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Windows 7 Open; Ballmer on the Outlook

That big whooshing noise you might be hearing today is a massive and collective sigh of relief out of Redmond that Microsoft can get that Vista yoke off its neck and now focus the world on Windows 7 instead.

The event gives me the opportunity to hear from CEO Steve Ballmer, who sat down with me at company headquarters for a wide-ranging, 30-minute interview about the operating system release, competition with Apple and Google , his thoughts on the oft-rumored Zune phone, and even whether he's worried about his job after a decade of virtually zero movement in the company's share price.

I found a typically ebullient Ballmer, but thoughtful and analytical too. Equal parts bombast and business-like. And supremely confident since the market might focus on the horse race between Microsoft and everyone else, but he focuses on sheer numbers and dominance and how to maintain it.

Windows 7 is a triumph for Microsoft, plain and simple. I've spent some time with the software, I found it simple, slick, sometimes fun, far more intuitive than its OS predecessors. Yes, it closes the gap with Apple, but Snow Leopard, to me, still offers the clear advantage.

Ballmer doesn't seem to care about that though. It's not about a comparison to Apple, he tells me. It's about bringing innovation to his customers who should be very pleased with this version of Windows.

"I think Windows 7 will be the biggest, one of the biggest products to hit the tech industry this year," Ballmer tells me.

"Just because Windows is used on about 1 billion computers around the planet. They'll be another 300 million machines that ship this year, and the diversity of PCs that ship with Windows 7, the simplicity that Windows 7 brings, I think it's a pretty banner year. I think the things that everybody's going to react to are: Wow, this is simpler; wow, this feels snappier, more responsive," he says.

On competing with Google: "I think you have Search, and things that are not Search. In the area of Search, it's clear Google has a dominant market share globally, very strong position, one of the strongest I've ever seen in the tech business, but we're hopeful through innovation, maybe we can make a bit of a dent in that."

"On the other hand, what about Google in these other markets? So far, Google really has no proven track record of success outside the area of Search. They're a well-financed company, and we'll see what happens. We certainly take them very seriously, but their real success record is with Search, where they are dominant, and now they're trying to elbow their way into adjacent markets, distributing their browser with their Search, YouTube and the like, and we'll see what happens."

On Microsoft's Search engine Bing: "Will there be innovation over the next several years in Search? I think the answer can be yes. Now there needs to be some competition, because I think we all would probably agree the user-interface and experience for Search hasn't changed much over the last four or five years. And our opportunities to push the pace, and we pushed it with Bing I, and then Bing II and Bing III and Bing IV. Bing, Bing, Bing, Bing, Bing! "

"We're going to keep pushing the pace of innovation, the user experience, and the business model, and we'll see where we get. We're going to give it a run, but there's no question Google's got a dominant position."

Competing with Apple

On competing with Apple and the focus on Apple's growing market share: "Still 4 percent. I don't know why anybody thinks they're selling incredibly well... I admit, they've gone up from whatever it is, 2.5 percent to 3.2 percent, and they're doing well. (So I say, but yeah, even that's a 50 percent increase.) They're doing well. (He smiles.) That's right."

This has got to get under your skin, I ask. Do you even care what about what happens to Apple?

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  • "Sure we compete with Apple. Apple is a good competitor. It's a good competitor. One we compete well with. It's amazing: people say Apple sells 10 million PCs. There will be 300 million Windows PCs sold in the same time frame. So it is interesting to me people spend so much time talking about the 3 percent of the market in that case."

    "Apple again, is a number 3 player in smart phones, but certainly the most talked about number 3 player. Nokia, RIM , we with our Windows phones, kind of neck and neck, probably a shade behind Apple on that. And it is interesting. It doesn't frustrate me. Apple does interesting work. The market wants to talk about, I just want to compete with it well, and I wouldn't trade our 300 million new users a year for their 10 million. I just wouldn't do it. I kind of like what we're doing and the way we're serving the market."

    I asked about Microsoft's ad campaign taking on Apple. I said, it seemed Microsoft was saying, "We have Windows 7, we have the better price, we have the dominant market, and then there's Apple and finally the consumer is coming around to that, or is it more a case that Apple still has the cool factor, we beat 'em on price and people settle for us."

    He seemed taken aback by this: "I don't think so Jim. I think the consumer really gets it. Consumers... they're very smart. In aggregate, they buy what they want to buy, with our advertising, without our advertising, with Apple's advertising, without Apple's advertising. They buy what they want to buy. And 300 million of 'em a year choose to buy ours."

    We're posting our entire interview. In an upcoming post, Ballmer on the Zune phone, and his job security. Take a listen. It was interesting stuff. And we'll be running clips all day long. I'm very curious about your thoughts on what Ballmer says. Drop me a note and let me know.

    Questions? Comments? TechCheck@cnbc.com