Ballmer: 'Google is head and shoulders above us'

Microsoft's chief executive officer, Steve Ballmer, has said the software giant has a long way to go to compete with Google when it comes to search and advertising.

Microsoft is attempting to break into online advertising but speaking at the Gartner Symposium/ITxpo in Orlando this week, Ballmer admitted Microsoft is still an "aspirant" in the search and advertising fields.

He said: "In world search and advertising, Google is the leader, we're an aspirant. We have a lot of work to do in search and advertising."

Microsoft acquired digital-advertising company aQuantive in May, and has been in the process of investing $2bn in its own online advertising platform.

Ballmer said it is "expensive to do an advertising platform" but insisted Microsoft's platform - called Microsoft Digital Advertising Solutions - is viable. "Our advertising system works," he said. "When we have something there, we'll show you."

The Microsoft chief said the company has evolved from a desktop software enterprise to a business that has "broadened" to include advertising and online services, as well as becoming involved with entertainment and mobile devices.

Ballmer added that Microsoft's "software model is under attack". "We need to take control back," he said.

aQuantive itself still needs to use an external advertising agency as consultants, Ballmer admitted. "[aQuantive has] learned a lot from having an advertising agency feeding back," said the chief executive.

Gartner analyst David Smith said Microsoft is "clearly going after the online advertising market, and advertising is Google's core market".

Smith added that the slowing of the software industry's growth "is a challenge to Microsoft", hence its need to diversify into other sectors of the IT industry.

He said: "Open source is putting a lot of pressure on pure software companies. Microsoft doesn't have presence in other business - it needs pressure in the advertising market."

Tom Espiner writes for ZDNet UK