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Thursday, July 29, 2010, 02:50 pm PT (05:50 pm ET)

Steve Ballmer: 'Apple sold more iPads than I'd like them to sell'

Speaking to Wall Street analysts, Microsoft chief executive Steve Ballmer noted that tablets are a big issue for the company and expressed concern about Apple's success with iPad.

"Today, one of the top issues on my mind, hey there's a category — tablets," Ballmer said, according to a transcript by Business Insider.

"Apple has done an interesting job. They've sold more than I'd like them to sell. We think about that," he said. "So it's our job to say, we have got to make things happen. Just like we made things happen with netbooks, we have to do that with Slates."

Ballmer introduced his comments on tablets by saying, "Windows is everywhere. It's in gas pumps, lights controlling stadiums, etc. But for consumers...Microsoft went from no Windows in netbooks to being the guiding piece of software. Thin laptops, gaming PCs, TVs, etc. We have the widest array of form factors."

What Microsoft did to netbooks

Netbooks originally debuted with Linux, which helped the low end mini-notebooks achieve an attractive low price. However, Microsoft immediately began pressuring PC makers, including netbook leader ASUS, to switch to Windows XP, offering the software virtually for free to prevent Windows-free netbooks from gaining traction.

In the spring of 2009, Ubuntu CEO Mark Shuttleworth expressed hope of a level playing field in the netbook market, stating in an interview that "a decent edition of Windows [7] will mean Microsoft finally has to charge full price and that Redmond will finally stop allowing OEMs to use low-cost copies of Windows XP instead of paying full price for the full version of the official flagship - Windows Vista."

By the summer of 2009, Ballmer was telling financial analysts that Microsoft hoped to stop the rapidly falling prices in PCs (in part due to an influx of cheap new netbooks).

Using Windows 7, Ballmer said, "We’re going to readjust those prices north." At the time, he commented that Apple's gains in PC market share were a "rounding error," and "cost us nothing." He added, "hopefully, we’ll take share back from Apple. But they still sell only 10 million PCs a year, so it’s a limited opportunity."

Tablets harder to take

A year later, Apple has increased its Mac unit sales significantly while also selling nearly as many more new iPads per quarter. Ballmer referred to iPad as a PC, so from Microsoft's perspective, Apple has doubled its share of the overall computer market, while making major gains in the formerly beleaguered tablet market.

Unlike the netbook market, Microsoft can't pressure Apple to convert the iPad to a Windows device. And other PC makers have shown little enthusiasm for Windows in the tablet arena, with ASUS recently shelving its plans to use Windows Embedded Compact 7 in favor of Android.

Asked about future Microsoft tablets in the wake of HP dropping its plans for the consumer "Slate PC" it unveiled at CES just before iPad was announced (and before buying Palm, below), and the news that Microsoft was canceling its own Courier tablet concept, Ballmer said, "We've invested in touch, in ink. Mark up annotation, you'll see us try to bring it together to deliver slates and convertibles people will be excited about."



Ballmer told the audience that new Microsoft tablets, "will be shipping as soon as they are ready. It has job one urgency around here, nobody's sleeping at this point. We are working with those partners, not just to deliver something, but to deliver products that people really want to go buy."

After fretting about Apple's ominous iPad sales numbers, Baller also took the opportunity to criticize the product, saying "I don't think there is one size that fits all […] I've been to too many meetings with journalists who spent the first 10 minutes of the meeting setting up iPad to look like a laptop." Presumably, Ballmer meant pulling out a Bluetooth keyboard.