Q: You sold 8 million Kinects over the holidays, more than you expected. What differentiates it from other gaming consoles on the market?
A: Xbox isn't a gaming console. Xbox is a family entertainment center. It's a place to socialize. It's a place to watch TV. We have Hulu coming. It's the only system where you are the controller. Your voice, your gestures, your body.
Ballmer has always insisted that the Xbox is an entertainment system, but the problem is that executives from Nintendo and Sony insist them same. Microsoft is a unique position because most people have a Windows PC in the house as well, but the company has not leveraged this as much as it could.
Q: But does the Microsoft brand resonate with that younger person who's looking at companies like Apple and Google thinking there is a so-called "cool factor"?
A: Maria, you go to your average 15-year-old boy, and he will say "I'll take an Xbox." I want that average 15-year-old girl as excited about the Kinect, and we haven't done as good a job drawing in that broader set of demographics.
The Kinect is definitely more consumer-focused than other Microsoft products. Ballmer has already said that PC support is coming. Here he's just reaffirming that the Kinect is Microsoft's answer to the Wii, and the casual gaming market in general.
Q: What has stopped you from making really bold bets on technology? You've got more than $40 billion on the balance sheet. If you want to have substantial market share in smartphones, why not just acquire Research In Motion, maker of the BlackBerry?
A: We've made bold technology bets. We've bet on the Cloud and our Enterprise business; it's going fantastic. We made the bet on Xbox; we made the bet on Kinect. We bet on Bing and are growing like a weed in that business. So I feel pretty good about the bets. When do acquisitions make sense? That's a complicated subject.
This directly addresses one of those rumors that keeps coming and going in the mobile industry. As analysts continue to flog RIM and Microsoft, some believe the bigger should buy the smaller, join forces, and essentially turn two smaller competitors into one bigger and better one. Ballmer isn't denying an acquisition outright, but he is denying that Microsoft purchasing RIM makes sense.