Ballmer: "That PC is heavier than the Toshiba I carry."

Kawasaki: "But this is more powerful than the Toshiba."

Ballmer: "No, that thing is missing half the features of a PC. Where's your DVD drive?"

...

Kawasaki: "DVDs are passe."

A few minutes later, Ballmer was describing Microsoft's "skill sets." He said the company is trying to develop expertise and major businesses in several areas compared with Apple, which is limited to consumer devices. "They're not really in the enterprise. They punted on online, which is OK by me," he said. "That's a particular perspective."

Kawasaki shot back, "Apple might say you punted on OSs."

Ballmer: "They'd be wrong. Every day, statistically they'd be wrong. ... Last time I checked there's a lot of people and a lot of governments who think we have a very high market share."

Kawasaki: "Especially the EU."

Ballmer: "No comment."

Kawasaki brought the discussion back to Vista.

"Vista has been very, very popular in the consumer world," Ballmer said. "I'm not saying that there aren't things that customers choose to comment on."

The No. 1 complaint has been application and driver compatibility.

"We made a very concrete set of choices in order to enhance the security," he continued. "Vista is a very secure system. We've had very little issue of that kind. It's the most secure client operating system out there. But we did make the choice to hurt compatibility and our customers have let us know that that has been very painful."

He said the compatibility issues are being addressed with driver upgrades and Service Pack 1, which should be available shortly.

Check out our complete coverage of Ballmer's Q&A with Guy Kawasaki.