It <b>is</b> a laughing matter if you're Microsoft's boss

Steve Ballmer makes light of the company's problems to Andrew Thomas

t's eleven o'clock in the HMV shop in London's Oxford Street. The chief executive of the world's top software company is doing a song and dance routine wearing a bowler hat while juggling expertly with an umbrella. He appears to be enjoying himself.

Steve Ballmer is 45 and the chief executive of Microsoft, having taken over from Bill Gates in January last year. While Gates is not comfortable in the public eye, Ballmer relishes working a crowd. He's done a decent Fred Astaire impression on a rock video being made as part of the hype for the launch of Microsoft's latest opus, Windows XP.

Five minutes later he's back in the limo heading for another photo opportunity at Dixons. He's been up since 5am, addressed a Royal Festival Hall packed with customers, then done it all over again for 250 journalists. He's still smiling.

"I normally get up around five, work out, go for a jog and then get the kids ready for school," he says, munching a danish pastry. "I drop the kids off at school [he has three boys, aged nine, six and two] on the way to the office."

Ballmer isn't a fan of home working. He spends five days a week in his Seattle office and checks emails at home during the weekends. Surprisingly, he es- timates he only receives 50 to 60 emails a day. "It used to be over 150, but I've finally managed to get rid of all the spam."

He joined Microsoft in 1980, the first business manager hired by Bill Gates, and headed several divisions including operations, operating systems development, and sales and support. In July 1998 he was made president, giving him day-to-day responsibility for running Micro-soft, and last year took full management responsibility for a company with revenues of $25.3bn (£17.7bn) last year.

Born in 1956 Ballmer grew up near Detroit, where his father worked as a manager at car maker Ford. He graduated in mathematics and economics from Harvard, where a fellow student was one Bill Gates.

He has an infectious enthusiasm for his company and especially for Windows XP: "The most gratifying thing about working at Microsoft is seeing people using, and enjoying using, our products." It is good that he enjoys his work because, while Gates is now free to think up new product ideas, Ballmer has the unenviable task of dealing with US regulators and the feared European Competition Commissioner Mario Monti, who is investigating alleged abuses by Microsoft.

Being the diplomat, Ballmer doesn't comment on the regulator's actions. But he dismisses accusations that bundling an internet browser, the media player and built-in CD burning software with Windows XP is anti-competitive. "We integrate new applications into the operating system that other people can build on top of," he says. "The US Justice Depart-ment has told us that building new functionality into the OS is okay. It's vital to innovate and to improve not just the quality and reliability, but the functionality and usability of an operating system."

While some of Microsoft's competitor's paint the company as evil, it has built a series of partnerships with what could be called rival IT firms. The XP launch event, for example, is populated with senior managers from companies like Dell, Hewlett-Packard, Intel and Compaq.

The relationship with Intel is particularly close, the two companies having worked together for 20 years. For the first time in its history, the chip giant has entered a joint branding exercise with another company as an estimated $30m is spent on launch activities by Microsoft and Intel. "The software industry isn't keeping up with Moore's Law [which states that microprocessors will double in power every 18 months], but the only successful software companies are the ones that innovate, the ones who add functionality," says Ballmer.

"The problem with Linux [the free operating system seen by some as the only real threat to Microsoft's dominance) is that they have a collaborative model: there's a lot of people involved in any changes and they can't innovate as fast as we can. We can't compete on price with a free product, but if you average out the number of hours a person uses a computer, you'll find that using XP over a year would probably work out to about 50 cents a week.

"As long as we continue doing a good job, people will want our products. The important thing is that people say they like using XP."

Asked if Windows XP will boost the beleaguered computer industry, Ballmer says: "It has to. The UK market was off by around 1 per cent last year. I don't know if it'll be up 5, 10 or 15 per cent this year, but it will be up. Whatever it was going to be, XP will make it better."

He thinks the personal computer market is far from dead, with only a quarter of European homes owning a PC and an increasing trend in the US for two-machine households. "Around 20 per cent of US homes already have more than one PC and I think wireless networking is going to be the big enabler both at home and in businesses. Like a lot of big companies, we're moving away from cables to a wireless office environment."

Ballmer denies that Windows XP makes excessive demands on hardware, forcing people to upgrade: "The minimum processor we're recommending is 233 mhz. If you've got a machine you've bought in the last three years, it'll run XP happily. You might want to put a bit more memory in, but that's about it. If your computer is over five years old, it probably makes sense to buy a new one."

Ballmer freely admits that XP is the operating system Windows 2000 should have been. "We wanted to bring the two product lines – Windows 98 and Windows NT – together in a single unified product that would work for both home and business users. The year 2000 was great for business, but not right for home users. We recommended that home users shouldn't go for 2000. It was reliable but it just didn't have the support for the kind of devices people wanted to use." He points the finger at a number of firms guilty of not developing software drivers for their products under Windows 2000.

XP is going to be around for some time. "It'll be at least two years before there's a significant change," says Ballmer. "But the product is designed to be constantly updated automatically as bugs are discovered or new functionality is provided.

"Although we say officially that Windows 2000 will be supported for another three years, in reality we'll keep supporting it as long as people want us to."

Asked how his style differs from Gates, Ballmer says: "Bill can hold more in his head than any person I've met. I rely more on the team. Bill was always product-oriented, which is why it works so well now. I focus on creating a structure, keeping an eye on the competition, monitoring customer satisfaction. If a customer chooses Linux over our products, I get my guys to find out why."

The Dixons PR shoot complete, it's off to Heathrow for a presentation to several hundred chief information officers, Then it's a flight to Munich to do the XP launch all over again. He's still smiling.