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Microsoft's Ballmer on Yahoo and the Future

By Peter Whoriskey
Washington Post Staff Writer
Thursday, June 5, 2008

In an animated discussion with Washington Post editors and reporters yesterday, Microsoft chief executive Steve Ballmer offered his far-ranging views of upcoming changes in technology and the media.

Among other things, he confirmed that Microsoft's discussions with Yahoo have continued, predicted that in 10 years all media will be delivered via the Internet and professed that he is confused by Google's moves in the mobile-phone market.

Also, he said that his favorite TV show is "Lost," but he'd rather watch it for free -- with ads -- than pay for it on iTunes.

Q Is Microsoft no longer interested in buying Yahoo? What about the effort by billionaire Carl Icahn to take over Yahoo?

AWill something happen with Yahoo? Every day is a new day. We'll see what happens.

We had no contact with Carl Icahn before he bought his stake . . . Obviously, he has talked to some of our folks since then. He's kind of an independent actor in the thing.

We made an offer; there clearly was a bid-ask difference. We offered less than they wanted. We did move on. We've had some discussions subsequent to that. We have not re-engaged in the discussions about the acquisition of the whole company. We are discussing other forms of strategic cooperation. That's 100 percent accurate.

Was Yahoo co-founder and CEO Jerry Yang reluctant to make a deal because Microsoft's bid price was too low or because his ego was wrapped up in the company he started?

It's always impossible to tell. You sort of have to give people the benefit of the doubt. . . . We offered an incredibly generous premium versus where they were. Maybe some of these lawsuits will turn up interesting e-mail, but I don't think otherwise there will be any way to do the forensics of what was the real motive here.

What is your outlook for the future of media?

In the next 10 years, the whole world of media, communications and advertising are going to be turned upside down -- my opinion.

Here are the premises I have. Number one, there will be no media consumption left in 10 years that is not delivered over an IP network. There will be no newspapers, no magazines that are delivered in paper form. Everything gets delivered in an electronic form.

10 years?

Yeah. If it's 14 or if it's 8, it's immaterial to my fundamental point. . . . If we want TV to be more interactive, you'll deliver it over an IP network. I mean, it's sort of funny today. My son will stay up all night basically playing Xbox Live with friends that are in various parts of the world, and yet I can't sit there in front of the TV and have the same kind of a social interaction around my favorite basketball game or golf match. It's just because one of these things is delivered over an IP network and the other is not. . . .

Also in the world of 10 years from now, there are going to be far more producers of content than exist today. We've already started to see that certainly in the online world, but we've just scratched the surface. . . . I always take my favorite case: I grew up in Detroit. I went to a place called Detroit Country Day School. They've got a great basketball team. Why can't I sit in front of my television and watch the Country Day basketball game when I know darn well it's being video-recorded at all times? It's there. It's just not easy to navigate to.

Given that Google has been leading the creation of open-source software for mobile phones and bidding on wireless spectrum, what do you think their strategy might be in that market?

I have no clue what [Google is] up to. It's very hard for me to understand what they are up to. . . .

I don't know what Google's angle is because it sometimes looks like Google wants to become a telecommunications company. And yet that may not be right. But that recent thing where they went in with Sprint and WiMax guys is very confusing to me. I think it's very confusing to a number of telecommunications companies, as well.

We don't aspire to buy spectrum and get into the direct-delivery game. . . . It's unclear to me why any of us would like to jump in and go compete with rest of the cable, mobile and telecom industry. At least we don't think we do.

Will Internet content generally be available for free, with ad support, or will there largely be fees and subscriptions?

I think there will be some things people subscribe to on the Internet, but I think that's going be more the exception than the rule.

My favorite TV program, "Lost," I watch on the Internet now. I don't DVR it, I just watch it on the Internet.

You don't buy it from iTunes to avoid the ads that come when you get it for free over the Internet?

Why? Because it's free. . . . I have to admit that I'm annoyed by the four 20 seconds [of ads], but not annoyed enough to pay a buck . . . I think at the end of the day most people say, "Heck, if I can get something that's pretty good that's ad-funded and the ads don't kill me, I'll take that over the thing I gotta pay for."

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