During Ballmer's appearance on Thursday at the Web 2.0 Summit in San Francisco, a Microsoft staffer gave a demo of Popfly in which he showed how the tool can be used to create applications for sites like Facebook's social network and Microsoft's Windows Live Spaces without the need to write code.
While acknowledging that Adobe Systems Inc. has done "a good job in rich media" with Flash, Ballmer nonetheless said there are plenty of opportunities for Microsoft to innovate as Web applications "continue to get richer and richer."
Speaking at the same event on Wednesday, Adobe's CEO Bruce Chizen downplayed Silverlight's threat to Flash, saying Flash has been around for 10 years, is widely adopted and has a broad ecosystem.
Ballmer, who answered questions from conference chair John Battelle and from attendees, said that the clamor over Web-hosted office productivity applications like Google Apps and suites from Zimbra and Zoho as major threats to Microsoft Office is misguided.
In the communication and collaboration software space, Microsoft is focused on making its applications accessible in whatever way customers require, and that the issue isn't a black-and-white opposition between packaged and hosted software.
He acknowledged that Microsoft pays attention "to what the other guy is doing" and is receptive to implementing good ideas in its products.
As the interest in hosted applications rises, critics have said Microsoft has been slow in responding with a hosted alternative to Microsoft Office, and that it risks missing an opportunity that others are eagerly pursuing.
Asked if he was getting impatient with Microsoft's search and online advertising efforts, where the company lags far behind leader Google Inc., Ballmer said he's confident his company will continue to improve in the coming years as it focuses on several key areas.
For example, Microsoft will continue improving its search engines, because they are key for generating online ad revenues. It will also continue to strengthen its consumer communication services, like webmail and instant messaging.
Key as well is having a strong ad platform, which is why Microsoft spent US$6 billion on aQuantive, and a strong ad syndication business, he said. Ad syndication will go through a major transformation in the next five years, as the focus shifts from matching ads based on a Web page's content to based on users' online behavior, he said.
Ballmer declined to comment when asked about rumors Microsoft is buying a stake in Facebook, but he said the companies' existing online ad partnership is going very well.
He dismissed questions about the consistent speculation that Microsoft might buy the embattled Yahoo Inc., saying Microsoft is confident in its strategy to at some point generate 25 percent of its revenue from online advertising. "We believe in our independent path. We like what we're doing," Ballmer said.
Microsoft also released at the event a beta version of the Windows Live Photo Gallery photo management tool that adds publishing support for Yahoo's Flickr photo-sharing site. As of Thursday, the Microsoft product has a "publish on Flickr" option, in addition to its ability to post photos directly to the Windows Live Spaces blogging and social network. The Windows Live Photo Gallery is available on the Windows Live beta page.
Microsoft further announced new features for its Live Search for Mobile search engine and launched Live Search 411, a toll-free directory assistance service accessible by calling (800) CALL-411 (800-225-5411).
Additionally, Microsoft provided an update on the adoption of Silverlight, whose 1.0 version was released a month ago. The number of partners in the Microsoft Silverlight Partner Initiative has grown to more than 50 organizations, and over 40 customers have delivered Silverlight applications.
Microsoft also said that Silverlight 1.0 is now available in 10 languages, including simplified and traditional Chinese, French, German, Italian, Spanish and Japanese.