The industry has talked up the idea that computers will finally move from the home office to the living room for many years, but Ballmer said he thinks this theory may be about to become a market reality.
"I think we are close to the tipping point, to where we may get a device that can take on critical mass. There will be an explosion in demand. People weren't really sure where these new devices fitted in. At two hundred bucks, maybe, but at three hundred or four hundred bucks, it was too hard to bootstrap the device type," he said.
There are of course no prizes for guessing Ballmer's pick to win the battle of the digital home -- and who he fingers as the loser.
"There is no way that you can get there with Apple. The critical mass has to come from the PC, or a next-generation video device," he said.
Ballmer said he's especially interested in "very basic end-to-end IP-based set-top box devices", which he said Microsoft is testing right now with Telecom Italia and Swisscom. Trials are set to start with such a device in the UK, although he declined to name the partners involved.
"We've seen a surge of interest from the telcos, as everyone is looking for a triple play -- voice, video, data," he said.
Ballmer pointed out that elements of the converged digital landscape have been around for a while, but only now have complete systems built up that seem to be getting consumers involved.
"We have had media technology built for years -- Apple, Sony, RealNetworks, have been there for years. What's changed is that now you have the format, the player, the device and the service, and that's what we will have with the launch of Microsoft Media Player 10, the official launch of the Microsoft Network (MSN), and Microsoft's Portable Media Center," he said.
Ballmer has strong words on the legal issues created by the growth in digital music and video in the home. Digital Rights Management (DRM) technology that will let content companies such as Hollywood studios feel comfortable that they can maintain control of their intellectual property is key to the convergence of consumer electronics and the PC industry.
Microsoft's chief executive clearly wants to position Microsoft as the good guy in the market, and was at pains to try and position Apple as soft on the principles behind DRM.
"We've had DRM in Windows for years. The most common format of music on an iPod is 'stolen'. Part of the reason people steal music is money, but some of it is that the DRM stuff out there has not been that easy to use. We are going to continue to improve our DRM, to make it harder to crack, and easier, easier, easier, easier, to use," he said.
He also claimed some domestic familiarity with the issue.
"My 12-year-old at home doesn't want to hear that he can't put all the music that he wants in all of the places that he would like it," he joked.
Talkback
Apple soft on principles behind DRM... This is a good thing for consumers, no?
As opposed to Microsoft, who as history has proven, hates its customers with a passion. Remember Windows 95? Try using that again and tell me that the company who made it doesn't hate you.
Seriously though, there are right and wrong ways to approach DRM. There is the Microsoft way, which undoubtedly will lock you in to all things Microsoft. Imagine, you could keep all your movies and music on a Microsoft computer, stream them to a Microsoft set top box or Microsoft Hi-Fi, take them around on a Microsoft media centre. Of course, the licensing requirements would mean that you would have to hang a really large picture of Bill Gates (you get a choice of frames) in your living room and pay obeisance to it every day. You would be monitored by a small video camera built into your Microsoft set-top box to ensure that you do this, and will be issued each day with an MSLACK (Microsoft Life Authorisation Coded Key). This can be entered digitally via the internet, but won't work because the Microsoft servers are down, so instead you will have to wait for 45 minutes in a telephone queue.
I've gone off at a bit of a tangent here. I doubt Apple's solution will be much better to be honest. What we need is an entirely open alternative. I want to store my music and movies on a Linux server because it's cheap, fast and reliable. I don't want to store them on a Microsoft computer, because it would be a virus-ridden dog. Similarly, Sony make genuinely high-quality set-top boxes albeit at a price, so I'd like the data to stream to one of those. On the other hand, Apples iPod is a lovely bit of kit and on the move, I'd like to listen to my music on that. Not overly bothered about watching movies on a 5 cm screen, so let's leave that out, although maybe I'd like to use Microsoft's portable media thingy, if it turns out to be any good. Or perhaps I'll watch them on my phone running Symbian.
What I'm trying to say is:
COME ON PEOPLE. IT'S NOT DIFFICULT.
I personally will only buy into an open solution. If movie companies release their products into closed environments, I won't buy them. By all means use DRM, but not if it's DRM I can't use.
While I often agree with the messages that Steve Ballmer puts out for Microsoft, I think he may be underplaying the importance of Apple and OS/X.
Where Microsoft "has DRM", Apple just took a security envelope and wrapped it around an existing audio standard (AAC.) Both play games quite well. Both run MS Office. Both have a nice UI. Both can be purchased in bulk for the enterprise.
All that really holds Apple back is slow market uptake, and that seems to be changing as people realize you can get your core desktop business software on a Mac and still have industry-standard API's to enable cross-platform native computing.
Those cross-platform API's are really the biggest thorn in Microsoft's side. As a developer I wouldn't care that I'm working on a Windows box if I didn't have to mess around with so many #ifdef's or stick with Java in order to get cross-platform programming options.