Why Microsoft’s so scared of Apple’s iPhone

“With the iPhone released and selling like hot cakes across the nation, people are speculating excitedly over how many units Apple and AT&T have actually sold to date. One group of people who’s speculating over that not so excitedly is Microsoft, who from day 1 since the iPhone’s announcement in January have shown tremendous fear — but not on the surface,” Carl Howe writes for Blackfriars’ Marketing.

“It all started with Steve Ballmer’s response to the iPhone on CNBC-TV [back in January],” Howe writes.

Howe then deconstructs the following video in which Microsoft CEO Ballmer laughs at Apple iPhone:

Howe writes, “What’s really telling of Ballmer’s response is his typically somewhat-nervous laugh: as CEO of Microsoft, he knew best of all people how serious a threat the iPhone was to them… Ballmer states ‘[Microsoft] is selling millions and millions and millions of phones a year, Apple is selling zero phones a year’ (remember, this was January 17th). Millions and millions and millions — that sounds about right, given Microsoft’s roughly 0.4% market share in the worldwide cellphone industry.”

“Microsoft has about 5.6% market share in smartphones, which is a mere 6-7% slice of the overall cellphone industry. Translation: they sold about 4 million cellphones running Windows Mobile (any version) in 2006… It’s fairly safe to say that there are only, in total, no more than 7 million Windows Mobile phones in the world,” Howe explains. “Apple’s stated 10 million goal seems a lot more aggressive already.”

How writes, “Yet, the real kicker is what the iPhone really is: a fierce attack on many industries, companies and platforms. Above all, though, the iPhone is an attack on proprietary formats, one of Microsoft’s core competencies.”

The iPhone attacks:
• The cellphone industry at large.
• Companies ranging from carriers to handset makers to OS makers to Opera.
• Proprietary codecs.

Howe explains that Apple’s iPhone is “also the first real threat to Microsoft from a desktop point of view: Linux-based cellphones (about 17% of all smartphones) weren’t really convincing people to leave Windows behind and switch to Linux, but the iPhone may very well convince people to switch to a Mac.”

Full article – very highly recommended – here.

[Thanks to MacDailyNews Reader “MacVicta” for the heads up.]
Howe concisely nails many points in his excellent article. Please click through and read his full article.

52 Comments

  1. > Ballmer states ‘[Microsoft] is selling millions and millions and millions of phones a year

    Really? I didn’t think Microsoft sold ANY phones at all.

    Once again, this is Apple’s advantage. Microsoft sells the OS, which needs to be integrated with other companies’ hardware. Apple controls the whole device. That’s why iPhone is so much better; and that’s why Microsoft fears iPhone. On consumer devices like iPod and iPhone, the integration of hardware and software is a much greater advantage than on computers.

  2. DC,
    Yes, they could care less because they care so damned much. The iPhone is not just a threat to Windows Mobile or other carriers. It’s a threat to Internet Explorer, and after that, Windows desktop. Once Microsoft starts losing desktop market share, it’s all over but the crying.

  3. Haven’t used a Mac, have you? Ok, maybe you mean from a marketing perspective, but that’s only because IT departments fear the Mac – which is why they fear the iPhone.

  4. “Just how well are hotcakes selling anyway?”

    iHop isn’t releasing any sales figures from this past weekend, but maple syrup manufactures said they have sold millions of bottles of syrup since the introduction of the iPhone.

  5. Haven’t used a Mac, have you? Ok, maybe you mean from a marketing perspective, but that’s only because IT departments fear the Mac – which is why they fear the iPhone.

    Which IT departments are you talking about? IT at my company has no such fears. Our shop is mostly Mac at the desktop level, and split between Mac, WIndows, Sun and Linux at the server level.
    We use the best products for the job at hand, and no, Apple isn’t always the best supplier for every need we have. Our biggest issues right now are Apple’s lack of enterprise support experience. Dell does a far better job of supporting their products, regardless of what OS is installed. I wish Apple were better, but it is what it is at the moment.

  6. Microsoft has such a huge market share they don’t care or are scared about the iPhone or Mac OS X. They probably should be. I’m a Mac user and hate anything Microsoft but the fact is this war that Apple fanbois are waging against Microsoft is one that Microsoft refuses to acknowledge they don’t need to right now, which could in a very very long time be their demise.

  7. No iMacs available for low-volume resellers in the UK through either of Apple’s distributors.

    I have two on back-order for a customer which are currently have ETAs of 3rd August.

    Hmmmm…

  8. @ (no one)
    “I’m a Mac user and hate anything Microsoft but the fact is this war that Apple fanbois are waging against Microsoft is one that Microsoft refuses to acknowledge they don’t need to right now, which could in a very very long time be their demise.”

    The industry is changing. People aren’t just replacing their desktop PCs the way they used to – the new growth vector will be in mobiles and other new kinds of hardware applications. The desktop era is dead and gone as far as growth is concerned. Microsoft knows this, that’s why the iPhone matters SO VERY MUCH to them, and it’s the device they have to beat. So far, they can’t even come close.
    Their Great White Hope might have been the Moto Q, as Ballmer points out. But if it was, they better take a look at plan B, because Moto Q sales are laughably miniscule compared to iPhone sales so far. It took a month to sell 150,000 Q’s. iPhone is, by ANY estimate, crushing that number into fine paste.
    Whoever creates the first smart phone that doesn’t suck, they’re gonna sell gajillions of ’em (1 Gajillion = 1,000 Bazillions), just like Apple did when they created the first media player that didn’t suck.
    This is already happening, and, delightfully, Microsoft has no way to stop it.

    -c

  9. Chrissy

    Thanks for clearing up the units of measure. I always wondered what units a Gazillion broke down into.

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