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Microsoft's Ballmer Calls iPad a 'PC'

Microsoft's Ballmer said that device shapes and features change, but it's still a computer and Microsoft is still the king of software.

NEW YORK (

TheStreet

) --

Microsoft

(MSFT) - Get Report

chief Steve Ballmer sees the PC changing shapes, but he still sees Microsoft at the center of it. And on mobile phones, the company is down -- but not out.

Speaking at the

All Things Digital

show Thursday, Ballmer was asked if

Apple's

(AAPL) - Get Report

iPad tablet had changed the game in computing. "I think PCs will look different," said Ballmer, according to a live blog of the event. "They'll get smaller, they'll get touch, their innards will change."

The Apple iPad is a PC, and any suggestions that it is something beyond is marketing fantasy, according to the blog.

But on mobile phones, Ballmer was considerably more humble, having watched outfits like Apple,

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Google

(GOOG) - Get Report

and

Research In Motion

(RIMM)

take off in smartphones due to more adaptive software.

"We were ahead of this game and now we find ourselves number five in the market," Ballmer said.

That is an apparently unacceptable development for Microsoft.

"We missed a whole cycle," said Ballmer, referring to the touchscreen smartphone trend that currently holds consumers' fascination. "I've been quite public about the fact that I've made some changes in leadership around our Windows Phone software."

Last week, in a top level shakeup,

Microsoft dismissed two executives

at the head of the its consumer electronics and mobile businesses. Ballmer suggested that Microsoft is refocusing on these two high-growth areas.

"This is a very dynamic business, the market leaders here have shifted over twice in the past few years," said Ballmer. "That's an opportunity for us."

Microsoft shares were up 1% to $26.73 in mid-afternoon trading Thursday, part of a 7% rise in the past week.

--Written by Scott Moritz in New York.