."

As for a meeting, Ballmer noted that Carol Bartz left a message for Ballmer in a book that the D makeup artist had people sign.

"The makeup couldn't fix me if it tried," Bartz wrote, according to Ballmer.

9:14 a.m. PT: Ballmer's done.