Microsoft CEO Steve Ballmer just had a chat with BusinessWeek, and All Things Digital's Peter Kafka was a fly on the wall for the event. He paraphrased the chat, which we'll boil down even further here.

On smartphones: Expects the market to grow to 70 or 80 percent the next few years. "So what will people want? Good experience built in, without downloading stuff. [Eds note: You're allowed to chuckle here] You want good price range." Sweet spot is $150 to $200, but they want to "make Windows phones up and down the price scale."

On "touch" and the iPhone: "Windows Mobile 6.5 has touch on it. The way Apple does touch drives cost. The way they do it on the iPhone is not an inexpensive component. We’ll do it in a way that you can afford to do it on most phones."

[That could very well be the best reason why we haven't seen capacitive-touch Windows phones yet. It just costs too darn much. And by "best" we mean huh?]

On the upcoming retail stores: "It is a challenge today for our partners, who do the most innovative designs, to get them to market. Because it’s too high risk for the Best Buys of the world. So we need an outlet to champion that innovation. Showcase devices that are hard to get stocked in traditional electronics retailer."

Hit up the full Q&A for more on Microsoft and cloud services, whether the Ballmer family indulges in any Apple gadgets, and what life's like without Bill Gates at work every day.