BALLMER: Microsoft plans to remain on the cutting edge of digital media technology.

Photo by KRIS SNIBBE/HARVARD UNIVERSITY NEWS OFFICE

If you think that the last decade produced a torrent of consumer high-tech innovation — notably personal computers, broadband Internet access, cell phones, and digital cameras — expect even more in the decade ahead. “This is the most exciting time in the technology industry since I left Stanford Business School 26 years ago,” Microsoft CEO Steve Ballmer (Harvard ’77) told a student audience that nearly filled Burden Auditorium in early December. Ballmer had been invited by the HBS TechMedia Club.

Speaking without notes while pacing back and forth along the edge of the stage, Ballmer made his case for Microsoft’s continued leadership in technology innovation to a somewhat skeptical audience, as revealed by student questions.

If it’s innovation that counts, one student asked, isn’t Microsoft’s new Zune portable digital media device, designed to challenge Apple’s wildly successful iPod, to market too late? Without hesitation, Ballmer candidly replied, “Sure, it’s too late” — an admission greeted with approving applause. But that turned out to be only half the answer. It’s only too late if you think narrowly about the product as just a music device, he quickly added. Thinking more broadly about portable digital media, “it’s a category that will continue to change,” explained Ballmer. “Unless you think the category is static, you get in.”

Playing off one of Ballmer’s core principles, that success requires hiring “the best and the brightest,” one student asked why it appears that the first choice of tech whizzes today is rival Google. Conceding nothing, Ballmer parried that Microsoft just completed “our best recruiting year ever.” “We have a lot more talent than Google or anyone else,” he opined.

Given the range of projects under development at Microsoft, there’s no shortage of challenges for talented recruits. Among those highlighted by Ballmer were using the Internet to transform television viewing into an interactive experience, applying technology to “reinvent” how meetings are conducted, and developing platforms to promote digital reading. “It’s stunning that we still read so much on paper,” said Ballmer. In addition, the company will push forward with major efforts to build its online search and advertising businesses.

Despite the buzz about cheap, open-source rivals to Microsoft’s Windows operating system and Office suite of products, Ballmer dismissed the challengers as caring more about altruism than profit. He insisted there will continue to be demand for Microsoft software that delivers feature-rich capabilities to PCs and other digital devices.

Moving ahead on multiple projects is no less than a corporate imperative, noted Ballmer. “Software companies are like sharks,” he analogized. “Either you keep moving forward or you die.”

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