Q&Amp;A With Steven Levy: Ballmer Unbound

Microsoft's CEO has always been hard core, whether leading cheers at employee meetings, strategizing to maintain the company's status as the world's biggest software firm or upbraiding analysts for insufficient bullishness on the company he joined in 1980. And according to a deposition in a court case involving Google's brain-raid on Microsoft's top talents, he's still capable of going over the top; the defector telling the tale said Ballmer reacted to the betrayal by tossing a chair and vowing to bury Google's CEO. Ballmer released a statement disputing the account, and left it at that. But in an interview with NEWSWEEK he did speak candidly on a number of issues, including a new business initiative, the tardiness of the next version of Windows and, oh yes, Google.

Newsweek: What's behind the new small- and midsize-business initiative Microsoft just announced?
Ballmer: We wanted to deepen our involvement with the small and midmarket businesses on the theory that they were not being well served by the IT market in general. We bought Great Plains and Navision, and not only had to integrate them with Microsoft, we had to integrate them with each other. Now we'll have one product name--Dynamics--and one approach in terms of role-based software.

How does role-based software work?
We have a set of personae [fictional users with different needs] that we use to drive innovation. There's over 50 of these across the company, and they're a key part of how we develop a product. For our midmarket server we're driving from the persona of what we call the IT generalist. There's also an order-entry-clerk persona.

Which persona do you personally relate to?
Ha! We call it the BDM [Business Decision Maker]. The business manager, basically. [But] we don't build products for single personas. A product like Windows has to appeal to many different personae.

Microsoft's stock price has been flat and you've taken issue with analysts who aren't predicting big gains. What are they missing?
People really underappreciate the amount of innovation that will affect the hundreds of millions of information workers out there. It's up to us not only to tell the story but to deliver the products. Last but not least we have big market shares in communications, mail and instant messaging, and a small market share in search. There's sure a big opportunity there.

If you were a young Procter & Gamble manager looking to move to a tech company--as you were before joining Microsoft--where do you think you would go right now?
Well, there's only three exciting technology companies, right now, aren't there?

I know you're counting Microsoft as one.
Some people'd [also] look at Apple and Google. Today it's us and some others, but we work hard to make sure that this is a place that continues to appeal to the top of the top, and I think we're on the top of their list.

Has Microsoft learned anything from Google?
I wouldn't put them necessarily high on the list of the folks we've learned from. I've learned more from studying open source and Linux--how to involve your customers much more deeply in the development and feedback process.

Your big new version of Windows, Vista, is very late and has been scaled back in scope. Has that been a crisis for Microsoft?
The original vision was to re-engineer a very broad set of key subsystems in Windows, all at the same time. It was ambitious beyond the state of the art. We won't do that again. We'll be ambitious within the state of the art. We scaled back, but we still have one of the most exciting releases in Windows history. If you'd asked me 13, 14 months ago whether we were having a crisis, I don't know what I would've said to you. But we certainly have gotten a key lesson, and we've improved.

How long will you continue as CEO of Microsoft?
Of course, the board of directors has a lot to say about that. My goal would be to be here certainly through the time my youngest son gets through high school. That's another 12 years.

In your mid-60s, will you still be bouncing around and shouting onstage like we've seen on those Internet videos?
My mid-60s? Man, I'm only 49, don't rush me! Geez! If I work 12 more years, I'd be 61. If I can't do the job with the energy, with the excitement, with the passion that it requires, I'd take myself out of the job.

Microsoft is really well known for is its persistence. Is that a function of its size and wealth or the values of its leaders?
We were persistent before we were big. Our persistence has been a functioning of the character and belief of the people who work here. We were persistent with Windows, and we've [been] persistent about Xbox. We're going to be very, very persistent with MSN. Why? Because sometimes you get things right immediately from the start, but sometimes you don't. It's a hallmark of any great innovation-based company to have the same kind of patience and persistence as a start-up does. So we're going to be very persistent, whether it's our business products, Xbox, MSN, or getting the ease of use right. That's what we do.