Microsoft’s Ballmer: ‘No chance Apple iPhone is going to get any significant market share’

Microsoft CEO Steve Ballmer was interviewed by USA Today’s David Lieberman at the sixth USA TODAY CEO Forum, in conjunction with the University of Washington Business School. The interview took place in front of an audience.

One question touched on Apple:

Lieberman: People get passionate when Apple comes out with something new — the iPhone; of course, the iPod. Is that something that you’d want them to feel about Microsoft?

Ballmer: It’s sort of a funny question. Would I trade 96% of the market for 4% of the market? (Laughter.) I want to have products that appeal to everybody.

MacDailyNews Take: Like the Zune? Note how Ballmer substitutes Windows vs. Mac market share when asked a question about iPod and the upcoming iPhone. It’s Apple that dominates the music market, not Microsoft. Recognizing that fact, it’s obvious that Ballmer gives “sort of a funny answer,” as he certainly would trade the Zune debacle for Apple’s iPod+iTunes in an instant.

Ballmer: Now we’ll get a chance to go through this again in phones and music players. There’s no chance that the iPhone is going to get any significant market share. No chance. It’s a $500 subsidized item. They may make a lot of money. But if you actually take a look at the 1.3 billion phones that get sold, I’d prefer to have our software in 60% or 70% or 80% of them, than I would to have 2% or 3%, which is what Apple might get.

In the case of music, Apple got out early. They were the first to really recognize that you couldn’t just think about the device and all the pieces separately. Bravo. Credit that to Steve (Jobs) and Apple. They did a nice job.

But it’s not like we’re at the end of the line of innovation that’s going to come in the way people listen to music, watch videos, etc. I’ll bet our ads will be less edgy. But my 85-year-old uncle probably will never own an iPod, and I hope we’ll get him to own a Zune.

Full article here.
Ballmer plays fast and loose with the truth. He can “prefer” to have his crap software in “60% or 70% or 80%” of so-called “smartphones,” but in reality, he has but 4.6%.

Canalys worldwide total smartphone device market – market share Q4 2006:
Symbian – 72.5%
Linux – 16.9%
PalmSource – 2.0%
Microsoft – 4.6%
RIM – 3.8%
Others – 0.2%

Ballmer’s 85-year-old uncle will probably never own an iPod because he’s related to Steve Ballmer, not because of anything to do with merits of the device. In the relatively small market of 85-year-old uncles, we’d venture to guess that Apple’s iPod dominates that market as thoroughly as it does all other demographic groups.

We have iCal’ed Mr. Ballmer’s statements for future reference.

129 Comments

  1. Even if Ballmer’s figures were right, the thing is that Microsoft need those sort of levels to maintain an equilibrium. The only way they can profit in a market is if they have a self maintaining monopoly. Anything else and it gets subsidised by their Windows and Office profits. Even the XBOX which has sold OK isn’t turning a profit. Apple can profit massively from single digit shares and ever more so once those levels increase. To start with, Apple will probably look at the iPhone in the same way they do the Mac, if it’s not as dominant as the iPod they won’t be overly concernved since they’ll have factored that in.

  2. 2%-3%!?!

    Wow Ballmer, you’re doubling or trippling the estimates that Jobs has been talking about. Jobs is only looking for 1% of the market.

    Sounds like Ballmer is expecting MASSIVE sales of the iPhone.

  3. Ballmer is such an idiot: ” They may make a lot of money. But if you actually take a look at the 1.3 billion phones that get sold, I’d prefer to have our software in 60% or 70% or 80% of them, than I would to have 2% or 3%, which is what Apple might get.

    Umm, you say they may make a lot of money, but then try to say that their marketshare won’t be good? I guess he isn’t paying attention to what’s happening on the computer side of things either. Mac computers have a small (but every growing!) marketshare, and Apple is already making a lot of money there. Jobs has already said that 1% for the iPhone would be great. It’s all about them making a lot of money, not bragging rights. Apple is already doing wonderful with their “small” marketshare. As this continues to grow, Ballmer will realize just how good Apple is at hitting their margin targets and being profitable. If Mac marketshare doubles (which would still be “small” according to Ballmer’s “logic”) and the iPhone really does get 3% market penetration, I will be one VERY happy shareholder.

    I’m shocked they haven’t demanded Ballmer’s resignation yet. He obviously has no idea how the business he is in actually works.

    MW: believe – how appropriate!

  4. “But it’s not like we’re at the end of the line of innovation that’s going to come in the way people use computers, do speadsheets, etc. I’ll bet our ads will be less edgy. But my 85-year-old uncle probably will never own Vista, and I hope we’ll get him to own OS X.”

  5. Peter Knook, head of Windows Mobile division at Microsoft, announced that Microsoft was installed in 6 million phones (including smartphones and wireless pocket PC) sold during FY 2006. The phone market for 2006 was approximately 1 billion units. The market share of Windows Mobile was therefore 0.6%. To reach 60% would require 100x what they are currently selling. They’ve been trying to move the needle for 4 years. (The launch of Windows Mobile for Smartphones was in October 2002.) Chances are that iPhone will outsell Windows Mobile in its first year. Ballmer lies.

  6. What a bloody liar.
    First: M$ does not have 96% market share of anything…
    Second: The iPhone will be a huge success.
    Third: M$ is the one who’s doomed regarding music technology. There is no way in this world that the Zune will become a successful product. No way. None. Zilch. Nada.

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