Microsoft and Steve Ballmer still focused on volume sales for smartphones

Fri, Sep 25, 2009


Microsoft CEO Steve Ballmer recently sat down with TechCrunch to discuss all things search, twitter, and smartphones.  Particularly interesting were Ballmer’s statements on the smartphone market and whether or not Microsoft would ever manufacture a Microsoft phone.

Let’s just break hardware devices into 2 broad categories, really high volume and more niche.  And I’ll call anything that’s about under about 150 million a year, niche, and I’ll call anything that’s north of 300 million a year, not niche…

Phones are not niche. The categories where I think a single player can control a large percentage of the volume are the smaller categories, what does Apple sell every year of iPods, 30 million? Whats the whole video game market? It’s maybe 30-40 million units a year.  But when you get these categories that are 300 million, 500 million, a billion, a billion five a year, the truth of the matter is you’re gonna want multiple points of manufacture with a lot of innovation around it whether its for supply chain, for geographic diversity, and our basic play with our software is to be super high volume.

So I think you can have Apple in the phone business, or RIM, and they can do very well, but when 1.3 billion phones a year are all smart, the software that’s gonna be most popular in those phones is gonna be software that’s sold by someone who doesn’t make their own phone, and we don’t want to cross the chasm in the short run and lose the war in the long run, and that why we think the software play is the right play for us for high volume, even though some of the guys in the market today with vertically oriented solutions may do just fine.

I don’t know what Ballmer’s smoking, but his statements are eerily similar to those he made when the iPhone was first announced.

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.

Well the iPhone’s market share is now close to 11% in terms of smartphones, and that percentage is only bound to increase as smartphones become a more affordable and attractive option for consumers.  Ballmer is so focused on volume that he seems to be neglecting the factors that attract large volumes of consumers in the first place, such as ease of use and top of the line features such as capacitive touchscreens – which Windows Mobile phones won’t have until sometime in 2010 at the very earliest.

Now I’m not saying that Microsoft needs to create its own phone, but their Mobile strategy has been flailing for years now, and by trying to be everything to everybody, they end up being nothing to everyone.

You can check out the full Ballmer interview below, though the pertinent portion begins at around 9 minutes in.


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3 Comments For This Post

  1. Constable Odo Says:

    The Microsoft theory would work if the OS on their phones were halfway decent. Microsoft is only interested in flooding the market with cheap cellphones just as they did with computers. That’s their only goal. Grab huge market share by appealing to the poor people of the world. I thought it always worked that way, yet I can’t explain why the iPod has such large market share. So many people are willing to pay more for a product if it is good enough to them.

    Microsoft Windows desktops are so prolific because corporations shoved millions of them on employees and that’s what people bought as consumers because they were familiar with them. Now consumers are buying iPhones through their own choice because they’ve heard good things about them and like the customer service Apple offers. If Apple can keep that up, then the iPhone will be secure no matter what sort of inexpensive junk Microsoft wants to dump on consumers. Of course, in places like India and Africa people will buy any crap as long as they can afford it. Apple will never get majority market share in any third-world country.

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