Microsoft CEO: iPhone to Grab Wimpy Market Share

At the sixth CEO forum, USA Today interviewed Microsoft CEO Steve Ballmer. One of the topics on their minds (and ours) was the upcoming release of the Apple iPhone.

Though Microsoft doesn't manufacture any cellular phones, their Windows Mobile operating system is the software behind several of the market's most popular devices. This presents some obvious concerns for Microsoft. Or, so one would have thought. Ballmer seems unconcerned. When USA Today made note of how passionate consumers are about Apple's products, and asked if this was an enviable position for Microsoft, Ballmer replied:

"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."

Ballmer conceded that Apple might make a good deal of cash with their two or three percent, but seems unconcerned about the iPhone's impact on the mobile industry. Ballmer cited a lack of broad-spectrum appeal to a wide consumer base as Apple's trouble point, an affliction from which he implies Microsoft products don't suffer.

It is worth noting that Ballmer isn't painting a completely accurate picture about the state of the market. Whether or not the iPhone will grab more than two or three percent of the mobile phone market remains to be seen (some analysts have predicted as high as 7%). Regardless, Ballmer's quip about Windows Mobile being in "60% or 70% or 80% of" mobile devices is exactly what he termed it to be - something he and Microsoft would "prefer". Windows Mobile has nowhere near this kind of dominance in the industry.
When asked about the possibility of a Zune Phone, Ballmer took the opportunity to take a shot at the general premise behind the iPhone, stating

"It's not a concept you'll ever get from us. We're in the Windows Mobile business. We wouldn't define our phone experience just by music. A phone is really a general purpose device. You want to make telephone calls, you want to get and receive messages, text, e-mail, whatever your preference is. The phone really is kind of a general purpose device that we need to have clean and easy to use."

Speculation is likely to arise as to whether Ballmer and Microsoft are confident to stay out of the music phone game because they truly doubt it as an effective concept, or whether their decision is more closely related to a glaring lack of success of the Zune as compared to the iPod.