In conversation with LinkedIn co-founder and venture capitalist Reid Hoffman at a Churchill Club event, Steve Ballmer gave his assessment on Microsoft's competitors in the mobile space. "The ecosystem of Android is a little wild," he said, noting compatibility and malware issues due to the fragmentation that comes from having multiple variations of Android, on devices from Amazon, Samsung, Google and other hardware makers.

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"Conversely, Apple's system looks highly controlled and quite high prices," the Microsoft CEO said, citing the $1,000 cost of an iPhone in Russia. "How do you get quality not at a premium price with not quite as controlled an ecosystem."

"The best of both worlds is available to us," he maintained.

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The phone operators around the world, who actually pay for most of the phones, really want three vendors, Ballmer explained. "On the high end, they have Apple and Samsung and a sea at the low-end. "We have a customer set that wants an alternative, and it's a different opportunity strategically...the product has to be great. Windows 8 is the most personal smart phone. When you whip out your phone, you want to see the things that matter to you."

However, Ballmer acknowledged that it's still early in the game. "If anyone thinks hardware innovation in pocket devices is ending, they are nuts," he said. For now, Microsoft and Windows 8 are playing catch up. Microsoft's Windows Phone mobile operating system captured just 2.4 percent of the smartphones shipped around worldwide during Q3 of 2012, according to Gartner.

Ballmer said he doesn't expect Microsoft's phone operating system to be an instant hit. "There is unmet need from operators and, from a consumer perspective, a lot of room for innovation. The challenge is to get 10 percent of the smartphone market, and then 15 percent, and then 20 percent. We aren't trying to get to 60 percent overnight."







