Steve Ballmer, about Apple and their iPhone

Steve Ballmer, the crazy (some may say) CEO man from Microsoft, had an massive interview for USA Today a couple of hours ago. Between the many question involving MSN, Google, operating systems and so much more, came a very interesting one about the Apple’s iPhone and Microsoft’s opinion about it.

Actually, it’s Ballmer’s opinion, but since he’s the CEO… Here are the paragraphs from the interview:

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. (..)

The non conformist Steve Ballmer, Microsoft’s CEO

Q: When can we look forward to a Zune phone?

A: 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.

The entire article can be found here: Usa Today

Is he right? Is he wrong? He claims that the iPhone might get 2-3% of the mobile phones market. Well OK, i for one think this percent will be a little bigger, having the Apple name behind it and knowing how people love Apple, especially in USA. That’s why around 5% of the market is more reasonable. With a total of 1.3 Billion phones sold every year, 5% of these means 65 million phones.

Steve (Ballmer) doubts the impact of Steve’s (Jobs) new iPhone toy

On the other part, Ballmer claims the iPhone to be subsidized by Apple, but also states in the next phrase that the phone will get them a lot of money. I don’t really get it, cause this contradicts the definition of subsidized, doesn’t it? Anyway, from the 500 $ price (that’s for US), it is supposable that Apple would have a profit margin of around 15-20%, that’s like 100 $ per mobile unit. And 100 x 65 million phones… equals 6.5 Billion dollars a year. And that’s really is something. Not to mention that the prices in other countries from Europe, Asia and Australia would be higher, thus a higher theoretic profit. And even if the iPhone won’t get 5% of the market, the income generated by it would still be important.

After all this math talk, it is kind of bizarre that Ballmer dubs the idea of a ZunePhone. Maybe it’s just the idea of a mobile phone based on the format of the Zune music player, cause i doubt Microsoft would just sit still, allowing Apple to grab the pie. Considering they have the monopoly over the operating systems used for phones with the Windows Mobile, just think about the idea of offering an interesting mobile phone equipped with some unique functions and some extra special OS, made just for it. It would be a best-seller, no doubt about it!