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Yes they will, most likely. Or rather they will collide in various areas struggling for consumer mindshare (with MS in a very disadvantaged position right now).

I still argue that Apple is far less "innovative" than it takes obsessive interest in the packaging of already done things and has the greatest marketing arm of any corporation out there.

"but you can't deny that the man [Ballmer] has passion" Maybe, but I don't think its for interesting product as much as a belligerently competitive business streak. That isn't a value judgement as much as an observation of character. Jobs was a bastard but one driven on what was produced. Ballmer is also a bastard but about as in the box a thinker as one gets for the industry.

If MS can even put up a viabe fight it will be some time in, and will be more to grab the

obsessive interest in the packaging of already done things

Already done for whom? If you buy a new product, and it has a feature you've never had before, it's new to you. Like anything else, this isn't subjective: you can count the number of people that have a given feature in their phones.

There is a world of difference between someone doing something new in a lab somewhere vs. someone building something that I can actually use to improve my life. The earlier is only a mere promise of things to come, while the latter is something I can actually count on.

In the context of a computer company, innovation means delivering excellent (and therefore original & novel) design, making the most of the latest technology available. Before the other companies do (if they ever do).

Tl;dr: let's dispense with the fiction that innovation stops in a research lab. It doesn't! (I should know because I work in a research lab. What we produce is only barely tangible, and it's up to others to actually take it somewhere.)

In Microsoft's lab was a bunch of unfinished work on voice recognition and handwriting recognition.

In Apple's was a complete port of their main OS to an ARM platform ready and tested for years.

The board should have been called to account why the NT kernel hadn't been continually tested on ARM, leaving them to build WP7 on CE (but making it incompatible with CE apps due to the off screen buffer replacing GWES/Gdi) and the abandon the product.

Surface looks great, the public stance is Ballmer owning it to the shareholders, failure should come with consequences at that level.

Yes, then let's also dispense with the fiction that great product & packaging is as novel and actually innovative as creating new technology (whether that be a protocol, or languages or manufacturing processes, or complete past the horizon breakthroughs, et al...sorry, but I dislike the use of "innovation" to be anything even mildly market "novel" instead of actually groundbreaking tech. Timing the market entry right is not the same as actually innovating something into it).
I don't agree, and I think you completely missed the point of my original post.

Is technology somehow good for its own sake, or is it good because it makes individual people better off? My view is the latter. Therefore, the answer to the question of who should get moral credit for bringing a technology to life is: everyone that had a consciously played part in making it so that person X could have thing Y in their lives.

I didn't miss the point; I disagree with it. Yes, it "takes a village" to bring that technology to a marketable life, but ultimately the large part of that chain isn't doing the "innovative" part (the actual out the box conceptualizing to fruition of a truly novel concept) but taking said innovation and making it consumable by a perceived (or primed) audience.

I am making a distinction between participants. What you are saying implies that its those because it makes something "better off" but I could say that about a lot of things that are not novel either (i.e. vaccination of poor populations that can't otherwise afford it), so innovation doesn't necessarily mean (or in my mind have to be) marketable to large numbers (i.e. novel new treatment for a niche disease).

Innovation != "bring a technology to life" (take it to market), its proving/crafting something truly novel.

Whether it makes it to wider usage doesn't make it any less novel, nor does successfully selling non-novel ideas at scale make that success any less valuable. I simply refuse to conflate the two.

From an article I was just reading on Wired about HP's new memristor technology:

“It’s sad to say, but the science and technology are the easy part,” Williams said at the recent conference. “Development costs at least 10 times as much as research, and commercialization costs 10 times as much as development. So in the end, research — which we think is the most important part — is only 1 percent of the effort.”

"Most important"? That contradicts the rest of what he said in the very same quote!

Every link in the chain from a new idea to a happy customer is important.

http://www.wired.com/wiredenterprise/2012/07/hp-memristors/

Microsoft has a sordid history with the word 'innovate'. Reading this gave me flashbacks to the days where they were trying to control the narrative regarding to their conflict with the DoJ. If only the verb form 'innovate' had some synonyms. Then they could say "Apple won't out-Garde the Avant on our watch" instead. Or something.
Like he has a choice or control in the matter...
That's weird, I thought the standard line on Apple was that they don't innovate, they just take existing product ideas and make them "pretty". And then sheeple like me buy them because we're gullible and stupid.

    I thought the standard line on Apple was that they
    don't innovate, they just take existing product
    ideas and make them "pretty".
Please show us when and where Ballmer stated this "standard line"?

If he never stated it, then how does this "standard line" relate to this article? Do people who state this "standard line" generally hold a high opinion of Ballmer's conclusions and must now reconcile their opinion of Ballmer's conclusions with their "standard line"?

Or do you simply want to use any opportunity to attack strawmen who believe that everyone who buys Apple's products are stupid and gullible sheeple?

Apple innovates. It does not invent. Invention involves true discovery or creation; innovation is introducing existing ideas into new areas (in Apple's case, new markets) or changing existing ideas.

But you did get the third part right, about the sheeple...p

Why even mention the competition? We all know who the tablet incumbent is. I've always been bullish on Microsoft, but Ballmer... A truly great CEO could say something more subtle like, "We have our best people working on Surface and we think producers - executives, artists, developers and managers - will love our tablet offering, which we pioneered with Surface Table in 2007 and can now finally bring to the public in the beautiful, compact Surface. <sends MS Word document via email, smiling like a sir>."
My thoughts exactly. He's too focused on the competition when he needs to be focused on the customer.

You won't win the race if you're focused on what your competitors are doing. Focus on the finish line and just get there first.

This is the kind of thing a CEO can say internally, but probably shouldn't be saying to press. If they are successful, there won't be any benefit; if they fail, he'll look silly. I realize part of the motivation here is to keep some partners on board, but a similar credibility issue will apply there as well.
You make a very good point, but on the flipside I like that he publicly recognises their position and that they need to get back on track. It reassures me that they aren't just hiding from the situation.
True, but it would be a lot better if he was saying this before everyone else in the universe realized they were lagging on innovation. Also, I feel like they're making a mistake by specifically pointing to Apple - they're lagging behind multiple companies in multiple markets.

When you spend all your time talking about one competitor, you're admitting they're beating you. Market leaders don't call our their competitors by name. (See: Coke, Pepsi.)

This is a crazy thing to be saying at a time when everyone is questioning the price and performance of Surface.

Don't get me wrong. Surface looks good. But what is the impression after a week of use? Does the cheaper model compete effectively with the $400 iPad2? Does the more expensive model compete with an Ultrabook?

Really. Innovation is about competitiveness as much as ideas. And if the Surface is over priced without being as useful, then Ballmer's comments are embarrassing.

So i guess this means they are going to move out of computers and start making hamburgers or something?

Since, of course, there is a near 0% chance of them not being out-innovated by apple in every field in which they compete.

Ballmer could be right. If iOS 6 or the most recent MacBook lineup is any indication, Apple seemed to have pulled the brakes on innovation.
Oh yes they will.