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“We want to see smart phones explode,” said Ballmer. “We have a lot of people trying to figure out how to work with our hardware partners, our chip partners, to lower and lower the price points. I am optimistic about what will happen in the next year or two.”

After a slow start, the choice of phones running on Windows Mobile is expanding rapidly. Today, there are more than 100 models available from 47 different manufacturers; they are being sold by 102 operators in 55 countries. These numbers represent substantial increases from even a few months ago.

Microsoft’s mobile and embedded-devices division has just made its first quarterly profit, with revenues passing $100m (£57m) for the first time. While this remains almost invisible in the context of the group as a whole, it is the importance of mobile phones as a platform for further software sales that rivets Ballmer.

He had not attended 3GSM in the past, he said, because he likes to schedule a full week of work to justify a visit to Europe and “we’ve never been able to work it”. Now, he said, “this stuff is just too important. So I’m coming for two days”.

3GSM drew more than 50,000 visitors this year, but it is the quality that really matters. Among the many chief executives present were Vodafone’s Arun Sarin, T-Mobile’s Rene Obermann, China Mobile’s Wang Jianzhou, Nokia’s new boss, Olli-Pekka Kallasvuo and Motorola’s Ed Zander. For the chiefs of the mobile industry, as a networking event 3GSM is Davos with knobs on.

Last week Vodafone announced it would launch a Windows Mobile “push” e-mail service — stepping up competition to the popular Blackberry.

For business users, the great advantage of Windows Mobile lies in the familiarity of the software. Thanks to the near ubiquity of Microsoft Office, the Windows Mobile versions of Word and Excel are instantly recognisable.

With Windows Mobile 5.0, executives can review and rehearse Powerpoint presentations on their phone. With a Bluetooth wireless connection, it is even possible to run a presentation from a mobile handset without the need for a laptop.

As well as the existing e-mail capability, Microsoft is adding instant messaging, integrated with contact information.

At the moment, Windows Mobile trails behind Symbian, the British company that is the leading supplier of smart-phone software thanks to its close relationship with Nokia. Last week Symbian announced that 33.9m phones with its software were shipped last year — the fourth consecutive year that volumes have more than doubled.

Ballmer suggested Symbian was vulnerable because of its relationship with Nokia, which owns a 47.9% stake. “People prefer to build software on a hardware neutral platform,” he said. Symbian was “not preferred by most operators because it’s captive to one handset manufacturer”.

While Symbian’s growth suggests it is shrugging this issue aside, Microsoft undoubtedly benefits from the number of developers that are already creating applications to run on Windows. Although users of Windows Mobile phones represent a small market at present, there are already 18,000 applications available for them. That, in turn, makes the phones more attractive.

Microsoft is working hard to further improve its attractions to network operators. Last week it bought Motion Bridge, a French firm that specialises in mobile-search technology. The possibility of combining search with the location information that network operators already have access to opens up powerful opportunities.

In the conference auditorium, Ballmer said he was asked all the time: “Are you guys friends or are you guys foes?” He replied: “We come as friends.”

Friends with big ambitions, though. With 700m handsets sold last year, Ballmer is looking to cut a much bigger slice of a very large pie.

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