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He covers a wide range of topics, but the one that got my attention is a two-minute snippet near the end, when the interviewer asks whether Mark feels that Microsoft needs to make its own desktop hardware. (If you want to see and hear this discussion for yourself, skip ahead to the 34:03 mark in the video.)

Do you think Microsoft needs to make desktop hardware or certain desktop/server PC hardware?

There’s a lot of discussion about that – not just in the industry but also within Microsoft. Should we be developing the Windows notebook or the Windows desktop? My opinion is that what’s made Windows so successful is the fact that it’s got an ecosystem with partners that are developing software and doing different things with hardware and software. And for us to kind of block all that [pause] innovation – hate to use that word because it’s so overloaded by marketing these days – to block out that playground that people have to do cool things for customers that we can’t think of or don’t have the agility to do, I think, is not the way Windows has gotten successful. I don’t think it’s even the right thing to do now, even in response to what people see as market pressures coming from other people that are doing that. …

[O]ne of the things that you have seen Windows doing over the last couple years is reaching out and working more closely with the hardware partners, with the OEMs, to make sure that the systems they deliver to users provide a good Windows experience, and not one where it’s Windows loaded up with a bunch of junk. And also that the hardware is designed and capable of running Windows the way it should be run and not “Hey, let’s save a few dollars and put in 512 meg of RAM” instead of the couple gig that really make Windows [perform well] … because when you talk about the amount of cost for that these days it’s marginal but the difference in user experience when you look at that is pretty drastic. So, I think that’s the way that we should continue to operate is to have these deeper partnerships with companies to make sure customers do get a great experience.

The fact that these discussions are happening within Microsoft doesn’t surprise me. It’s one of the most obvious responses to Apple’s success, and it’s also in keeping with what Microsoft CEO Steve Ballmer wrote in his all-hands memo that was leaked to the press back in July:

In the competition between PCs and Macs, we outsell Apple 30-to-1. But there is no doubt that Apple is thriving. Why? Because they are good at providing an experience that is narrow but complete, while our commitment to choice often comes with some compromises to the end-to-end experience. Today, we’re changing the way we work with hardware vendors to ensure that we can provide complete experiences with absolutely no compromises.

Apple makes a handful of systems using basically the same parts, and they sell the hardware, software, and support as a package. That makes it easy for them to deliver systems that work reliably and can be supported at their stores by technicians with a minimum of training. But it also means that I have limited choices if I want to buy a system running the Mac OS. I can’t buy an Apple-powered tablet, or a small and light notebook (the MacBook Air is thin and light, but it’s not small), or a powerful and expandable small-form-factor desktop. All of those choices are available to me in the PC marketplace, but they come with other tradeoffs, such as crapware and driver hassles.