Shareholders Grill Ballmer On Apple, Windows Mobile

At Microsoft's annual shareholder meeting Thursday, CEO Steve Ballmer fielded questions on both of these nagging issues, although these queries can't have come as a surprise.

One shareholder seemed particularly perturbed with how the younger generation views the software giant.

"They claim that Microsoft, the evil empire, is stodgy. And in the current ad that Apple has, you all look like a buffoon," the shareholder said. "And I'm just wondering why your marketing group can't do something to rein in this next generation, because you've got a real bad image out there."

"We all watch television, and we all know some young people," Ballmer wryly responded. "The truth of the matter is we do quite well, even among college students."

Ballmer then retreated to Microsoft's standard fallback position on this issue.

"It's important to remember that 96 times out of 100 worldwide, people choose a PC with Windows," Ballmer said. Even in the high end of the U.S. consumer market, where Microsoft faces its toughest competition from Apple, people choose PCs over Macs 83 percent of the time, said Ballmer.

"Frankly, the economy is good for us because people do understand that Macs are quite a bit more expensive for essentially the same computer," said Ballmer.

Another shareholder asked Ballmer why Microsoft hasn't joined forces with Nokia to go after the iPhone and Google Android smartphones. "What are you going to do about it?" the shareholder asked pointedly.

"Undoubtedly, we have our work cut out for us," Ballmer responded. "I think we're on the right strategy, which is to focus on the software that goes into phones as opposed to building phones."

Microsoft will keep investing in mobile, and has already funneled new talent into Windows Mobile to improve its products and market position, according to Ballmer. "I think we're early in the game," he said.

Microsoft has responded to Apple with an advertising campaign it believes is highly effective, but there's no getting around the Windows Mobile issue. Gartner says Windows Mobile lost nearly a third of its market share between Q3 of 2008 and Q3 of this year, and if Microsoft doesn't figure out how to stop this, the questions at next year's shareholders' meeting will be even spicier.