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Is Microsoft bitter and twisted over the success of the iPod. The once might Apple partner reckons phones are set to crimp the iPods future.

Microsoft CEO Steve Ballmer believes iPods will be replaced by a new generation of mobile phones. Microsofts of course. “We will soon witness a lot of innovations and changes in portable devices,” Ballmer said at a management forum in Berlin. “Portable music is not limited to iPods,” the executive added. The head of Microsoft also believes competition with Google is an open opportunity, according to heise online. “Half of the time that we look for something, we don’t find it. There is a lot of room for improvement,” he explained. The actual innovation that Google founders Sergey Brin and Larry Page unveiled was not the technological aspect of internet searches, according to the executive. “They were the first ones to realize the potential of online advertising. The Google business model is the actual innovation,” Ballmer said.

The CEO added that he feels partially responsible for failing to understand the challenge Google represents to the software giant quickly enough.

“I was just as mad at myself as I was at our research and development department,” Ballmer said.

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