You’ve said in the past that IBM — and not Google — is your biggest competitor. Given the efforts Microsoft is making in digital advertising, do you still feel this way?
There is no simple measurement to look at our competitors. Google is our hottest competitor because of their pre-eminence in search and advertising. IBM is still a much bigger company so I wouldn’t want to slight either of them. They both provide intense competition and that’s great for customers. The tendency not to focus much on business computing is a little too bad because business computing — making jobs more fun, making people more effective — because it really has a big impact on the economy. If we look at things like RoundTable that have been hyper-successful but because they are used in that business domain, they just don’t get the same visibility. Sharepoint, Office, RoundTable, our unified communications stuff. Certainly from a revenue growth point of view, those things are a very big deal. Now then again in areas like search, we have to show that we can do as good and better than Google can do, so we get to think of the best work of all the competitors.

Microsoft continues to invest a lot in Windows Live and other online services without significant financial return as of yet, can you give us of an honest assessment of that business?
You can’t think of online as separate from everything else. Software is online and the way you think about your phone, getting mail and sharing your photos. The way you move files between your PCs. It will be these Windows Live services that enable that. In November, we kicked off the first integrated version of Windows Live and that’s done quite well so we’re still early into it. It’s a key element of having the Windows platform strong for software developers and end users. We’ve got over 400 million people using Windows Live services. Messenger, Hotmail are very much leading products. The only place where we look pretty distant is search share. We did some incredible work this year and that’s beginning to be recognized and we’re going to do even more.

You are speaking about the continued momentum for Windows Vista. How will the uncertainty in the economy affect the upgrade cycle?
Has there ever a point where there is certainty in the economy? The economy has been very strong. It was an amazing year for personal computers including Windows PCs. We’re over 12 percent growth in PCs and going into the year, no one expected that. I am not a forecaster. In PCs, some years are strong and some years are very strong and this last one was very strong. I don’t think the fate of Microsoft depends as much on whatever happens (in the) economy as it does on the getting the breakthrough innovations from Microsoft Research into the products and staying ahead so it remains the platform that people want to develop software for.

In July, you are going to transition to a part-time role at Microsoft. A lot of company founders have a hard time staying away. How do you think you will handle it?
The thing that will be keeping me busy is a very complex and engaging set of topics about bringing health and education breakthroughs to the people who need it most. I love software, but I also love the Foundation stuff. I find them both very very fulfilling. I am thrilled that Ray Ozzie stepped up as chief software architect and we have people like Craig Mundie and a lot of the colleagues I have worked with over the decades doing great work at Microsoft will pick a few things to focus on. The broad thing of trying to understand everything and coordinating it, that’s the role I will pass on. It’s not one that you can do casually. It’s kind of more than a full-time activity. My role will definitely be different. I will still get a little bit of everything. I love working with the smart people and I love the kind of breakthroughs. In my speech, I talk about how we moved to user-centric, moved to natural user interface and pervasive high quality displays. It will be kind of too bad not to working on that every day, but working on a malaria breakthrough or how people can do micro-finance are pretty impactful things too.