Exclusive: Microsoft's Ballmer Throws Down Gauntlet Against Apple

"We are trying to make absolutely clear we are not going to leave any space uncovered to Apple," said an exuberant Ballmer in a 30-minute interview after addressing some 16,000 partners at the company's annual Worldwide Partner Conference in Toronto. "We are not. No space uncovered that is Apple’s.

[Related: Microsoft's Ballmer Touts New Products, Mum On Channel Surface Tablet Sales ]

“We have our advantages in productivity,” he said. “We have our advantages in terms of enterprise management, manageability. We have got our advantages in terms of when you plug into server infrastructure in the enterprise.

"But we are not going to let any piece of this [go uncontested to Apple]," shouted Ballmer. "Not the consumer cloud. Not hardware software innovation. We are not leaving any of that to Apple by itself. Not going to happen. Not on our watch.

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"We do feel empowered to innovate everywhere and bring our partners with us," Ballmer said. "We are just not going to leave any -- what’s the expression people like to use -- We’re not going to leave any stone unturned, so to speak, as we pursue that."

Ballmer did not even discount the possibility that Microsoft’s innovation offensive could include its own smartphone to compete against Apple’s wildly popular iPhone. When asked if Microsoft might make its own smartphone, Ballmer paused and then replied: “Right now we are working real hard on the Surface. That’s the focus. That’s our core. Look, we’ll see what happens. We have good partners with Nokia, HDC in the phone space. I love what we've got going on with the Surface. We are going to focus on Surface and our other Windows 8 Tablet partners and see if we can go make something happen.”

The interview with Ballmer is one of the first he has done since the software giant shook up the industry by unveiling plans for a pair of tablet computers dubbed "Surface" in a bold move that thrust the world's largest software company into uncharted hardware waters.

As to whether partners will eventually be able to sell the Surface, which is slated to be available from Microsoft.com and Microsoft retail stores, Ballmer said Microsoft’s initial emphasis was to put “one foot in front of the other” and get the product “out the door.” “But, if a partner says, ‘Hey look I want to sell some of these things. I want to put them in solutions,’ they can order some off Microsoft.com and sell them. There is nothing that gets in the way of that. But, we have not set up what I would call industrial distribution as sort of a first element. We may get there. But, if a partner wants to order some and put them in a solution with the customer, we’ll be excited to see that happen.”

The Surface marks the first time ever that Microsoft has tried Apple's long-successful strategy of tightly integrating its own hardware and software together in sleek products.

Microsoft is introducing two tablet products: Surface for Windows RT, a consumer tablet running Windows 8 on ARM microprocessors that Microsoft expects to be used in the workplace, and Surface for Windows 8 Pro, an Intel Core-based tablet that runs the edition of the upcoming Windows 8 operating system for business professionals.