Is Apple iPhone’s price too low?

Apple Store“Microsoft CEO Steve Ballmer on the iPhone, during an on-stage interview at the CEO Forum with USA Today’s David Lieberman,” John Gruber writes for Daring Fireball.

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 percent or 70 percent or 80 percent of them, than I would to have 2 percent or 3 percent, which is what Apple might get. – Microsoft CEO Steve Ballmer

Gruber writes, “Strong words, and an awful lot of competitive FUD packed into one short paragraph.”

“I’ve stashed away a slew of ‘iPhone doubter’ links over the last few months from various pundits and analysts, and the iPhone’s price, by far, is the most frequently cited reason for predictions of doom in the marketplace,” Gruber writes.

Gruber writes, “Some of these pundits and analysts are morons. Ballmer, however, is a very smart man, but what he’s saying about the iPhone is going to make him look stupid if it’s successful. He clearly doesn’t get what makes the iPhone so appealing, and his dual obsession with the price and business users is baffling.”

“Maybe I’m the moron, but the way I see it, if the iPhone’s initial price is wrong, it’s too low, not too high. Don’t compare it to other smartphones, which, yes, nearly all cost less than $499 when purchased with a plan. Compare it instead to the prices of the iPod,” Gruber writes.

Full article here.

[Thanks to MacDailyNews Reader “Twilightmoon” for the heads up.]

48 Comments

  1. Ha, not my first submitted article, but the first one where I got credit…

    Tho posting an article from DaringFireball is like shooting ducks in a barrel (a bit too easy).

    This one quote has me scratching my head:
    “Some of these pundits and analysts are morons. Ballmer, however, is a very smart man, but what he’s saying about the iPhone is going to make him look stupid if it’s successful.”

    Isn’t there some sort of law against using “smart man” and “Balmer” in the same sentence? There should be if there isn’t.

    The money line from this article at the end:
    “We’ll see how long Steve Ballmer thinks the iPhone’s price is funny.”

    Amen to that.

  2. What’s different about the iPhone is that it is really the Mac Mobile, the mobile version of the Mac. A phone is just one of its features.

    IMHO, Apple marketing missed this one. It should be selling a Mac Mobile as a new type of computer. One that scales from handheld, to laptop, to deskside supercomputer, to rack server.

  3. As someone who plans to own this phone when it comes out in June, I’m not one of the people that are worried about the battery life. Integrated batteries are harder to replace, true.. but how many of us have really replaced the batteries in our cell phones. Most of us replace the whole phone. In two years I expect the battery to still be fine, and will likely upgrade to some future more advanced version of the iPhone before the battery is an issue.

    For those few that really does care about the battery, I can assure you that there will be plenty of ways it can be replaced. The iPod battery has numerous 3rd party battery replacement options. The iPhone will have the same plus if it gives out early on I have no doubt Apple will replace it for you.

  4. “Isn’t there some sort of law against using “smart man” and “Balmer” in the same sentence? There should be if there isn’t.”

    Twi-
    I think you just broke a law…..Damn!, Now I did it.

  5. It’s hard to understand why Ballmer goes out of his way to set himself up for humiliation in this way. He doesn’t actually ~need~ to say that the iPhone is inevitably going to fail, nor does he ~need~ to make up misleading statistics. He could quite simply dismiss it as an interesting experiment and go on to make favourable references to Microsoft’s offerings instead, but he chooses to make specific predictions which fly in the face of what’s already known to be happening. There is an inevitability that his words will come back to haunt him and in just a few months too.

    The only explanation that makes sense to me is that he must be holed up in some sort of bunker where he’s surrounded solely by ‘yes men’ who praise everything he does – however absurd. From Microsoft’s point of view, it’s good that the CEO is excited about Microsoft’s products, but it’s very undesirable to have a CEO who shoots his mouth off unnecessarily and will be shortly shown to have no understanding whatsoever about a massive change in the industry.

    What Microsoft needs to be worried about is that shortly there will be ten million new devices running OS X. When all those people start getting accustomed to OS X as an OS, another perceived barrier to switching will have been demolished.

    Gruber ( as always ) hits the nail on the head. He observes that the iPhone isn’t targeted at businessmen, it’s targeted at people. Some people are businessmen, so some businessmen will be using iPhones, but the point is that it’s not aimed at a narrow market. It offers something compelling to a great many different users, but all of those users will appreciate the easier interface.

    Ballmer is obsessed with providing what he thinks businessmen want, Jobs is obsessed with providing what people want.

  6. Seems to me Ballmer must be just plain sh1t scared of what the iPhone is about to do…

    Good comment above: “Ballmer is obsessed with providing what he thinks businessmen want, Jobs is obsessed with providing what people want.”

    Hits the nail on the head.

  7. Gary:

    Apple’s marketing didn’t miss this one. It’s all about two things.

    1. Keep it simple. Everyone knows what a mobile phone is, so it’s an easy concept to sell. Everything else is gravy. It’s a great phone but it also does all those other things.

    2. There are still a lot of people who won’t buy a Mac, much like a lot of people who come here won’t buy a Windows PC. So, sell them a Mac, but call it something else.

    I agree that iPhone is more than a phone, but I’ve read comments from people saying it should be called something like the iDevice. How the hell do you sell that? Without any explanation, you just know what an iPhone is or you can make a very good guess.

    Also, as a consumer product, why would you be selling it as something that scales from handheld to rack server? Just how much demand do you think there is or would be for this?

  8. Even while Steve was showing off the iPhone for the first time in January I thought that the iPhone was a really neat way to get OS X into Corporate offices guarded by IT idiots who veto anything other than Windows. WE all know it is a Mobile Computer AND a cell phone. But it is in our best interest to let things happen the way they will. Big shot Corporate CEO buys iPhone cause he likes the latest toys; brings it to work and TELLS the IT idiots to support it. End of story. The Mac is now in the shop. We win. Balmer as always, does not win.

  9. “Ballmer, however, is a very smart man, but what he’s saying about the iPhone is going to make him look stupid if it’s successful.”

    GOING to make him look stupid?
    As if running around a stage in circles in a sweaty mess hasn’t already.

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