Microsoft CEO Steve Ballmer wants to make it very clear: his company has what it takes to compete directly with the reigning kings of the gadget-verse. "We are not going to leave any space uncovered to Apple," he said in a live interview with CRN held at the company's Worldwide Partner Conference. "Not the consumer cloud. Not hardware [nor] software innovation. We are not leaving any of that to Apple by itself. Not going to happen. Not on our watch."

Ballmer repeatedly highlighted Microsoft's foray into integrated computing: the Microsoft Surface. The Surface — a tablet-ultrabook hybrid built to run on Windows 8 — will hit the market this fall, and if the unofficial price rumors are to be believed ($599 for the ARM-powered RT, and $1,000 for the beefier Intel-powered Pro model), the hybrid might go head-to-head with Apple for consumers considering purchasing a $499 iPad or a $999 MacBook Air.

The Surface (pictured right) represents a radical departure for Microsoft, which has spent more than two decades developing software to run on other people's hardware. Microsoft was the ubiquitous face of 1990s computing; Apple was a boutique brand for ice coffee-slurping hipster weirdoes. As late as 2000, Ballmer reportedly described Microsoft's philosophy as "last to cool, first to profit." Loosely translated: the company was less concerned with the cutting edge as it was with improving upon the work of others; Microsoft let others navigate new territory, then it swooped in to develop its own version.

And to that end, the company's strategy met some success: the Xbox (built upon the foundation laid by PlayStation), Kinect (via Wii), and even Bing (via Google, which surprisingly holds a fairly respectable 15% share of the search engine market) are household names. Of course, there have been notable failures: Microsoft couldn't give away Nokia's Windows Phone 7. Of the three times we've posted deals for the phone (all of which set its price to free or bundled it with a $50 credit) our readers barely blinked — or clicked. And remember that old "iPod-killer" the Zune? Don't worry, very few people do. (But our very own dealnews Media Editor keeps it alive).

Unfortunately for Microsoft, "cool" almost directly translates into "profit" in the gadget world and the company has little to show for itself in today's mobile market. Apple is the undisputed champion, all the kids are on Facebook, and even Google commandeered Windows' "open" OS role with the Android platform. A story in the current issue of Vanity Fair derides Microsoft's anti-innovative corporate culture as the problem, and dubs its recent run a "Lost Decade."

One thing Ballmer's vision for Microsoft 2.0 does not seem to include is a Windows-branded phone that can compete with the iPhone. When asked specifically about a phone, Ballmer dodged the issue and redirected his focus on selling the Surface and the tablet-tailored Windows 8 OS. "Right now we are working real hard on the Surface. That's the focus. That's our core."

But will this "core" be fruitful? With the cool-but-not-radically-innovative Surface, Microsoft is playing catch up in both tablet and ultrabook games. In another few years these may be quaint technologies as both Google and Apple venture forward with wearable tech. But don't count Microsoft out as a longview innovator quite yet. Take for example their cutting edge interactive 3D desktop prototypes. If the company manages to cultivate truly inspired new products as they did with say, Kinect (and make them available to the public in their Apple-like Microsoft Store), then this lumbering tech giant may yet learn how to be cool.

Readers, what do you think about Microsoft's proposed hardware challenge for Apple? Can Microsoft innovators realistically compete against the kids from Cupertino? And if not, might their stumble result in cheap devices for the budget-seeking consumer? Sound off in the comments below.

Front page photo credit: Trusted Reviews
Bottom photo credit: Shelky Bytes