Steve Ballmer was interviewed by Danny Sullivan in this morning’s keynote conversation at SMX West in Santa Clara.

One of the most interesting takeways from this session was Ballmer’s statement saying that Microsoft does *not* now intend to “kill off” Yahoo! Search – he further stated that within the deal agreement, Yahoo! may increase their search share via a wide number of initiatives. I’m thinking that if this is indeed the longterm strategy Microsoft is pursuing, they are doing the savvy thing of allowing multiple search engine applications which may better target multiple demographics.

Ballmer naturally responded with some of the usual positive or evasive statements that are typical of large-company CEOs when Danny asked questions that many are curious about. But, Ballmer also answered some questions very honestly/openly in a refreshing and direct manner — such as stating that they didn’t necessarily see Bing as moving overnight from a number two position in the search market pie. And, he said that no one sets out trying to be #2 – that they desire to do a really good job in search.

The main takeaway of the session is just how pleased and confident Ballmer is with how Bing is doing — that confidence implies that Bing is a major strategic initiative within Microsoft, it’s here to stay, and that they intend to continue to aggressively work to increase marketshare.

Google, you’re on notice! Looks like the underdog will be nipping at your heels, ongoing.