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October 2, 2007 2:11 PM

"Maniacal" Ballmer on Facebook and free software

Posted by Brier Dudley

Here's the Times of London interview with Steve Ballmer that has Facebook fans in a tizzy today.

Ballmer was coy about Microsoft's rumored investment in the social networking company, which may be part of his strategy to "surprise" investors with a foray into advertising.

Facebook's networking effect has value but the site is faddish and its technology isn't revolutionary, Ballmer said:

"There can't be any more deep technology in Facebook than what dozens of people could write in a couple of years."

That was the money quote, but he said some interesting things later about Microsoft's new take on free software and services. I wish the article kept going; it ends just after it turns to this topic. A few excerpts:

Mr Ballmer suggests that there lies a new formidable force behind the drive into advertising. "My general rule of thumb today is that anything the consumer doesn't have to pay for, they won't," he says.

I'm surprised he didn't use the opportunity to plug the new Office Live services, but maybe the interview was done before Monday's launch. The story almost reads like a set-up for the new services:

The admission beckons towards a trend of free online software and services that has the potential to decimate Microsoft. Google and IBM, for example, recently launched free alternatives to Microsoft Office, Mr Ballmer's biggest earner by far. The stalwart suite of office tools, which includes Word and Excel, accounted for revenues of $4.6 billion -- a third of Microsoft's total sales -- in the company's most recently reported quarter.

Microsoft is in danger of losing licence fees that it has milked for decades as customers depart for free alternatives. The answer: Microsoft will also offer free services -- e-mail, photoshare, instant messaging and the like -- and reap revenues through advertising.

"There is no way to play in broad consumer services unless you're going to use advertising," Mr Ballmer says, "and you only have two choices for advertising: one, you do it yourself, or you outsource it to Google. In our case, that's probably not going to happen."

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Gadgets and games | Fun stuff I've written about lately includes Apple's iPhone, Hewlett-Packard's HDX laptop and Microsoft's Halo3. Also on the radar are new digital video boxes such as the Tivo HD and the Vudu.