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In a memo detailing organisational changes at the Windows maker, Ballmer touched briefly on all its major competitors and how Microsoft intends to challenge them.

"In the competition between PCs and Macs, we outsell Apple 30-to-1. But there is no doubt that Apple is thriving," he wrote. "Why? Because they are good at providing an experience that is narrow but complete, while our commitment to choice often comes with some compromises to the end-to-end experience. Today, we're changing the way we work with hardware vendors to ensure that we can provide complete experiences with absolutely no compromises. We'll do the same with phones - providing choice as we work to create great end-to-end experiences."

Turning to Google, which possibly poses an even greater threat as software moves from the desktop to the web, Ballmer said that Microsoft intends to keep investing

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in search to become the market leader.

"In the coming years, we'll make progress against Google in search first by upping the ante in R&D through organic innovation and strategic acquisitions. Second, we will out-innovate Google in key areas - we're already seeing this in our maps and news search. Third, we are going to reinvent the search category through user experience and business model innovation. We'll introduce new approaches that move beyond a white page with 10 blue links to provide customers with a customised view of their world."

Acquiring Yahoo would have helped, he said, but insisted it would make no difference in the longer term.

"We want to accelerate our share of search queries and create a bigger pool of advertisers, and Yahoo would have helped us get there faster. But we will get there with or without Yahoo."

Concluding the memo, Ballmer said that Microsoft has an "incredibly bright future".

"We are the best in the world at doing software and nobody should be confused about this. It doesn't mean that we can't improve, but nobody is better than we are."

[photo: WEB DEVELOPERS by Nick, Programmerman; some rights reserved]