Chief Executive Steve Ballmer is betting on one of Microsoft Corp.’s busiest years ever to keep the company relevant in a new age of mobile technology.
On Monday, Microsoft formally introduced new smartphones that will use a revamped version of the company’s mobile-phone operating software.
That software, Windows Phone 8, follows last week’s release of the latest version of Microsoft’s flagship Windows operating system, which was refashioned with touch-screen devices in mind.
Also in the works or already on the market are new Microsoft server software, the Surface tablet—the company’s first-ever homegrown computing device—and an update to Microsoft’s Office bundle of document and spreadsheet programs.
Microsoft was once king of the technology market, with its personal-computer software, but as computing has shifted to mobile devices, the Redmond, Wash., company has struggled to adapt. Microsoft currently has less than a 3% share of the world-wide smartphone market, according to research firm Gartner Inc. In recent years, its share price hasn’t kept pace with the stock market’s gains, and rivals like Apple Inc. have overtaken it in market value.
In an interview in San Francisco Monday, the 56-year-old Mr. Ballmer discussed the initial reception for Windows 8, how Microsoft can play catch-up in the mobile market and the company’s changing mission in an evolving market. Edited excerpts:
WSJ: You’ve barely made a dent in a smartphone market dominated by Android and Apple. What will it take to budge your market share in smartphones?
Mr. Ballmer: The number one thing it takes is a great product. You’ll find things on Windows phones that you won’t find on iPhone or Android, which isn’t enough, but it’s fantastic. Number two, people actually have to be able to see them, touch them and feel them. In the U.S., you can go into an AT&T store or a Verizon store and [Windows phones are] well presented, the salespeople know what they’re talking about. Number three, we have to tell the story in our own voice. We have not done Windows-phone advertising for awhile. You’ll see us get out and do that.
WSJ: Is Microsoft interested in making its own smartphone, the way the company has made its first computing device, the Surface tablet?
Mr. Ballmer: We’re quite happy this holiday going to market hard with Nokia, Samsung and HTC. Whether we had a plan to do something different or we didn’t have a plan, I wouldn’t comment in any dimension.
WSJ: Microsoft is talking more about how its products—Windows personal computers and phones, Xbox and Office, for example—work well together. Why is that important?
Mr. Ballmer: It’s an obvious value proposition: If you’re one of the hundreds of millions of people who buy a Windows PC, it’s going to make everything so much easier for those people with Windows phones in the way we integrate the same account sign up, file storage, playlist sharing and gaming. We also have a high-volume device in Windows PCs, and that ought to help in the places where we have lower volume.
WSJ: How has the public reception been for Windows 8 and the Surface in the first few days?
Mr. Ballmer: Numerically there’s not really much that’s interesting to report. If you were to call the retailers, they would say, ‘Hey, off to a very good start.’ We’re out of stock a lot of places on touch [screen] machines. I was at a dinner in San Francisco last week, and I brought out this beautiful, very thin [touch-screen] laptop, and they said, ‘Wow, I never thought touch could be valuable and important in a laptop.’
WSJ: Would you prefer Apple’s business model, in which it controls the hardware and the software?
Mr. Ballmer: We like our model, as we are evolving it. In every category Apple competes, it’s the low-volume player, except in tablets. In the PC market, obviously the advantage of diversity has mattered since 90-something percent of PCs that get sold are Windows PCs. We’ll see what winds up mattering in tablets.
WSJ: Microsoft co-founder Bill Gates’s mission for the company famously was a “computer on every desk and in every home.” What is your mission for Microsoft today and the next generation?
Mr. Ballmer: We talk internally about enabling people and businesses throughout the world to realize their full potential. Whether that’s sexy or not, putting you in control of your world, and letting you do things you weren’t able to do before, that’s what we’re about for people and for businesses.
WSJ: How is Microsoft changing to reach that mission?
Mr. Ballmer: You really do see all of Microsoft well integrated into Windows 8 and Windows Phone. This is really quite remarkable. You buy a Surface, it’s all of Microsoft. You’ve got Office, Skype, it’s all right there. We’re focused on devices, with their integrated services, and we’ve got three of them primarily: [Windows] Phone, Xbox and Windows. Those are the vessels in which we should pour our value.
WSJ: You’ve said before that you want to stay CEO until your youngest child graduates from high school in a few years. Is that still the plan?
Mr. Ballmer: [Laughs] I said that many years ago. I’m excited to be able to lead Microsoft at this fantastic time. I love my job. I’m happy doing what I’m doing, I’m energized. I will serve as long and no longer as both the board wants me, and I feel like I’m adding value and/or until somebody better should come in and take over.