Microsoft CEO Steve Ballmer, Live From The Churchill Club - Forbes

Microsoft CEO Steve Ballmer is having dinner Wednesday night at the Santa Clara Marriott, with a 1,000 or so of his closest friends.

More specifically, he’s speaking at the Churchill Club, where he’ll be interviewed on stage by venture capitalist extraordinaire and LinkedIn founder Reid Hoffman. I’ll be blogging the event live; stay tuned for updates.

There are many, many topics for Ballmer to address. This week’s firing of Windows President Steven Sinofsky. The progress of Windows 8, Windows Phone and Surface. The state of the PC industry. The company’s relationship with the PC manufacturers given the entry into tablet hardware. Rumors about a potential move into smartphone hardware. Rumors that the company might bid for Netflix. And concerns about who might succeed Ballmer a few years from now, given that Sinofsky, who had widely been considered an heir apparent, is now out of the picture.

Before we get started, a bit of news I picked up during the cocktail hour: Microsoft investor relations chief Bill Koefoed, who is widely respected both inside Microsoft and on the Street, is shifting roles: he’ll be the new chief financial officer at the company’s Skype subsidiary.

Festivities start at 7:30 Pacific.

• Here’s how insane traffic is in Silicon Valley right now. It took me over an hour to drive from Palo Alto to Santa Clara. It’s all of 13 miles.
• The hotel could not possible have enough parking. Next year, they can hold a dinner with Ballmer at the new San Francisco 49ers stadium, which is about 1 mile from here, and invite 68,500 people. By the way, the naming rights for the stadium are still available.  Windows Park? Microsoft Field? Exchange Place? The Outlook? Just sayin’.
• 7:30 Introductions are under way. The event is apparently being streamed live at Fora.TV.
• 7:35 Both men come on stage. Clapping.
• Hoffman starts with a question about transition in leadership â€" and the departure of Sinofsky.
• Ballmer says he is real excited about the spectacular start with Windows 8. He says from strategy perspective they are all in on what they’ve done, new user interface, product with best of work and play, tablet and PC coming together. He says they are off to a good start, and have a very good team. Sinofsky has made one of the most amazing contributions anyone has ever made to any company. I wish him well. The new team is fantastic, little less well known. 400 million PCs with Windows get sold every year.
• Hoffman: What’s the relationship between Surface and PCs?
• Ballmer: This notion of the best of world’s is not the craziest notion â€" if you really can give people the best of work and play. Option to lie back, lean forward or lean all the way forward. He says they really re-imagined Windows. (He reached down, and pulls out a Surface tablet.) He notes that it is a tablet, but put it in the dock, and it is a notebook.
• Hoffman: Is that the key strategy for making a footprint in tablets?
• Ballmer: He says there are many form factors. Tablets, notebooks, touch screen notebooks. What happens is, distinction between PCs and tablets goes away, you just have to decide the usage mode that works for you. Opportunity for app developer is enormous, he says.
• Hoffman: Why will Surface dent the tablet market?
• Ballmer: Diversity of form factor actually matters. Laptop does matter, and tablet does matter. Diversity of price point, you will see range of price points. Enough volume to attract developers â€" apps for phones ported to PCs; apps for big screens; you want to support the innovation from the phone up and the PC down. UI is very different â€" not a seas of icons, it is alive with the things that are important to people’s live. It is a point of view difference. You can write everything in Javascript and HTML, which makes it easier on-ramp for developers.
• 7:43 Hoffman asks about the new push into hardware.
• Ballmer: There has been a shift. OEMs will still build lion’s share of Windows devices. With that said, it is clear that there is an innovation opportunity on the seam between hardware and software â€" and it must not go unexploited by Microsoft. We continue to work with HP and Dell, Toshiba and Sony and Acer and Asus and HTC and Nokia and Lenovo. But where there is innovation that crosses hardware/software boundary, they are not going to cede. Software is still the skill to have; but going to the market will be through devices and online services.
• Hoffman notes that this creates tension with ecosystem
• Ballmer says they will navigate carefully. Tell people up front what you are going to do. There is no software that we are not licensing to partners. In Xbox, we just build the device, hard to share the economics. The phone, more tightly defined the hardware spec. In PC, we have very open set of innovations around Intel Core and Intel Atom processors, trying to be more tightly proscribed on ARM processors.
• Hoffman: Will Microsoft ship a PC?
• Ballmer: Surface is a PC for all intents and purposes. Shipped Surface RT; announced Surface Pro which said will ship 90 days after Windows launch. But not shipping a clam shell. The OEMs are doing great work and we’re excited about it. Same is true in phones. No need to repeat what other companies are doing brilliantly.