iPhone Will Flop Says Microsoft's Ballmer

By Richard Menta 5/1/07

It sounded more like wishfull thinking than the musings of a man who has actual insight into the fortunes of Apple's upcoming endeavor into the mobile phone market.

"There's no chance that the iPhone is going to get any significant market share. No chance", said Ballmer at the USA Today CEO forum held at the University of Washington. "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 per cent or 70 per cent or 80 per cent of them, than I would to have 2 per cent or 3 per cent, which is what Apple might get."


iPhone

What I found immediately interesting is that Ballmer is already giving Apple "2 per cent or 3 per cent" of the market, when Apple already announced that its goal for success was 1 per cent market share by the end of 2008. Not only has Ballmer upped Apple's goal, he is now calling triple their announced sales objective a failure.

To put that is perspective the mobile phone market is roughly 1 billion units large. 1 per cent of the market is equal to 10 million phones and at $500-$600 per phone that 5-6 billion dollars of revenue. 3 per cent of the market equals 15-18 billion dollars of revenue, hardly chicken feed.

Ballmer also used the podium to squash rumors of a Zune phone. But is that really a strategic move or a reflection of the fact that the heavily marketed Zune is the real flop so far in this space. We'll see when Zune 2.0 hits the shelves this summer. That's when Ballmer gets to back up his talk with some market credibility, something Microsoft's digital vision is yet to achieve.

Other MP3 stories:
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