This is a guest post from Larry Dignan. You can read the original article on Larry’s blog Between the Lines on TechRepublic’s sister site ZDNet.

Microsoft CEO Steve Ballmer on Thursday defended Vista’s honor–again–but at least gave a nod to enterprise buyers that planned to skip it and upgrade when Windows 7 launches. He also noted that a Microsoft purchase of Yahoo would still make sense, but there are no talks. And he called Google Apps primitive while he was at it.

ballmer1.pngBallmer, speaking at the final keynote at the Gartner Symposium ITxpo in Orlando (Twitter feed), came to the stage in the middle of an economic swoon where enterprises are still debating whether to upgrade to Vista. Ballmer spoke via a Q&A with Gartner analysts Neil MacDonald and David Mitchell Smith.

First, Ballmer defended Vista’s honor as he had at last year’s Gartner’s powwow.

“The adoption rate of Vista is faster than the adoption rate was of XP at two years in,” said Ballmer, who noted that there were issues with compatibility. “We had a great success with security and starting to see a ramp with adoption.”

MacDonald countered with Gartner survey data that 61 percent of respondents are thinking about skipping Vista. Ballmer said that Microsoft would be ready for that outcome too. Mentioning Windows 7–he quipped about the creative naming convention of using just “7”–he indicated that Microsoft would be ready for folks that want to skip Vista. In fact, he said Windows 7 would be compatible with Vista.

“Our next release of Windows will be compatible with Vista. The key is let’s get on with it. We’ll be ready when you want to deploy Windows 7.”

Ballmer was asked why Windows 7 is considered a major release instead of just the second rev of Vista. His reply: “It’s not minor because it’s a lot more work than a minor release. It’s a major release.”
Ballmer also noted that Windows 7 will improve the operating system shell. “Windows 7 will be Vista, but a lot better,” he said, noting cleanness of user interface. Is this fit and finish improvement? Gartner analysts kept referring to Windows 7 as a release candidate 2.

Another key question: Given the economic environment, why upgrade to Vista?

“If people want to wait they really can,” said Ballmer. “But I’d definitely deploy Vista.” He noted that most IT buyers upgrade the OS when they deploy new machines.

The other elephant in the room was the Yahoo deal. Yahoo, which used to be a takeover target of Microsoft, is getting cheaper by the minute.

In fact, Yahoo tagged yet another 52-week low on Thursday traded below the $12 mark.

Could Yahoo come into play again for Microsoft?

The answer seemed to be to never say never, but there’s nothing imminent. “We offered $33 bucks (for Yahoo) and it’s $11 today,” said Ballmer. “It’s clear Yahoo didn’t want to sell. They probably still think it’s worth more than $33 a share. I still think it makes sense for their shareholders and ours.”
Update:  Those comments put Yahoo shares on better footing almost instantly. When Ballmer speaks Yahoo shareholders listen.

Among other topics:

Google Apps: Ballmer said he didn’t consider Google Microsoft’s biggest competitor. Gartner’s questioners asked Ballmer about the Google Apps threat and he became animated. “People don’t use it. People try Google Apps, they don’t use it. You can’t even put a footnote in a document!” said Ballmer. When asked if Ballmer was dismissing Google Apps, he said that Google has “very primitive” capabilities. “We have better competition today than Google Docs and Spreadsheets. We get more competition from OpenOffice and StarOffice frankly,” said Ballmer.
Consumer: Ballmer noted that Xbox, Office 2007 and Messenger have been consumer hits. However, Ballmer pooh-poohed the idea that Microsoft was favoring consumer over enterprise.
Multicore: Optimizing applications to take advantage of multicore technology is a challenging problem. Windows’ NT code base can still improve.
ballmer21.pngMicrosoft’s cloud OS: Why should people care? “We have a big announcement in two weeks at our Professional Developers Conference and we’re going to run through this stuff,” said Ballmer, looking at his 10 handlers in the crowd (right) and knowing he’d be saying too much. Regarding cloud computing he said it’s critical Microsoft has a platform in the cloud because it’s more than just hosting.
Does Microsoft worry about losing focus? “No,” said Ballmer. He said it’s silly to not think the world is going to change. He said he has no problems building everything from data centers to devices.