UPDATE: Windows 7 photos and feature details here. Highlight videos, way easier to digest than my liveblog, are after the jump.

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6:15 We're here. Things should start in a few.

6:23 Wow, Owen Thomas from Valleywag was kicked out of the entire hotel. He'd planned to sit at the bar and report from outside, but he's banned. CORRECTION: He's at the bar.


6:29 Dow Jones is reading off sponsors. Hold on, Gates will be here soon.

6:31 Mossberg and Swisher are on stage, warming up the crowd and talking about the versa tubes behind them on the stage.


6:35 Showing a director's cut of the Gates retirement video.

6:46 Gates and Ballmer on stage. Mossberg asks if they were roommates but they were not. (Gates and Ballmer shook their heads and grinned. They were in the same dorm.) People thought they'd be good friends and introduced them. They were both very intense, but Gates says that he was not into signing up for campus activities. Ballmer signed up for all things he could.


6:49 Walt: Did you try to talk Gates into staying? Ballmer: No!

6:50 Ballmer is talking about his experience at Stanford when Bill Gates tried to hire him.


6:51 Gates called Ballmer while he was at Stanford and tried to hire him. Ballmer said that Gates called and when heard Ballmer was still in school, he hung up. Ballmer called back the next day and they agreed Ballmer should finish his first year.

6:52 Ballmer did a bad job at first, by his reckoning: things shipped late and people worked really hard all the time.

6:56 Bill Gates had spreadsheets about contracts, revenue and payroll for everyone, all over his house. In the couches, etc. Bill to Ballmer at that time: I didn't pull you out of business school to bankrupt us!


6:57 Bill spelled out the vision for Ballmer then: they could put a computer on every desktop. Bill told Ballmer at that time: Hire as fast as you can and I'll tell you if we're getting ahead of ourselves.

7:01 Mossberg: There is not a history of two executives working for so long together. Ballmer: 28 years. Kara: What made Ballmer special? Gates: It was important to do it together, two heads together. Like when IBM divorced us a couple of times, we went through that together. Mossberg: There is a perception that Gates is the Tech guy and Ballmer is the sales guy. Gates: There's a lot more to running a company than the tech, like the strategy, sales, etc.

7:02 Ballmer: I ran the product management for Windows 1, but I'm not an engineer. Ballmer: We're both detail oriented, but in different ways. Bill knows more about products. I know more bout moods and people's situations and finances.


7:04 Kara: You consider yourself a business man? Gates: Sales minus costs equals profit. Is there more? (laughter)

7:05 Mossberg: Way fewer people knew who Ballmer was than Gates. Did that bother you because you just talked about a partnership? Ballmer: Did that ever bother you? Because it was good for the company than personally, and being famous is not easy. And Gates was the Senior partner when I signed on until 8 years ago when he wanted to switch, so it was never a big deal to me.

7:08 Kara: As junior now, do you get to veto? Bill: No. Walt: How did you adjust to the role switch between junior and senior? Ballmer: It was hard. Took a year to adjust to how much work to assign him compared to the rest of the team. But Bill Gates going to part time is not going to affect things as much.


Mossberg: But aren't you, Bill, the Chairman of the Board and the largest shareholder? Bill starts to answer but Mossberg stops him from spinning. He wants and answer. He wants to hear how difficult it will be to extricate him. Ballmer: Bill's available to me as a friend and resource, he's not part of the formal process, that's not how I look at it. Kara: What if he calls you an idiot? Ballmer: I am used to that, for 28 years!

7:11 Mossberg offers Ballmer a whiteboard, because he considers Ballmer a maestro of the whiteboard. Ballmer steps up and goes to explain the yahoo situation. He's just talking business jargon. Basically, Yahoo is important for the scale of the business for advertising.


7:15 Mossberg: Can you get scale from Yahoo without a full acquisition? Ballmer: Well we're still talking to them. No one else gets scale but Google. If the WSJ's ads were sold only through Google, they'd tell you how it was priced and that's all it. Kara: Like a monopoly! Gates: Guys like us avoid monopolies because we like to compete! (Laughs)

7:20 lots of sales stuff, advertising stuff, and jargon. I will spare you.

7:21 Ballmer says something loud and Mossberg says he got scared for a bit.

7:23 Mossberg: Let's talk about Vista. People didn't like it. Is Vista a failure?

Ballmer: It isn't. We sold 150 million copies of Vista. Would we have done things diff? Yes, with 20/20 hindsight. There was so much pressure to be secure, we gave up some compatibility for security. We have made progress since it was in the market. Walt: Let me ask Bill, he's being quiet. Is Vista up to your expectation? Did it damage the company? Bill: Well no version has shipped as perfect for me. But that's the magic thing about software, people give you feedback and you make a new version. With Vista, we have a lot of chances to improve. There's a lot of things that were well received in Vista. This is the most used software in the world. There are plenty of chances to learn from Vista. Ballmer: There are two things that are different in Vista. The user interface change was jarring.


7:40 Windows 7 was just unveiled and here are the photos. Here's a feature detail breakdown.

7:43 Mossberg: The combination of Vista and whatever the OEMs put on there make it slow. Ballmer: We're working on making the end to end experience higher. We're trying to get more in front of the curve in Windows 7 to make it better.


7:46 Ballmer: Every share point Apple picks up, is a point we don't like. There's no question our model is better. That doesn't mean that it's what everyone likes. (There's a lot of rambling here, and jargon, and its hard to find any facts in here.) Mossberg keeps pushing for an answer on if they were happy about Vista, but Ballmer tells him, half-jokingly that Walt is repeating himself. Walt wanted an answer but he probably knows not to answer this after he answered truthfully at CES to our own video cameras.

7:51 [Sorry about jumping to the other post on Windows 7 and delaying here. There's a lot going on and its hard to keep it all together, folks.]

7:51 They're talking about phones. Ballmer states that Nokia is one and they're two. He's talking business jargon again, but I think they need to talk less about business and more about product quality.


Kara: How do you look at Google Android? Ballmer: They're taking a crack at the pie, no one knows what their business model is, and they have no phone, but we'll see. They're a serious company, and we take them seriously, but no one knows.

7:55 Kara: Anything you want to say, Bill, as you're retiring soon? Bill: Probably the last time I'll speak here. Walt: Nooo Bill: Defers to Melinda who will explain the Foundation's work later.

7:55 Question from the crowd: Any thought of putting ads in the current Msft products, since we spent so much time on them? Ballmer: He's not sure it would work here, but there is a lot of Jargon here. Bill: If someone is using Office, they don't want to be distracted. But with Office Live, it's possible.


7:59 Question: How do you attract talent? Bill: Success breeds success, and smart people want to work with other smart people and that dynamic is one to keep strong.

8:00 Tim O'Reilly: Big companies have big hairy goals, like putting pcs on every desktop. What's Microsoft's goal now? Bill: Software driven goals, he goes on to mention many questions, like how is the info worker's environment going to change?, etc., and doesn't really answer the question about what Microsoft's goal is.

8:05 Slide guy asks: What's the take on programs and apps within browsers, like Facebook and Myspace. Kara: After superpoke. Ballmer: The future of computing is more balanced, in the cloud or in the browser. What people want is presentation from a nice client with the connectivity and collaboration within the browser. That's what we're driving on the software + services strategy. Bill Gates is rushing through tech elements like 3d and strorage, but he's ultimately making the comparison between the networked computer before. Kara: Do you use widgets? (Facebook.) Bill: I got overwhelmed. Lots of people poking you, etc.


8:07 Ester Dyson has a Q, following up on Tim O'Reilly's. Why not take on for profit healthcare, not just something incremental like better TV. Ballmer: Our world is software and that's what we help with. Once we leave that, we're not sure we're the best guys.

8:09 Finished. More from D tomorrow at 8am PST. That was an extremely hard conversation to follow, with lots of dodging and rambling, so please excuse my translation and check out allthingsd.com for the official transcript.

[All Things D]