The background here is that while Apple continues to do relatively well despite the economic crisis, Microsoft is, for the first time in the company's history, showing a decline in profits. On top of that, a recent investigation revealed that of machines costing 1000 USD or more, 91% of the revenue goes to Apple. Mind, though, that we're not talking about unit market share, but revenue market share. Still, it's an impressive number.
Ballmer first noted that a lot of the members of his audience, consisting of members of the press and analyst community, had Macs. He noted that Microsoft apparently had more work to do. In true Microsoft spirit though, he did say that in the end, it doesn't really matter that much if people buy Macs - as long as they run Microsoft Office. "But anyway... That's okay, feel free as long as you are using Office to go right on ahead," Ballmer said.
Ballmer went on to explain the difference in how the two companies operate within the PC market. "We do not, like Apple, believe in low volume, very high prices," he said, "Apple is a great company. Does a fine job. But their model says high margin, high quality, high price. That's kind of how they come to market. We say we want big market share but with big market share you take a lower price."
Still, the company isn't sitting still, and Ballmer promised that while Apple currently has the lead when it comes to cool and beautiful hardware, this lead could be turned around before Christmas:
Interesting times are certainly ahead. Windows 7 is shaping up to be a very nice release, and it's going to be much harder for Apple to ridicule Windows 7 than it was for them to ridicule Vista. When it comes to Macs, Apple might have to go back to actually touting advantages of the Mac over Windows instead of just making fun of it.
Then again, Steve Ballmer doesn't exactly have a very reliable track record when it comes to predictions, so I'm not betting on his words.