Steve Ballmer has defended Microsoft's performance during 2012, insisting he "feels pretty good about our level of innovation" in an address to shareholders in Seattle.

Speaking at the company's annual meeting, the CEO highlighted the recent product launches and financial performance, and outlined Microsoft's shift to devices and services.

“In 2012, our revenue grew to a record $73.7 billion,” Ballmer said.

“We also maintained strong cost discipline resulting in cash flow from operations of $31.6 billion, an increase of 17 percent from the prior year.

"In addition, we returned more than $10 billion to shareholders through stock buybacks and dividends.”

When quizzed about why Apple's iPad products continue to outperform the company, Ballmer conceded an earlier move into the tablet market should have happened.

"We're innovating on the seam between software and hardware," he said.

"Maybe we should have done that earlier."

"We see nothing but a sea of upside. I feel pretty good about our level of innovation."

New products:

Over the past months, the company has shipped an unprecedented wave of new products, including Windows 8, Microsoft Surface, Windows Phone 8, Xbox Music, “Halo 4” and Windows Server 2012, including other products, services and applications.

Ballmer believed that over time the full value of the company’s software will be seen and felt in how people use devices and services at work and play.

“Focusing on devices and services will impact how we run the company, how we develop new experiences and how we take products to market for both consumers and businesses," he said.

"The work we have accomplished in the past year and the road map in front of us brings this to life.”

Looking forward:

Ballmer also addressed some of the strategic opportunities that lay ahead for shareholders, as share prices in the company remain the same as ten years ago.

“Helping businesses move to the cloud is one of our largest opportunities,” he said.

“All the online services people use today run on servers in data centers around the globe.

"The volume of Internet services used will continue to grow as people connect to the Internet from more devices for more purposes — fueling incredible opportunity for the company.”

Ballmer also noted that Office 365 is on track to be one of Microsoft’s fastest growing businesses ever, claiming organisations of all sizes are using the software.

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