STEVE BALLMER WAS ONSTAGE AT the Saturday Night Live studio in New York City. He was relaxed, taking off his tie to fit microphones for a product announcement he was making later that morning; with his slight paunch and rumpled shirt, he might have been the late SNL comedian John Belushi. Ballmer, 51, was joking around with his handlers while men with headsets tinkered with equipment and sound.
And why wouldn't he be happy? Microsoft stock had hit yearly highs in anticipation of the splashy launches of Vista, its new Windows operating system, and Office 2007, its revamped applications suite. The six-month rise alone added $2.
9 billion to his net worth, for a total of $12.7 billion in Microsoft stock.
Even with the uptick, Microsoft stock has been flat for five years running, a far cry from the $60 it commanded during the tech boom.
The open-source movement, free Internet-based applications, Google's dominance in paid search, Apple's dominance in music and the Justice Department have all been thorns in Microsoft's side. Yet few on Wall Street underestimate Ballmer when it comes to competition least of all Harvard pal Jim Cramer of TheStreet.com.
"No one could lead this next leg up for Microsoft as well as Steve," Cramer says with his typical, hyperverbal exuberance. "Tenacity, loyalty, rigor and honesty all rolled into one great guy."
Ballmer grew up outside Detroit, the son of a Ford accountant and a homemaker.
His intellect was recognized early he won a scholarship to prep school and went on to Harvard, where he shared a dorm with Bill Gates. After a stint in marketing at Procter Gamble, Ballmer started graduate school at Stanford University, then joined the drop-out club in 1980, when Microsoft had $12.5 million in sales.
Gates, who never finished at Harvard, passed the CEO reins to his college buddy in 2000.
The word "intense" was invented for Ballmer, who met with us in a green room that had a paper sign with his name taped to the door. While he was at first warm and engaging, a question about security features shifted his mood.
His eyes, soft when he smiles, grew dark. The usually boisterous Ballmer became unexpectedly quiet and soon exited the room without saying goodbye. Still, he had a lot to say to SmartMoney senior writer Dyan Machan before he did.
If Apple is cool and edgy, Microsoft is...
Leadership, responsibility and innovation. There are points on the spectrum between boring and edgy. In politics, the guy who wins isn't boring or edgy.
We are more centrist. Apple is trying to appeal to the edgy. So your main customer is business.
No. I don't think most individuals are edgy.
Steve Jobs's iPhone announcement stole the thunder from Bill Gates's keynote address at the Consumer Electronics Show.
Do you wish you had the iPhone? No. Apple has put its brand into a new category.
That doesn't mean it's a good product. I wouldn't be surprised if one of our partners came out with a device that looks exactly the same at a lower price in six or seven months [near the time when iPhones will ship]. There's a notion that there's magic with Apple.
IPod is a hot brand not Apple. But Apple is in the home, winning in the very place Microsoft has identified as important to its strategy that is, entertainment. It's a romantic notion that Apple has the lead.
People who build overpriced, underpowered equipment and then market it in an edgy way do not have a formula for broad success. In the home there are PCs; Apple has no presence. There are videogame machines; Apple has no presence.
TVs: Apple has no presence; Microsoft has some presence. Music: Apple has a very large presence [via the iPod]; Microsoft has an interesting presence in the high-end market. You mean the Zune?
Please. We don't kid ourselves. We won't come out our first Christmas and take over.
There will be a phase two and three. But at the end of the day, entertainment devices will be a very good business for us.
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