Kicking off a financial analyst meeting on Thursday, Microsoft chief executive Steve Ballmer addressed the threats to Microsoft's biggest economic engine, its Windows business.
In addition to the usual issues of piracy, emerging markets and netbooks, Ballmer acknowledged another challenge: rivals to Windows.
"We've got competition coming from a lot of different places," Ballmer said. He talked about the competition from Linux and Apple and the looming threat from Google's Android and Chrome OS.
"I don't know what Chrome OS is yet," Ballmer said. "Right now I just put it on the list for competitive completeness."
That said, he said he does expect more competition overall for Windows. "We are going to come under attack," Ballmer said. "Any business that is as big... as Windows deserves competition."
However, he said he expects Windows 7 to be a strong answer to all of those threats, noting that Microsoft understands that Windows is its flagship product. "That is absolutely job one around here," he said.
Ballmer said the Windows business should grow roughly in line with the overall PC market in the coming year, although he declined to give a specific forecast.
He also walked through the economics of the Windows business, addressing all the different segments. "Many of you think we have problems we don't have in the Windows business," he said.
On the Apple front, Ballmer noted that the year was roughly a washout, with Apple gaining some share in the beginning of the year and Windows regaining some at the end of the year.
However, he noted that the company still had work to do with the analysts, counting up the significant number of Macs in the crowd. "Don't hide it," he said. "I've already counted them. I've been doing it since we started talking... Feel free. As long as you are using Office go right on ahead."
Ballmer's comments follow a disappointing quarter in which Microsoft's revenue was hundreds of millions of dollars less than many analysts were expecting.
"It was kind of a wild quarter," Ballmer acknowledged. "It was a bad economy and we still had a pretty good year."
The company has said it sees the overall economy and its business to be challenging for the rest of the calendar year.
Earlier in his talk, Ballmer also walked through the economics of the search ad deal with Yahoo, highlighting its benefits to both companies, calling it a win-win.
