Microsoft CEO Steve Ballmer chats with BusinessWeek editors about Web 2.0’s sky-high valuations and the new competition the company faces.
Some questions and answers involved Apple:
BW: Who are Microsoft’s top competitors?
Ballmer: Guys who can touch us in multiple places probably matter more than guys who can touch us in any one place. And actually we don’t really have our big competition from any one company. Any one company, we know how to compete with… there are cases where software gets monetized through hardware. That’s what an iPod is. iPod is a software thing. You just happen to collect the money on the hardware.
BW: Does Zune fit into the hardware piece of this?
Ballmer: Sure it does. Because the value of Zune, if we’re successful, is all in the software. It’s in community [the ability to share music and pictures with other Zune users]. I want to squirt you a picture of my kids. You want to squirt me back a video of your vacation. That’s a software experience. The truth is, though, if it makes money, it will be built into the gross margin on the hardware. We’ll figure out how to make money on the community perhaps later though advertising or other means.
BW: How much money will you lose per Zune?
Ballmer: None. Apple put the hammer down there, dropped the price down to $249. If they had been $299, it would have been nicer. They have the advantage of scale. So we’re at $249, too. We don’t make a lot of money, not to start out.
Full article here.
Chunky Zunes can squirt brown, er.. brown Zunes can squirt chunks? What’s chunky and brown and squirts, again? Each Zune should come with a free bottle of Kaopectate in the box. And, excellent business plan you have there, Balmy: “If it makes money… We don’t make a lot of money, not to start out… We’ll figure out how to make money on the community perhaps later.” What a joke.
Related articles:
Microsoft’s consumer electronics track record: long string of failures – October 11, 2006
MP3.com founder: ‘Zune will be an expensive failure for Microsoft because consumers aren’t stupid’ – October 06, 2006
Microsoft fails to secure key Zune domains – October 04, 2006
Microsoft rigs Zune with tricky pricing and proprietary money schemes – October 03, 2006
Why Microsoft’s Zune won’t kill Apple’s iPod – October 03, 2006
10 Apple iPod vs. Microsoft Zune myths – October 02, 2006
Analyst: Zune could lead to ‘civil war’ between Microsoft and Windows Media partners – September 29, 2006
Thurrott on Microsoft’s Zune: ‘The makings of a disaster, what the heck are these people thinking?’ – September 29, 2006
Analyst: Microsoft Zune’s as good as dead on arrival – September 28, 2006
Microsoft sets 30GB Zune price at $249.99 – September 28, 2006
How Microsoft’s Zune can kill Apple’s iPod – September 21, 2006
Microsoft’s Zune insanity – September 21, 2006
The Microsoft Zune 1.0 dud – September 20, 2006
Microsoft’s underwhelming Zune a ‘viral DRM’ device – September 18, 2006
SanDisk teams with RealNetworks against new common foe: Microsoft Zune – September 18, 2006
Creative does Apple’s dirty work by immediately attacking Microsoft’s Zune – September 17, 2006
Motley Fool’s Jayson: Microsoft’s ‘just plain ugly’ Zune a meager offering, not an iPod killer – September 15, 2006
What’s in a name? ‘Zune’ a French-Canadian euphemism for penis or vagina – September 15, 2006
Crave at CNET: ‘Microsoft Zune, all the excitement that brown can bring’ – September 15, 2006
Microsoft’s Zune underwhelms – September 15, 2006
Enderle: Microsoft Zune ‘a design mistake’ – September 15, 2006
Microsoft hypocrisy exposed with Zune: What ever happened to ‘choice?’ – September 14, 2006
Analyst: Microsoft Zune with fake scroll wheel ‘hardly an Apple iPod killer’ – September 14, 2006
Analyst: Microsoft Zune won’t spoil Apple’s biggest iPod Christmas ever – September 14, 2006
Microsoft unveils Zune 30GB player, Zune Marketplace; declines to disclose prices – September 14, 2006
Analyst: Microsoft’s Zune an ‘underwhelming’ repackaged Toshiba Gigabeat; no threat to Apple iPod – August 30, 2006
Microsoft confirms brick-like Zune to be made by Toshiba – August 25, 2006
Microsoft Zune is chunky brick made by Toshiba – August 25, 2006
Microsoft to spend hundreds of millions, several years on Zune trying to catch Apple iPod+iTunes – July 27, 2006
Zune: Apple cannot lose. Microsoft cannot win. – July 26, 2006
Technically Monkey Boy (AKA Ballmer) is correct. The Zune is not a money loser….because it doesn’t even freakin’ exist yet!
He’s not even a convincing liar. “Oh yeah, and, um, I wish the iPod was $50 more. No real reason….just sayin'”
Squirting Zunes… scary. The problem with “squirting” a picture or a home movie, even those will go away in 3 days!! Anything shared goes away in the 3 day limit… what a crappy piece of technology…
Also,
“We’ll figure out how to make money on the community perhaps later though advertising or other means.”
Doesn’t surprise me in the least that this came out of Monkey Boy’s mouth. He’s all about his precious advertising revenue and monetizing ever single aspect of every single product and then act as if there is nothing wrong with it!
People want a good user experience, not viewing ads all day!
Ballmer’s gonna “squirt” something at me?
ew.
When I’m being touched by guys in multiple places, I squirt too. In 2 of the Zune colors.
“We’ll figure out how to make money on the community perhaps later though advertising or other means.“
I’m thinking “Crack Cocaine For Sure” or maybe “male prostitution”
How again did HE get to be CEO?
Maybe it won’t lose any money — it is not like they have any R&D expenses to recover!
I’m thinking I don’t want anything Ballmer “squirts”
Why would I “squirt” someone a video of my vacation or pix of my kids to their device when I could just hand them my device? No matter how good the interface that would still take fewer steps, be less tortuous, be quicker, and save battery life. What crack is Ballmer smoking?
You want to squirt me back a video of your vacation…. I thought it didn’t play video?
If I was a shareholder I would be very concerned.
This statement tells me there isn’t much of a plan at all:
“We’ll figure out how to make money on the community perhaps later though advertising or other means.”
And he’s the CEO?
Fire him.
BTW my guess was that a Zune will cost Microsoft about $239. So Ballmer is being honest there, they technically won’t lose money. But at $10 a unit they won’t be recouping their development costs either.
OMG if he squirted anything even remotely close to me, I would feel compelled to get tested for STDs.
a little too much inuendo what with “guys touching” and “squirting”.
good ol’ Ballmer.
Now you know they’re in trouble when he says this whole thing is dependent on software, an MS specialty as we all know.
Remember, in Quebecois French, “Zune” means genitalia, more often than not, “penis”.
Maybe in Ballmer’s head, it’s cool to create an instant lexicon around a product, just like hiring monkeys to create websites to build interest in the same product.
What. A. Tard.
Do I really want to have videos of your family vacation installed on my music player?
On another thought, with the Zune having Wi-Fi built in, and with all the talk of Vista calling home, how often do you think the Zune will “call home” when it is in a wi-fi zone?
This might be where the advertising pops up along with checks of your music and everything else on your Zune.
nuff said.
I don’t want him to squirt me with anything.
This guy is an idiot. Hard to believe he is CEO, but then again, anything about Microsoft is “hard to believe”.
This guy doesn’t want to touch him ANYPLACE!
SQUIRT!
HEY! You’d better have a towel to serve with that squirt…
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Lick my zune.
‘ipod is software thing?’ this guy has no idea how Apple ipod is very advanced technology. like he claim, why can’t MS make better one so far? so they invented anything on Zune? nothing. they borrowed hardware from toshiba, created some UI. that’s it’ UI itself. it can’t synchorize podcast, audiobook, show more pixel on screen is far lower than ipod. so how software thing is even working to MS? nada. as you know, they have been so lucky to sell out windows. they say it is sold. but it’s not. it has been bundled for every PC. so technically it’s not sold. without major update, windows has been gone to 8 years. software, hmm.
I think that MS should make only mouse, Xbox 360. that’s all.
He probably squirts himself alot, to monkey boy speed!
UP and Down!
Interesting post on Businessweek:
“Nickname: Avocado
Review: Microsoft is paying attention. Pause to think about it. The Zune is going to be the new consumer computing device. You can Skype with it, make documents using voice with it, take pics and videos with it — and it will tie together with Live.com by allowing you to upload all your content to some remote server. The Zune is to a mug of water what Live.com is to the ocean (or a giant lake, since you’d have to filter the salt water before drinking it). [Your home PC is a tub/tank of water, in this analogy — but do you really need to store water in a tub/tank if you have a running connection through your faucet?)
Date reviewed: Oct 11, 2006 4:19 PM”
What a lot of bollocks!
I bet he’s not telling the truth. He probably really wishes Vista was OS X.
stroke my zune and ill squirt you lol. gawd this is too easy. omg my zune just prematurely squirted all over. 🙁 ill pass on this me thinks. i can squirt just fine w/o a zune.
haha!
squirting… that’s what Cytherea can do!
maybe balmy was thinking that the zune was perfect for squirting movies?
“make money on the cmmounity” later? Somehow?
Amazes me how clueless he/they are.
Mind you, no one ever went broke underestimating the intelligence of the general public.
“I want to squirt you a picture of my kids. You want to squirt me back a video of your vacation.”
I officially want to throw up now. That is an image I didn’t want stuck in my brain. Ballmer squirting ANYTHING is disgusting. >.<
Microsoft needs to stop this dude from talking… Seriously.
Apple makes tonnes of money raping its customers. If Zune isn’t losing money, even though it doesn’t have the economy of scale, you can imagine that Apple is making 200% profit on their nanos.
“You want to squirt me back a video of your vacation.”
Maybe I do, but even if 2 people actually bought zunes in the world the fact remains that the 1G Zune CANT PLAY VIDEO.
Thats right. Can’t play video.
See the article on it at roughlydrafted.com about the zune.
Honestly, the guy is an idiot. He is the reason why MS stock can’t gain. His first act at being announced as CEO was to go on national TV to tell the entire world that MS stock along with other stocks, was way over valued. Maybe that was true, but in the interest of his employer, he was the last person in the world that should of made that statement on TV. Duh?
MS needs to fire this guy and hire some folks in trench coats to finish the deal on him. I am a Mac fan and I want M$ to get rid of him. It is like seeing a team you don’t like get skunked 100 to 0 in the World Series…you just start to feel bad for them. I think the Apple vs. MS thing makes Apple perform better and as a user of Apple products I like the effects that competition has on my computing/music experience.
Just my $0.02
He doesn’t even know what he’s talking about…
What a complete moron…
Ewww.
Balmer talks about guys touching him and squirting. That’s just foul.
hard to look at that picture of balmer without an umbrella!!! even harder when reading him speak of ‘squirt’s!!! two umbrellas!!! YUK!!!
Micro$oft is a losing business. Apple should buy SAP AG and join the FileMaker with SAP. Then Apple could squeeze the f#ck out of Floppysoft.
MDN magic word: fact
OK, hang on. Several people have done tear-down analyses of the iPod (including the 5.5Gs) and have estimated that Apple is making a “significant” margin on each one sold.
Where is the assumption coming from that MS is losing money on each Zune? Has somebody done a similar tear-down to look at the components? Functionally, the only real difference between the iPod (30Gb) and Zune is an FM tuner and WiFi chipset, so they should be functionally and physically similar. Is the presence of a WiFi chip alone enough to completely erase the hardware margins that iPod enjoys? Does anybody know what sort of margin Toshiba was making with their Gigabeat-S model? Does economy of scale play that big a role in Apple’s ability to make a profit on each iPod?
Who in the hells says “squirting” to describe transferring anything? Disgusting!
NOTE TO MDN:::::::::: dear MDN – thank you so much for posting that tongue picture each time you run a Ballmer story. it never fails to make me laugh. you endear yourselves to me a little more for each priceless tongue post.
“Apple makes tonnes of money raping its customers”
Obviously you’ve never been raped otherwise you wouldn’t be so generous with your use of the term.
When has Apple FORCED anyone to buy anything? Never?
Freewill my friend.
Now, go back under your rock.
“Touch us…” “Squirt”
???
Very sexual.
OK.. first the “licking” Ballmer pic. what the heck is that. then the all that touching and squirting talk. This is disgusting! Funny as heck but disgusting. Maybe the caption should read Steve Ballmer, CEO of “touching, squirting, and tongue lashing”?!
Squirt! What an idiot! Only Ballmer can make the Zune sound even MORE unappealing than it already is!
A must see video: “Steve Ballmer going crazy”
Prepare to be amused.
You people don’t know the history of squirting.
This Squirting thing should get plastered over the entire web.
It’s priceless.
Microsoft inovation at work. Squirt!
(Could catch on for transfering porn)
Uh… The Zune can play video. It comes with videos loaded. There’s just not going to be any video service at first. (Doesn’t change the fact that trading home movies via clunky Zune players is a stupid idea.)
OMG. I had to stop reading when he said he was going to squirt.
ACK! Horrible mental image! Make it stop! Make it stop!
Please don’t squirt anything in my direction!
B-Sabre-
The biggest difference between Zune and iPod is not a couple of chipsets, it’s the fact that Apple sells between 8 and 14 MILLION of them a quarter, and they have supply channels that give them the best prices on components. MS has none of this, hence the higher cost to build.
@B-Sabre: In order for the Margin to matter, you need to cover fixed costs. Also, they are using a different hard drive, and Apple has secured very large quantities of supplies, so they got the discount. Ballmer also said that they don’t make the money off the hardware. Last time I check, the iPod sales makes the money, not iTunes. He still doesn’t get it. But back to your question, you have to cover fixed costs for the units to start making money. And they probably have high fixed costs because they are entering a new market. Economic’s of scale has to work in Apple’s favor. Any company that owns 75% of a market is going to have a huge benifit for discounts on parts. Just look at how much a stock jumps when rumor says that a company will start supplying Apple with parts. The companies will give a good deal to Apple.
p.s. is b-sabre reffering to the Buffalo Saber’s? Because if it is, I’m glad you enjoy the great sport of hockey.
No-one’s picked up on his subtle put-down of Apple. He says:
“Guys who can touch us in multiple places probably matter more than guys who can touch us in any one place.”
…and then talks about the iPod. Implication: Apple only ‘touch’ Microsoft with the iPod, the Mac is unimportant.
“Guys who can touch us in multiple places probably matter more than guys who can touch us in any one place.”
Monkey Boy is frickin touched all right. Touched in the head.
Note the difference in the CEO of Apple vs. the CEO of Microsoft:
SJ: “Isn’t this cool?” when presenting a new product
SB: “We’ll figure out how to make money on the community perhaps later though advertising or other means.” when discussing a new product
Here….let me squirt you a video of me drinking tap water during Mexican vacation……ewww!
Also available in a scratch and sniff format!
Gotta run to the Great White Telephone to negotiate for a Buuuuick.
B-Sabre:
I believe the assumption of losing money comes from eight areas:
1. the profit that must be paid to Toshiba as the hardware developer, which would be more than the profit to a mere Chinese fabricator
2. the development costs MS must have paid Toshiba to develop for them, being such a risky venture
3. the lack of economies of scale
4. the cost of the software development in new DRM, interface and web site
5. the fact that MS seems to need 5x the number of programmers for the same job as Apple
6. the cost to develop ‘new’ features (WiFi, FM)
7. the MS mass marketing yet to come
8. MS still has to maintain all the PlaysForSure infrastructure
Remember that Apple paid for the iTMS store (break even) even before the iPod was released.
Um…no one I know uses the word “squirt” for anything. If Ballmer thinks he is starting a new term, simply by opening his mouth, well . . .
I’m an Apple fan and I think Ballmer is screwing up on big-time strategy, but I have to say that Ballmer knows how he plans to make money on it later; he just can’t say it definitively now because people won’t like it. Like ads, who wants ads on their mp3 player; but ads can evolve into something that we won’t mind if it’s helpful to us.
The overall plan laid out by Avocado in Macaday’s post is generally reasonable. And as soon as the iPod gets wireless, I’m sure Apple will provide all of that stuff (email, calendar, iChat, iPhoto sync, etc); not just squirting.
The problem with the Zune is that it will have wireless and yet provide none of that stuff, and it’s squirting is crippled for music. (By the way, MS said that photos don’t get wiped out by the 3 play/ 3 day rule. And Zune can play video but MS will not be selling video at the Zune Marketplace.) So strategically, MS is selling a crippled Zune, rather than wait to sell a Zune that provides all the uses that people would expect from having wireless. Dumb.
Ballmer is one of the stupidest so called CEOs I’ve ever seen. I would really hate working for him.
There is too much sqirting going on in here !
Ballmer…….LOL……ROTFLMAO!!!!!
BWAAAAAhahahaAHAHAHAHAAHAH!!!!!
Ballmer! AHHHHHHAHAHAHAHA!!!!
BALLMER!!!!!! LOL!!!!!!!!
Oh…my sides hurt!!!!!
I get it now..Zune is a portable porn player. Hear me out…Zune is a word for genitals, it squirts, it comes in a brown overcoat…see..see. MS is going to make a killing on downloaded porn (when it does video). Making money on the community and squirting puts the peices together.
I think Microsoft should sell plastic zune squirt toys for 4.99 then thet could actually make some money.
Guys who can touch us in multiple places probably matter more than guys who can touch us in any one place.
Microsoft’s other multiple partners.
Squirt? I’m not even going to go there.
MW: Sounds like Ballmer is very, very lonely.
Does this mean that they can have Squirt Zune fights? Could be fun…
Holy Mackerel:
iPod was introduced in October 2001. The iTunes store debuted in May 2003, so Apple didn’t pay for the store before the iPod.
1 and 2 are basically the same thing using different words. I also don’t think there would have been too much cost involved in rebranding a Gigabeat from Toshiba. All the development work was done and the product is out there. This is an easy way for Toshiba to recoup some money on a player that hasn’t sold too well.
4. There may be an additional cost here that you didn’t mention. I haven’t read anywhere if anyone has determined if the UI infringes on the Creative patent, in which case Creative has $100m to defend their IP.
5. Do you have figures to back this up.
From what I’ve read, MS seemed to be in a hurry to get something out the door, hence the use of the Gigabeat. They have said that future versions of the Zune would have different designs and they are even running a design competition for people to submit their concepts of what they think a Zune should look like. For this reason, I’m giving this holiday season to iPod as Zune v1 will be a non-starter, but I wouldn’t count MS out when they come up with future versions.
HAHAH…
Make money off the community… or something..
Great business plan…
Welcome to the dot-com redux, Ballmer…
Alex says “I wouldn’t count MS out when they come up with future versions.”
True, but Apple isn’t sitting around doing nothing. By the time MS comes out with their next Zune version, Apple will have probably killed off the current iPod with a completely new iPod.
I haven’t bought a new iPod yet because I’m still expecting a completely new one on either Oct 21 or Oct 28 (5th anniversary). And that’s before the first Zune hits the market.
By the way, remember that just as Creative made a Zen that was getting real close to the iPod in design, Apple introduced the iPod with video. In the US, Creative took another 2 months to announce the Zen Vision, though it was really 3 months before it could be bought in stores.
This is the part that stood out for me:
Ballmer: …Because the value of Zune, if we’re successful, is all in the software.
It seems to me that even Microsoft isn’t too impressed with themselves right now.
Dude, I just squarted.
Does the squirting Zune come with protective rubber covers? If so, are they ribbed?
Lol. Did he mention you can make text pics on the computer and send it to another Zune? Like “Meet me here at seven.” And since they dissapear in three days they won’t clutter it up. It rules.