Microsoft Executive Steve Ballmer has been discussing the iPhone in a lengthy interview with USA Today
The comments made show that Ballmer, and probably the rest of Microsoft, don’t quite understand the mobile phone market.
Q: 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?
A: 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.
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.
A quick analysis of the figures shows that if Apple take a tiny 1 percent market share they will sell 13 million iPhones, not far away from the 10 million that Steve Jobs was aiming for. Assuming an average profit margin of $100 for each phone sold (which is a low value given $500 price tag is subsidised by AT&T/Cingular) this equates to a revenue of $1.3 billion per year. Not bad for a tiny market share.
This figure is likely to be increased by maybe $10 per month revenue share from Cingular adding up to another $120 per user per year, a total of $1.56 billion in recurring revenue.
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Not only that but Ballmer says that iPhone may get “2% or 3%”, not the 1% Apple’s been touting. So he’s inadvertently said that iPhone will exceed Apple’s own target 3 fold!
What? He wants 2-3% of the market? MS only has .6% of the phone OS market, since only 10% of the entire phone market consists of “smart phones” and Symbian trounces WinCE in that market.
And Apple “might make a lot of money?” Yes, they will. Compared to the Xbox, Zune and other failures that lose $billions for MS. Another boring statement from the emporer who has no clothes.
We will all have to wait and see how Apple does with their iPhone. But with the documented hysteria surrounding it, I think it will be a giant success. And if it is, if Apple gains a full 10% of the phone/phone OS market, what will Balmer have to say then?
So all those ads, and R&D for the Zune was so your 85 year old uncle would buy one? You’d think he’d just do that out of loyalty to his nephew… Or maybe you’d just give him one because you’re worth millions and he’s your uncle. If he carried a Zune, it would double your marketshare.
Microsoft does not have its software in “60 or 70 or 80%” of cell phones. It’s somewhere in the 5 to 10% range according to various market studies. Symbian and Linux are way ahead.
And if we assume MS OS gets it $10 per phone for 130 million phones (10%), that’s $1.3B.
Not only that, Microsoft’s share of the cell phone market for their Windows cell phone OS is around 0.5%.
Ummm MS only has about 6% of the mobile market.
Put down the glass pipe monkeyboy.
Ballmer is just a big dumb xxx bragger full of air in the head; I don’t know about you guys but I’m not buying ANY micro$soft’s products anymore…..brag about that!!!!