Ballmer: Microsoft sees Google as desktop OS rival

Microsoft is preparing to square up to Google as a rival in the desktop operating-system market, chief executive Steve Ballmer said in an analyst call on Tuesday.

Ballmer said Microsoft assumed it would see Android-based laptops as well as mobile phones using Google's operating system. Although Android started its life as a mobile platform, it has already been unofficially ported onto some netbooks, and chipset manufacturers such as Freescale are busy adding Android support for their ARM-based netbook processors.

"We'll see Google more as a competitor in the desktop operating-system business than we ever have before," Ballmer said. "The seams between what's a phone operating system and a PC operating system will change, and so we have ramped the investment in the [Windows] client operating system."

Microsoft is currently developing Windows 7, the successor to Vista. At the moment, the company supplies the ageing Windows XP at relatively low cost to its netbook manufacturer partners for pre-installation — Ballmer said Windows holds 90 percent of that market — but intends to replace XP with Windows 7 when the upcoming operating system appears at the end of 2009 or the start of next year.

"As you see us announce our strategy for Windows 7 on the netbook, we're going to have a lot more opportunities to think through how we get the customer to want to trade up from a lower-priced offering to a higher-priced offering, and we're certainly experimenting with that," Ballmer said.

Ballmer said there would continue to be a netbook edition of Windows "at the current Windows XP price point", but added that Microsoft would give manufacturers and users "a chance to trade up from there". Microsoft confirmed at the start of February that there would be a Windows 7 Starter edition, aimed specifically at the netbook market.

The Microsoft chief attacked Google's mobile strategy for Android, claiming it was unsustainable for the web giant to offer its operating system to manufacturers for free.

"We have a positive price on our software," Ballmer said. "Google does not. I don't know how it is a sustainable thing to not have a positive price. And don't tell me you think it's search, because even when they win the Android business, they have to pay to have their search installed on that phone, just as we do, that's a competitive bid that the operators mandate. So we're going with a real price, with real investment, with a professional approach, and a positive price on software-based model."

Ballmer also scotched rumours that Microsoft is working on an own-branded handset, saying it was "not our strategy to build our own phone", but rather to sell the Windows Mobile operating system to manufacturers. He added that Windows Mobile 7 — version 6.5 was announced only this month — is "coming next year".

He also said Office 14, the successor to Office 2007, "will not [come out] this year".

Although he described Microsoft Office as a "superior offer", Ballmer noted that OpenOffice.org, the popular open-source productivity suite, "doesn't go away" as a competitor. "We get challenges particularly in education accounts from Open Office," he said.