Microsoft CEO Steve Ballmer was told today that the appeal of the iPhone and other consumer devices has made it more difficult for chief information officers at large public agencies to continue justifying the use of Windows Mobile phones in their organizations. In response, he acknowledged there are "opportunities for us to accelerate our execution in this area."

The exchange came during a question-and-answer session at the company's Public Sector CIO Summit in Redmond. Chris Kemp, the CIO at NASA's Ames Research Center, credited Microsoft for its work on security. However, he added,

"With platforms like the Google phone and iPhone coming out, it's really tough to continue to stand behind Windows Mobile when our employees are bringing these consumer devices into our environments. And in your presentation you put Windows Mobile right in the center there, but it was a phone that doesn't work in America and an operating system that you haven't released. I'm wondering what your commitment is to continuing to get newer versions of the operating system in our hands so that we don't have to fight this battle on the ground."

Here's what Ballmer said in response.

"We have a significant release coming this year. Not the full release we wanted to have this year but we have a significant release coming this year with Windows Mobile 6.5. I think that would look a lot like the phone that I showed that was in the slide, but very good catch, very impressed. (Laughter.) He was right on both scores, very good.

"But I think with Windows Mobile 6.5, there will be phones in market this year. We still don't get some of the things that people want on the highest-end phones. Those will come on Windows Mobile 7 next year. Certainly I'm not, um -- there's opportunities for us to accelerate our execution in this area, and we've done a lot of work to really make sure we have a team that's going to be able to accelerate.

"With that said, we did sell more Windows Mobile devices last year than Apple did iPhones -- just an important factoid to have. Blackberry was a little bit ahead, and Google was nowhere to be seen, except in Silicon Valley, I'm sure. But we'll do our best to help you with that challenge."