Steve Ballmer: Student Minority Day BAM 2008 – Feb. 8, 2008

STEVE BALLMER: Well, thanks. It is a privilege to have a chance to welcome everybody here today, and everybody here today via webcast. I guess we have folks in about eight different cities. For the first time we have a group joining us from the School of the Future in Philadelphia; a particular welcome to folks joining from that location.

Microsoft Chief Executive Officer Steve Ballmer talks to students about software, the evolution of technology and innovation yet to come during the 17th annual Blacks at Microsoft Minority Student Day in Redmond, Wash, Feb. 8, 2008.

For me this is a very fun event. We’ve been doing this Minority Student Day now for about 17 years, and I still get e-mails, frankly, from folks I had a chance to meet during a variety of these different sessions. Just the opportunity for our company to continue in a variety of ways, including this session, to help get people jazzed up and excited about technology, is really a lot of fun.

I do have to say a lot has changed in 17 years. To me 17 years unfortunately doesn’t sound like very long. To most of you 17 years probably feels like about 100 percent of your life.

And yet you think back — a particularly big day, my oldest son turns 16 tomorrow, so it’s very much on my mind about this period of time. But you think back 17 years, now we say, hey, isn’t it great we can get people excited about technology. And I’ll bet if we go around the room, I think a lot of you are excited about technology I don’t even use, and that’s how much things have changed over this period of time.

Seventeen years ago, most people, most people in the world didn’t know what a PC really was, didn’t know how to use a PC. That’s 17 years ago.

More stunningly perhaps than that even right now, 17 years ago, most people didn’t have a cell phone. I bet that is not an issue in today’s audience.

Seventeen years ago, the level of videogame quality, shall we say, was quite low. I actually can remember the initial videogames very well. When Bill Gates and I were in college we used to play this game called Pong, which we all thought was really cool, and really exciting. That’s even more than 17 years ago. We’ll have a chance to show you — some of you I’m sure have seen some of the work we’re doing with Xbox games these days. The stuff is absolutely amazing in terms of what you can do.

Our theme for today’s event is “The wow starts now and the future starts with you,” and yet if you think about it, just how far things have come, it’s unbelievable. And yet when we say the wow starts now, we really mean it. There’s so much new cool stuff that’s coming in the next six months, the next year, the next three years, five years, 10 years.

You take any perspective that’s relevant in terms of what you’ll be doing with your lives, and technology is just going to continue to evolve and improve and change. And whether you choose to be in the technology business and you want to make this stuff or sell this stuff, or you just say, hey, look, I want to be somebody who uses technology to help me get a better job, to do my job, there will hardly be a job you can do in this country unless you feel literate and comfortable using technology as a fundamental source of information. And it really doesn’t matter what kind of a job people pursue.

And kind of our job around here is to continue to help people get more and more comfortable with technology, to make it easier for people to get comfortable with technology, to make technology more fun, and to help people be more productive in their use of technology.

Microsoft Chief Executive Officer Steve Ballmer gives the keynote address during the 17th annual Blacks at Microsoft Minority Student Day. Local students attended in person, and many more “attended” the event via webcast from locations in New York, Washington, D.C, Philadelphia, Atlanta, Charlotte and Las Colinas. Redmond, Wash. Feb 8, 2007.

We talk about our core skill, our core competence as a company is software, and sometimes people relate to the software, sometimes people relate to the hardware, but the secret sauce, the magic ingredient, the thing that really changes the way this stuff works is the underlying software in these machines that make them simpler to understand, that make it so you can speak to your computer, your computer understands what you want and what you do and the like.

Every year here we ask our top technical people to go off for a period of time on something we call our quest exercise. It’s tell us how the world is going to be different, just tell us how the world is going to be different through technology in the next 10 years, how is it going to be different to watch TV.

If you think about TV watching, TV watching is really still about as it’s been for a number of years. Let me ask a small question: Do we have anybody here in the audience who uses Xbox Live, anybody who’s played on our Xbox Live system? Some.

You know, when you use Xbox Live, you and your friends are just sitting there, and you can have a little headset on, and you can be anyplace you are in the world or your own basement, your friend’s basement, you’re talking. If you’re my son, you’re probably shooting at something on Xbox Live, because that kind of tends to be his favorite game. But you’re just it’s sort of like this one big group interactive experience.

It’s not the way it is when you watch TV. When you watch TV, you’re sitting there in your room, and somebody is in another room, and somebody is in another house, and your friends are all over the place. It’s not as combined and collaborative and social and interactive as anything that’s going on in videogames.

And so we talk about how will TV viewing change. I’ll be sitting there watching my favorite golfer, Tiger Woods, putting, and he’ll make a putt, and I’ll yell at my TV, “Hey Bill, did you see Tiger make that putt?” My TV will wake up; Bill, Bill, who does he usually mean when he says Bill? Ah, Bill Gates. Ah, does Bill want to be bugged? Well, yeah, for Steve he’ll take an interruption. Where is he? Oh, he’s at his beach house: “Hey, Bill, did you see Tiger make that putt?” It might actually come through like my real voice, but just for effect there. You know, we can change the way this kind of stuff works in pretty interesting and pretty dramatic ways.

You know, the computer today, people still want to talk to it. And when you want to talk to a computer, you just don’t want it to recognize your voice, you want it to do what you want it to do. “Get me ready for my trip to Boston.” I was in Boston this week. “Get me ready for my trip to Boston.” I don’t want it to just be able to hear that and put up on a screen, “Get me ready for my trip to Boston.” I actually want it to do what my assistant can do. Okay, he’s going to Boston: who’s he seeing, what’s he doing there, what kind of information does he like to get himself prepared, he needs customer reports, he needs this, that — I’m a little extra energized today — he needs all of this stuff, just get it ready for him, just like a human being. Software can really make that happen.

You know, think about whiteboards and what will happen with whiteboards and blackboards, and the ability to touch and share.

The fact that we can do this webcast is fantastic. The fact that I don’t really have a screen up here where I can look and see every one of the other audiences the way I can see, and I can see who I’m resonating with, and who looks kind of bored here in the room, and I can’t, my eyes aren’t good enough, but I want to know what all the kids with the purple shirts have on their shirts, because there’s a bunch of you in the audience here today, but if anybody is wearing orange shirts in any other city I can’t see those. I should just be able to see everybody up on the big screen like we’re all really in one room. That’s the world that we’re moving to.

You know, I look out in the audience, and it’s like every other audience. Most people just have paper and pencil that’s in their hands. People don’t bring a computer; it’s not a part of the way people take notes. It’s too hard, it’s too complicated, it’s too expensive, it’s too this, it’s too that. We’ve got a lot of work to do in the way things evolve and the way things change.

Healthcare. Healthcare. Healthcare is the biggest thing in everybody’s — you know, if you ask, what is the biggest thing in almost every society, it’s how do you get people fed, how do you get them health, and how do you get them education. And it turns out that health and education are probably two of the areas in which computers have played the smallest role in changing things.

Think about the way you learn on your computer. You learn, but the teachers aren’t really using the computers to teach. At the School of the Future that we’re working with the folks in Philadelphia on, that’s one of the themes, how do we keep pushing computers to actually help people learn and understand new things. How do we get it so people really do submit their homework electronically, how do you get it so people have all their notes in one place.

I’m sure it’s not true for anybody kind of in this meeting, but at least I know at the Ballmer family sometimes we lose our notes. They’re not as organized as maybe they ought to be; electronically organizing, capturing these notes, everything just becomes a lot simpler.

So, I continue to see great things to do with technology. And whether you work at a place like Microsoft and you want to build this stuff or sell this stuff, or whether you’re just sort of a member of society using this stuff, it’s going to be more fun, more interesting, and more compelling, and really important to the kinds of careers that people want to launch.

Since you’re here at Microsoft, I’ll also have a chance to talk to you a little bit about what’s going on here. You know, for me it’s just unbelievable to see all this progress and change, and yet I look at the next 12 months just in terms of the things that we’re producing, and I’m in awe of what the folks who work at Microsoft are able to create.

Some of the kinds of stuff we do I can get really jazzed about, but it’s hard to get most students jazzed about. We’ve got all this new software that’s going to help people build applications better, run the back-end computers for the biggest corporations in the world, but we also have a lot of great consumer products. We have fantastic new Xbox games: Halo 3, Mass Effect, Call of Duty, Rock Band; some of the other stuff that’s coming in Xbox and Xbox Live.

We’ve got new phone designs coming to market with our software, really designed not just for business users but for students and consumer users.

We have a lot of people now moving to this next generation of TV experience, particularly in places served by AT&T.

In the last year, we brought out new versions of Windows and Office. It’s kind of fun to see my 13-year old. He really wanted to try the new version of Windows. His school liked the old version. So, he talked his teachers into can we have a computer and exploring and learning about that stuff.

We’ve got new technology going into cars. I mentioned this to somebody the other day: Ford is running all these ads, and it’s not because my dad used to work there, but Ford is running all these ads for their cars powered by Synch technology from Microsoft, and the question I got is, what the heck is it? I’m glad it’s from Microsoft, but it’s new technology so you can plug in and you can essentially voice command and control a bunch of electronic devices in the car.

We have new computer technology called Surface that you can touch and use as kind of a big touchpad or screen.

And we’ve got new music and entertainment devices, including the new Zune, and I’d like to maybe have a chance today to show you a little bit some of the new software and hardware coming from Zune, and to do that we’ll have one of our marketing folks from the Zune team come on stage and show you a little bit about the new Zune. So, please welcome onstage Alex Wright from our Zune team. (Applause.)

ALEX WRIGHT: Hey, Steve.

Hi, guys. How are you? I can imagine all this is a little bit overwhelming. I’m on the PR team, public relations, and I specialize in entertainment PR. So, I get to take our really super cool technology and go show it to people like Daisy and Kanye West and all the fun people. I get to do the Grammys and things like that.

So, as I listened to everything that’s said today, I think that the technology part is amazing, but Microsoft is a place where you can be anything, you can do anything; whatever you’re strong in, you can do that here. So, I wanted to make sure that I said that, because I am not technology girl, as you guys will see as I go through my little demo here.

So, anyway, these are our new Zunes. Did anyone ever see our v.1, our version 1 devices of Zune? Okay, so they’re kind of like a brick and a weapon all in one. The second generation is awesome; they’re really sleek and sexy, and it’s really easy to stick in your pocket. The small ones there are the 4 and 8 gig. Those are great for kind of select music, if you want to — I don’t know, you’re skateboarding and you want to make up your own play list, it’s really fun to do that. And then the big one is an 80 gig. The 80 gig is awesome for your entire music collection, which I like when I go places, and also for watching videos.

So, I’m just going to take you through a little bit. I’m going to show you my Zune here. So, you can see all this technology; we’ve got Wolf Cam, Slides, I don’t know.

So, this is my Zune. And what’s really cool is you can see we have new menus, new software, new everything. So, it’s kind of sleek and sexy and new.

So, I can go through here. This is called a Zune pad; makes it really easy to flick or click. So, if you’re working out, which clearly we all do all the time, and you’re in the gym, you can just click back and click forward, makes it really, really easy.

So, what I’m going to do is I’m going to play a video so you guys can actually see what the screen looks like here. (Video clip.)

ALEX WRIGHT: So, you guys can see that this screen is pretty big. It makes it really easy to watch video.

All Zunes also come with FM radio. (Radio clip.)

So, this is the story of my life; I always get caught somewhere doing something.

And the last really cool thing I’m going to tell you about the device is — you guys stop laughing — is that all of our Zunes come with wireless capability. So, we can actually share songs. If you had a Zune, my Zune could find your Zune, and we could shimmy songs back and forth, and we can do that through the software and through the device.

So, there’s a lot of really, really cool things that separate us from maybe some other people that you’ve heard of at some point.

All right, so now I’m going to go through, and I’m going to show you our new improved software. So, what you’re looking at right now is my music collection to some degree. On the left-hand side here are all of my albums, all of my songs, all in alphabetical order. On the right-hand side here you see all of my songs singularly in alphabetical order, and in the middle you see my album artwork right here. So, R. Kelly, a little of this, a little of that.

The cool thing about this is you actually have the same experience as shopping in a record store. You can look at all of your album artwork and your credits and the same things. It doesn’t quite look like a spreadsheet.

So, here is something else that’s really, really cool. I was a little nervous today to come see you guys, so I picked this song, Big Girls Don’t Cry, because I was like suck it up and just do it. (Music clip.)

But what’s really cool about this is this is our Now Playing view. So, when you just have your PC up, it flips through all your album artwork. So, that’s kind of a cool thing if you’re doing your homework or whatever, and you’re just playing it.

So, moving on, here you’ll see my Zune down here. Can you guys see that? This is my Zune. This is a CD, and this is play list. What’s so easy and so great is we just drag and drop, that’s all we do. So, I’m going to take R. Kelly, and I’m going to synch it to my device here, and drag, drop, and look at the fancy graphics, and it’s so pretty.

Then if I wanted to make my friends — burn them a CD or something like that, I drag and drop the same thing. So, we’ll take Bad by Michael Jackson, and I can just drop it there.

On the right-hand side here you’ll see playlists. So, just to create a playlist of your own, you just click Create Playlist, you hover, and name it, and then you can have like dinner out with friends, I’m skateboarding, I’m crazy, whatever you’ve got in there, you just put it there.

All right, so now you guys basically see what I have in my collection. I have my play list, my videos, my pictures, my podcasts, all of that.

So, now let’s see how we get it.

So, this is the Zune marketplace. It’s a really, really great experience. It’s like going to a record store. On the left-hand side here you’ll see that we have all these different genres. I’m one of those kind of people that likes to search for different things, and sometimes I don’t know what I’m in the mood for. So, I can break it down by genre, and sub genre underneath them.

Then over here this is what helps keep me cool. It has top songs and top video. So, I’m not always in the loop of what’s new and what’s just been released. This tells me that.

There are two ways to buy music. One is a Zune Pass. This is my favorite thing in the world: US$14.99 a month for all you can stand. You can just download music, download music, download music. The other way that you can buy music is to — the way that you probably have done before is to buy it per song or per album. But for me, the Zune Pass, I can just download stuff. If I like it, I keep it; if I don’t, I get rid of it, and it’s still just $14.99 a month.

Okay, so let’s see, up here is how we search. So, who would we search for? Name an artist. You guys, come on, you’ve got to wake up. I like Alisha. Let’s look up Alisha. Did you say no? (Laughter.) I don’t think Alisha would like that.

So, I just go to search music in the marketplace, I just go up to the right-hand corner here, type in a name, and press the search icon.

Now, what’s so great about our search technique is that on the left-hand side here you’ll see what I already have in my collection. So, I can go to that and see what I want, what I don’t already have. And over here it shows you what we have in the Zune Marketplace.

So, I’m going to click through to her artist page here. So, as we look at Alisha’s artist page, we can look at the top songs. So, let’s say that we didn’t know the name of what they’re playing on the radio, this is where we would find it, again keeping us cool and current and connected.

And over here are play lists. So, these are play lists that are already made by our in-house z-jays, which feature Alisha, and people that sound like her.

Down here you see we have a full discography. Again it’s like shopping in a record store. So, you can see all that stuff.

Another favorite thing of mine is you can go through to her bio. And here you can see everybody that she’s worked with, people that she’s collaborated with, and you can actually click right through like Carlos Santana or Whitney Houston, you can click through and read about those artists, and also buy their stuff as well.

Through the artist page you can buy videos, which are great, and here’s one of my favorite things is that I can find out what’s related. So, I can see who she was influenced by, related artists, if I like her sound, and I can find other artists that sound like her, and related genres. So, again it makes it really, really easy for me to search and find music and share with my friends.

So, the last piece that I’m really excited to show you today is the Zune Social. So, this is our online music community. I’m sure that a lot of you have done a little networking online and stuff like that. What we’re looking at right now is my personal profile page. So, here is my name, and here is how I’m feeling; I’m feeling a little shimmied. And here’s what I listened to last. And once I create my Zune Card, it automatically updates. Whatever I play, whenever I play music from either my device or from my PC, it automatically updates, which is really, really cool, so my friends can always see what I’m listening to.

Up here I have some of my favorites marked, of course, Fergie and Steve Wonder, who’s great, and some of my favorite artists and the last stuff I’ve played.

So, I can actually send messages to friends, I can send songs to friends. It makes it really, really interactive to help me discover new music and help me stalk other people online. I like to do that, too.

So, another really cool feature is you can see that I have some friends, and look at that, SteveB is my friend. I bet you guys already knew that, didn’t you? But this tells me what SteveB has been listening to, and he can send me messages. It seems that he really likes Notorious BIG. (Laughter.) That’s his thing; he was getting ready putting his game face on, and it was him and Biggie. (Laughter.) Yeah, that’s my guy.

So, here’s what’s really cool. So, I go down and I’m like, hey, Steve, what are you listening to, and I click through to his page. Well, Steve has been listening to obviously a lot of Biggie. So, I can look at his Card, and see how he feels. It says, get back to work. (Laughter.) Which is why he’s the boss of everybody. But I can look at his card, which is updated with what he’s been playing and so on and so forth. So, we can click through Biggie I think, and right from his Card I can send songs to other people, I can buy Biggie so that if I don’t have that in my collection, and I can mark it as my favorite. And then Steve’s got some fun friends there, IM, so we can just chitchat back and forth, because he has a lot of extra time in his day. (Laughter.)

So, that’s the highlights and the overview of what Zune is. Zune is really, really cool, and I’m really honored to be a part of this team. Something very special about Microsoft is sometimes people underestimate us, and we always come back for a great big win, and that’s one of my favorite things about working here.

And we also believe in freedom of choice. You can customize your entire device. You can customize the back, as you see I’ve done here. And what I’m bringing up right now is something called Zune Originals. You can tack to it with different artwork, you can have text on it.

So, what you guys can see here is I’ve done mine. But anyway, what it says is “always be fearless” because that’s the words that I live my life by. So, I put it on my Zune, I play the soundtrack to my life, and it inspires me to go out and share with other people.

So, enjoy your day. This is a really, really special day. Thank you so much for having me. And remember, Microsoft is more than just computers. (Applause.)

STEVE BALLMER: Nice job.

Can’t really say I knew most of that music. I saw one called Big Girls Don’t Cry, which is about actually my age, but it was performed by somebody I’d never heard of before, so I’m going to have to get a little bit more with it.

I just want to wrap up with a little bit of a discussion about Microsoft as kind of a company and kind of how we see in some senses our role in society.

We innovate, we try to do great new products that change the world, we try to make good revenue and good profit for our shareholders, but we also try to have an important impact on two communities: the communities in which we work and live, and our own employee community, and I want to talk a little bit about both of those.

Particularly in the community where we work and live we think it is super important for us to do everything we can to make the benefits of technology possible for a broader and broader group of people. We do that through our innovation, our community giving, the giving of time, stimulating interest in computers in different ways.

We run a programming competition for kids around the world. We run high school internships. We had 50 people — we’ll have 50 people here this summer, local high school students.

We do stuff through the DigiGirlz program, which is a high tech, hands-on camp for girls. That’s in its eighth year.

We’re doing college scholarships, particularly for women and minorities, to try to promote interest and literacy and involvement with computers.

And in our own workforce we think life is pretty simple: We want everybody in the world, everybody — our basic theory is everybody in the world should use our stuff, and if we’re going to achieve that goal, the people who work here and who represent and build products for our customers have to represent the whole world.

So, we need a diversity of point of view, of people in our own workforce, because at the end of the day there’s, whatever, close to 7 billion people now on the planet, and we want to have people who can represent all 7 billion working here, thinking about how to bring the benefits of technology to all kinds of people, richer people, poorer people, American people, non-American people, white people and non-white people, men and women. There’s just a big set of issues to really thinking through what it will take to drive technology to the next level.

So, with that, I want to wrap up. I know you’ll have a great day. And certainly I’ll look forward to having a chance to have a little bit of discussion and question and answer. If we don’t get to something that’s on your mind, whether it’s I don’t do a good job on the Web questions or whatever, I’m [email protected]. Please feel free to ping me on e-mail if there’s something you want to chat about afterwards. And with that, let me kind of open up and see what’s on people’s minds.

I forgot to ask what the protocol was for webcaster questions, but I’m sure somebody will tell me, if I ask hard enough. If you’re in the room here, there are folks with mics who will bring them around to you.

MODERATOR: Hi, Steve. We’re going to take some questions from some sites watching remotely, and in Las Colinas, Texas, Victoria Dixon at Carter High School in Dallas, wants to know, why is Minority Student Day so important to you?

STEVE BALLMER: Well, I’ll tell you in two real dimensions. Number one, I love the opportunity to have some interaction with people who are younger than at least my normal interaction level. I have kids now who are getting to be kind of high school age. But when you really stop and think about it, a lot of the key trends in technology don’t get set by people my age, they get set by people who are of the age in this audience and slightly above. And the chance to get that exposure and experience is great.

And I think it also is very important hopefully for some of the kids to attend — who attend to have a chance to get excited about stuff they haven’t seen before, but it also sends a clear message to our employees. Part of our job is to reach out and try to continue and drive and stimulate interest in technology in the broadest part of the community possible.

Way in the back of this room, the gentleman in the white shirt or coat.

QUESTION: If I wanted to be a videogame developer, what classes would I take for college, and how would it take for me to get in a position at Microsoft?

STEVE BALLMER: Yeah, if you wanted to be a videogame developer, the most important thing actually to do is to learn how to write programs, hard-core programs. And people think a lot about the artwork, and that’s all important, but part of the thing that really makes great games great games, if you really want to be a programmer, is those have to be written with kind of an engineering precision and discipline and rhythm, and that stuff is complicated technically as almost anything, if you want to have really great game play, if you want to be able to have really fast action and really great graphics and really real time type performance.

So, you would take computer science and programming type courses if you really want to be a videogame programmer. You’d take graphics courses that teach about how to make things move quickly on the screen. You would take courses in things they call data structures that shows you how to organize the information in the memory of a computer, so that you can very quickly make things happen. You might want to actually take some visual studies and art type courses, because it turns out that may not be important in every part, but really understanding kind of what the designers and artists are interested in would also probably be a pretty important part of that experience for you.

Yes, ma’am? And just wait half a second for one of the mic people so that people on the Webcast can hear you.

QUESTION: My question is, what are your goals for Microsoft development and expansion on a global level?

STEVE BALLMER: Microsoft makes about 60 plus percent of its business today outside the United States. So, we are more global, I would say, than not. And we actually started that way. You know, in old line companies with big manufacturing plants and companies that got started before the Internet, the truth of the matter was most companies started out in one country primarily because it was hard to be in multiple countries.

We started out in an age where there was already global news and the Internet came along pretty quickly, and software was not exactly really hard to manufacture, right, you just kind of make a copy, maybe it’s too easy sometimes for people to copy software, at least from the standpoint of people who make it.

So, we started out very easily having our business be a global business. It’s not like food. Food is a business where you have local tastes. Nobody develops local taste in software. It kind of all came pretty globally at the same time.

The key for us to continue to develop and grow globally is to make sure we continue to push hard in the so-called developing markets or emerging markets, countries that are rapidly developing their economy. People often cite places like Brazil and Russia, India and China, which are big markets for us, but so is the rest of Latin America. The fellow who runs our worldwide sales operation highlighted for me, as much as we talk about our success in India and China, we’re actually as big in Africa as we are in India and China, which is really quite an interesting statistic.

So, we have really incredible opportunity, and of course there’s still Europe and Japan and those places. But a lot of that globalization will come in those other countries.

And partly we also have to have a different kind of innovation, focusing in on even lower cost price points, because what it’s going to take to make computers affordable for the rural farmer in China — my wife was just in Mali in some of the villages there — to make computing really affordable for that broad swath of people actually it doesn’t just mean people dropping their prices, we almost have to rethink the way some of these things work.

How do you build something that’s a telephone most of the time, but you throw it into a cheap little docking station next to your TV, and it’s kind of like a computer? How do you get two-for-ones, if you will, so that people can get something affordable that serves multiple purposes? That whole mindset needs to pervade us if we’re going to get beyond — computers right now are in the hands of roughly a billion plus people on the planet, and we have roughly 7 billion people on the planet. We’ve got a long way to go.

MODERATOR: Steve, we have a question from Atlanta. His question is, what new forms of technology will Microsoft soon be introducing into the market for consumers that will ultimately benefit all of its users?

STEVE BALLMER: It turns out that everything you give to a consumer ultimately benefits all users. (Laughter.) No, it’s sort of an important thing. There used to be a theory in computers that things started with these business people, and then got to consumers, but now most of the hot technologies really get pioneered with consumers.

We certainly have some great new phones. We don’t build the phone, we build the software which goes in the phone, powers the phone. We have some great new phone stuff.

We have some great new things we’re doing with Windows in various forms, Windows in tablet computers, Windows in table computers that I think are big.

We have some stuff we’re doing with video hookups and video — call it videoconferencing, if you will, that I think will be pretty amazing that will get popular, so people can see, touch, feel each other, so to speak — well, I’d better be a little careful about that. People can get together electronically and have that be a big deal; so, a lot of good stuff coming on the consumer front.

Mic number one, and then he’ll bring you mic four for the next one here. Yes?

QUESTION: The robotic industry is a very underdeveloped market. I was wondering if you have any ideas in developing the content for robotics to inspire minors to build something meaningful.

STEVE BALLMER: Yeah, we’re actually pretty fired up about the robotics area. It’s an area that one of our guys got kind of excited about maybe four years ago, and we gave him a little budget, and a little more budget, and I think what we’ve got now we call it our Robotics Development Kit. It’s actually a set of software that lets other people build robotics applications, and we’re pioneering some — generally some new programming concepts in there.

I actually think the robotics toolkit — I don’t know who I’m looking at, but I think the robotics toolkit is actually available, maybe even free of charge, on the Web, but if it’s — why don’t you just ping me with a piece of e-mail if you’re interested, and I’ll give you a pointer to get at some of our robotics stuff.

QUESTION: I was wondering, most of my friends have an iPod, and we haven’t really heard much about the Zune. How do you plan to draw more students in my generation towards Zune?

STEVE BALLMER: That’s a difficult challenge. That’s why I’ll bet Alex is glad she’s got her job. There’s a lot of work to do, and a lot of opportunity to look good, by going from very itsy bitsy witsy little beanie market share, which is what we have now — you were very polite about saying it, but we have very small market share, and we want to have very big market share.

And I think it actually involves two or three different things. Number one, there’d better be some sets of things that are cool in Zune that aren’t in iPod. And some of the things that Alex showed you around the Social and what we’re trying to do there with — some of the stuff she showed you is available up on the social networks now through MySpace and Facebook, but essentially the same technology. We need to be pioneering exciting concepts. Zune probably over time will have not only the Zune player and Zune on PC, but it would be great to have Zune on phones, and how does all that progress. So, innovation and stuff that people just say, wow, got to have that, that’s number one.

Number two, you actually have to put some elbow grease in and do some marketing. I mean, Apple spends a lot of money telling their story. The guy on the ads and the whole bit, okay, that’s their shtick. We’ve got our own shtick. I don’t know, our guy runs around in big boots or something on a mountain bike. But we’ve got to tell the story; we’ve got to tell it effectively, we’ve got to tell it with a little romance, but it’s got to be authentic to what we build.

And then number three, we’ve got to actually get people who are what they like to call the cognoscenti, people who other people look to. I’m sure if you think about your friends at school, there’s somebody who sort of knows the latest gadget, there’s somebody who everybody thinks knows the most about music. You’ve got to get at those kind of people, wherever they live. Of course, you’ve got to start in places like Los Angeles and get to the artists themselves. You heard Alex talking about some of her experience in some of her work. But you want to get artists to think it’s cool, you want to get the music cognoscenti. So, you’ve got to kind of work it on a variety of different fronts.

You could say in some senses the bad news is we’ve got a lot of work to do. The good news is all we’re going to do is improve our position for the next few years, and that means we’re going to grow and have a chance to add value.

Why don’t I go mic four, and then we’ll go to the webcast again. Mic four.

QUESTION: I produce and I perform music, and I’m trying to find out if Microsoft, if they make movies and videos, and if they do, do they have like a studio or something around the Seattle area that people can tap into?

STEVE BALLMER: Well, it’s a weird question. It’s not a weird question; I’m going to give you a weird answer. The answer is weird; the question was pretty straightforward.

We don’t basically make music and videos, et cetera. But, of course, part of some of our products involve making music and videos and stuff, and certainly some of the way we sell. I probably personally record about 10 videos a week. They’re not exciting, you wouldn’t want to probably be — “Hi, this is Steve Ballmer. Let me tell you about the latest in software.” But nonetheless I make about 10 of them.

So, we actually do have a studio that’s about a mile or so from here on 148th Street. It’s not open for kind of public usage. We’ve considered it from time to time, but actually it’s very busy now, being used for a variety of different sales and marketing activities.

So, I think the basic answer is no, but if it’s an area where you have some interest and because you’re here today, I encourage you to talk to some of the Microsoft people and we’ll see what we can do.

I’ll go to the webcast and then the gentleman behind you after the webcast.

MODERATOR: What will Microsoft gain from purchasing Yahoo!, and what obstacles will impede Microsoft from its goals with Yahoo!?

STEVE BALLMER: Thanks for the very good question.

You know, Microsoft, there’s really three large players in the online world, and yet when you stop and look at it from a revenue perspective, increasingly there’s just one strong player. And if you actually look at it, most of what people do online is very fragmented. It’s not like people spend most of their time at MSN or Yahoo! or Google or anyplace else. So, the Web is kind of big, some things are a little concentrated, but from a revenue and sales standpoint of advertising, Google is really the big guy out there.

What our goal is, is to provide, you know, what I would say great innovation and great competition, particularly in the search and advertising area to Google.

A lot of people don’t — my wife does now, but a lot of people — didn’t for a while — don’t even really understand how companies like Google and Yahoo! and Microsoft make money online. What does it mean: you look at an ad, you click on an ad. My wife asked me — this is probably now two or three years ago — oh, you mean those are ads on the right side of a search page, but they’re not on the left.

We all smile, but I’d say, yeah, I’ll guess five out of every 10 people don’t actually understand the distinctions that are going on there, and yet it’s a big business. There’s already about $40 billion a year globally sold in search advertising, and we think in our desire to be a world leader in Internet search and Internet advertising, it helps us a lot to acquire Yahoo!

What are the challenges? There’s a group of 13,000 plus people who work at Yahoo!, and they have their goals and their ambitions and their desires and their thoughts and their software and their everything else, and we have to kind of mate up their goals, desires and ambitions with the goals, desire and ambition of people here, and that’s generally referred to as the integration process. If we do that well, we get to — that will be a very good thing for customers, our shareholders, et cetera; and if we do that poorly, we probably shouldn’t have tried this acquisition. So, really doing that well is a high priority, and we’re very focused in on it.

Assuming the Yahoo! — that Yahoo! accepts our bid, which is yet to happen.

Yeah, I promised the fellow here.

QUESTION: Do you think the post-PC devices like Zune will eliminate the PC as we know it?

STEVE BALLMER: Hold the mic. What do you think? (Laughter.)

QUESTION: I think no, because I don’t think people want to look at their pens and try to surf the Internet, and look at their MySpace that way, or search their device, stuff like that on the Internet.

STEVE BALLMER: I’m kind of with you. I think people — here’s the way I would say it. People are going to want little screens and big screens. People are going to want keyboards and no keyboards. People might even want super big screens. That’s usually called a TV set as opposed to a PC. But because people are going to want all this variety, I don’t think the PC in any sense goes away. The PC tends to be the smartest of the devices. It has the most storage, the most intelligence, because you can use it the most intimately and closely, because it has more sort of control points.

The thing that I think people really don’t want is big barriers or islands, gaps between their information. Crud, I have a different list of friends on my PC than I do on my phone. I mean, you might want to, but you don’t want to be forced to just because you’re on your phone versus your PC. Do I get my same IM list, do I get my same mail list? If I personalize the sports scores I’m interested in — you know, I actually do a fairly elaborate personalization, and I wish I could do more. I’m a big basketball fan: pro, college, high school; and I just really want to be able to grab all these scores from a lot of different places, and put them one place. I don’t want to have to do that separately for my PC, my phone. Some day I’d even like to be able to do it for my TV, so I can be sitting there looking at the various scores, click, how did Garfield — Garfield plays tonight, they’re a local school here — click, how did they do; boom, go see the video from the high school game of the night, da-dah, da-dah, da-dah. That’s what I want. And yet I want to have that be relatively seamless across TV type things, phone type thing and PC type thing.

So, no, I don’t think the PC goes away, and I don’t think the phone goes away, and I don’t think the TV goes away, but I think some of the barriers go away.

Way in the back of the room. You raised your hand, Stafford, for some reason? Okay, in the back. I thought Stafford had a question. All right, go ahead.

QUESTION: My question is, what do you wish to change about Microsoft?

STEVE BALLMER: Change about Microsoft?

QUESTION: Yes.

STEVE BALLMER: Well, this is one of these questions that’s always funny, because I love Microsoft, and I have to say how much I love it. Because I love Microsoft so much, and our people so much, I’m very proud of what we have. And I’ve got to spend a few more seconds emphasizing that before I tell you — and, of course, I want Microsoft to improve in a variety of different ways.

I liken this — well, I don’t know if this works talking to a group of high school kids, but I’ll do it anyway. I liken this to the way parents are with their kids. Parents love their kids but it doesn’t mean they don’t want their kids to do better and change and improve. I kind of have some of the same attitude about Microsoft.

I think we can move faster on some things. On some things we move very fast; on some things, ah, I wish we moved faster.

We’ve got the greatest people on the planet, I honestly believe that. We need more of the greatest people on the planet, because we have such big, broad ambitions, and such amazing things we’re trying to do. So, we need to keep driving to get even more great talent from around the world.

We’ve got to catch up in Zune. This lady highlighted for me that we’re not doing very well — I knew that, by the way — that we’re not doing well versus iPod, but there’s a bunch of these things where we’re in the game, but we’re not in the game, and I want us to do better in the places where we’re behind.

So, I love it, I love what we’ve done, I celebrate our achievements, and yet we’re like any other good — like a good sports team, we’re still only winning about 75 percent of the time, and I want us to win 100 percent of the time.

So, with that, I’m getting the — am I off, or do you want to have one more Webcast question?

MODERATOR: Yes, we have actually two more. Our last two will come from remote sites, the first from Charlotte, North Carolina, and the question is, in the future does Microsoft plan to do an open source version of Windows?

STEVE BALLMER: No. (Laughter.) Well, what does that mean? An open source version of Windows would mean not only would we publish Windows source code, we’d make it free. That’s what open source means. We wouldn’t be hosting minority student day if we open sourced Windows, because we wouldn’t have enough profit to pay people, let alone invite in people from the community.

So, I’m not saying open source is a bad thing, but it doesn’t pay the bills in this company, so we can’t embrace that way of doing things. If we make everything free — you know, I tell our employees, we give out free soda pop to everybody who works here. We make our stuff free, people have got to give back the soda pop. It’s just inconsistent with what we do around here.

MODERATOR: Okay, and our last one is from Mountain View, California. Are you going to add more features to the Zune? I would like to see a stopwatch, voice recording, games, Internet, memo pad, and a camera.

STEVE BALLMER: Is Alex still here? Write it down. We’ve got our feature list.

No, we will be adding more and more things to Zune. The thing that the team balances, that we do really balance on Zune is how much — what is it people want in a device like that. Do they want a huge amount of capability or do they want something that’s simple and really just does music well?

This is a classic. The PC, one of the things that makes the PC the most amazing thing of all time is it does everything, and if it doesn’t do it, it will do it tomorrow. The PC started out as something that did these things called spreadsheets and programming, and then it became a word processing machine, an e-mail machine, a games machine, a pictures machine, a videos machine. It does everything.

One of the debates is, do people want their phones and their Zunes to do everything, or do they want them to be simpler and more simple purpose than the PC ever was. The team who works on that sort of debates those issues, but we will be adding things. Whether we will add all of the things on the questioner’s list, we’ll have to wait and see.

With that, let me say thanks, enjoy the day. It’s been my privilege to be with you. [email protected]; let me know if I can help with anything. Thanks. (Applause.)

END