However, Ballmer held back on much of the details. Microsoft is planning to release big news on those topics at its Professional Developers Conference, which is scheduled to take place on Oct. 27 in Los Angeles.
Vista Adoption and Windows 7
David Smith, Gartner's lead analyst on Web 2.0 and cloud computing, commented on Windows Vista's apparent slow adoption rate. For instance, after two years of product availability, Vista accounts for about 10 percent of large-enterprise integrations.
Ballmer denied that Vista's adoption rate has been slow. Vista has had a faster adoption rate than Windows XP after two years' time, on both the consumer and enterprise fronts, he said. Microsoft decided to enhance security in Vista at the expense of compatibility but adoption is ramping up now, he added.
Gartner, for its part, is predicting that Vista use will grow to 50 percent by 2010, according to Smith.
Ballmer commented on the question of skipping Vista for Windows 7, as some polls have suggested that many IT admins will try to do just that.
"We hope you'll deploy Vista and it'll make sense to you, but if not, we're all prepared for you to deploy Windows 7," Ballmer said, explaining that Windows 7 will be compatible with Vista.
Gartner predicts that the Windows 7 product will appear in the second half of 2009, contradicting Microsoft officials, who have pegged product release for early 2010.
Ballmer didn't disclose a product release date. However, a preproduction version of Windows 7 will be available to PDC attendees.
Neil MacDonald, Gartner's lead analyst on Microsoft, suggested that the PDC-released version will just be "a minor release." Ballmer disputed that term. Microsoft has already worked on Windows 7 for two and a half years, he said, so it'll be more than that.
"It's a release that I think will do a lot of what people want us to do on performance, cleanup," Ballmer said of the upcoming Windows 7 pre-beta. "In very nice ways on the UI, we are going to pioneer some of the things in terms of the way touch and multitouch is used in the user interface. We've improved what I would call the shell or the basic tools that people have to manage programs and information."
Ballmer further explained what will be exciting about the Windows 7 release.
"Essentially, the way I'd characterize it -- it's Windows Vista, a lot better," he said. "Windows Vista is good. Windows 7 is Windows Vista with cleanup and user interface; improvements in performance."
Companies won't likely skip Vista because "a lot of our customers will upgrade roughly a third or a quarter of their computers" per year, Ballmer explained.
Future Microsoft operating systems beyond Windows 7 likely will stick with the same Vista code base. Ballmer explained that the much praised Windows Server 2008 contains the exact code base that is at the core of Vista, and Windows 7 uses that core too.
The main challenge for Microsoft in the future will be providing support for Intel's new processors. Microsoft will have to redesign its operating systems and processes to take advantage of "many-core" CPU hardware. Microsoft can't depend on tweaks to existing CPUs because "we're not going to get more quad speed" from chipsets, Ballmer explained.
On the desktop virtualization front, Microsoft expects to ship a product in January.
"We'll ship, as part of our Desktop Optimization Pack, beginning of next year, technology that lets you run the hypervisor and virtual machines on the client," Ballmer said.
Competition With Google
Ballmer denied that Google was Microsoft's most significant competition. Microsoft's main challenges are the open source business model and getting good at advertising for the consumer market, he explained.
MacDonald echoed the point. He said that the conventional wisdom is wrong on the Google vs. Microsoft competition. It's not so much about competing apps in the Internet cloud. Rather, the important point is that Microsoft is trying to challenge Google's online ad search business.
A Gartner analyst asked if Microsoft would now try to acquire Yahoo since its stock has recently plummeted.
"I don't know what price might get the job done….They didn't want to sell at $33 [per share]," Ballmer said. "They want to remain independent….Perhaps there'll be opportunities to partner on search [with Yahoo]."
An analyst claimed that Google Apps "is taking the consumerization away from you" and providing features that are better than what Microsoft offers, but Ballmer denied it.
"Nobody uses those things," Ballmer said of Google Apps. "You can't even put a footnote in a document."
He noted that Microsoft Office is growing 30 percent in the consumer market through its Home and Student Editions. People try Google Apps but they don't use them -- except maybe students when collaborating on class projects, Ballmer said.
"Today, they have very primitive stuff," Ballmer said of Google. "We get more competitive pressure from OpenOffice and StarOffice."
Cloud Computing Plans
Ballmer would not explain the "Microsoft Cloud OS" term -- a phrase he himself has leaked. Details will be announced at the PDC. He did say, though, that Microsoft's cloud OS has been under development for three years.
Microsoft's applications will not have to be rewritten to run in the cloud, "but we'll encourage developers to do something to make apps more manageable at a higher level," Ballmer said.
Microsoft's cloud computing vision does not entail running all of the world's online computing and storage facilities.
"It's a transformation for our business, but I don't think we'll be buying all of the world's data servers," he said. Instead, Microsoft will have to "service-enable our partners and customers."
Ballmer spoke at the Gartner ITxpo 2008 event, which was held this week in Orlando, Fla. To see the Gartner "Mastermind Interview Keynote" with Ballmer, click here. The video feed requires Windows Media Player or Real Player.
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