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@ McGraw-Hill: Ballmer: Apple Is Too Expensive For This Economy (And That's Why Microsoft Will Win)

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imageThe deteriorating economy and cutback in consumer spending will hurt Apple (NSDQ: AAPL) and Microsoft (NSDQ: MSFT) — at least that’s the way MSFT CEO Steve Ballmer sees it. In a <a href="" title="Q&A with BusinessWeek editor-in-chief Steve Adler”>Q&A with BusinessWeek editor-in-chief Steve Adler at the McGraw-Hill (NYSE: MHP) Media Summit, Ballmer took aim at the iPod, iPhone and and Apple’s computers in general. “No one’s going to pay $500 more for a logo,” he said to audience gasps as he alluded to Apple’s various offerings.

Asked about the expectations for Windows mobile 6.5, Ballmer said pricing will make a big difference in leveling the playing field between Microsoft and its larger rivals in the smartphone space, Apple and BlackBerry. He estimates that smartphones will go from about 10 percent market penetration in the U.S. to 70-, 80 percent. “That’s true even in a bad economy.” Users want a range of price points, he says. “iPhone is a very expensive phone without a keyboard. Some people can’t afford [the device] and they can’t afford the data plan. It costs about $500 to make.”

“We want to power a low- to mid-range phone that can work with hardware developers,” Ballmer said. “Unless you assume that BlackBerry and iPhone will dominate the smartphone market — which I don’t — that gives us a huge opportunity. A $500 phone is not going to reach all Americans and people in emerging markets. The most popular phones in China and India cost $25 to build. We’re at $125, which isn’t close to those countries, but a lot cheaper than Apple. Plus, we can do touch-screeen cheaper, both high end and at the lower end, than Apple can.”

Mrs. Ballmer doesn’t want an iPhone: Alluding to Melinda Gates’ lament that sometimes she covets friends’ iPhones, Ballmer’s family seems to have no such desires. And if they do, they’d better not tell the press. “I don’t have any Apple products, my kids don’t and my wife certainly doesn’t.” That sparked a humorous back-and-forth. Adler: “I don’t buy any of my competitor’s products. I just borrow them at the newsstand. Ballmer: “I thought you’d say you just read them online for free.”

Keep going with Zune: About half the audience raised their hands when Adler asked how many own iPods. Less than 10 did the same. The big pay off is on phones and PCs, Ballmer says, as opposed to just the one device and “that’s where we have to align the Zune. But we’ll keep going with it.”

6 Responses to “@ McGraw-Hill: Ballmer: Apple Is Too Expensive For This Economy (And That's Why Microsoft Will Win)”

  1. Yup, Ballmer seems to live in a strange Microsoft world which differs significantly from our own. The Zune itself is not a bad product as such, but stands an even smaller chance of success in the fight against Apple products than OSX does against Windows.

    And MS seems completely out to lunch in the mobile OS thing. Everyone else seems to have listened to what users want (and pay for). MS seems to focus on what they think themselves. No, no, wait. They have probably done huge focus group studies with questionnaires and such.
    Just like Apple did not do when developing the iPhone. Just like Sony ignored when they invented the Walkman (sold 350 million units).

  2. Scott Deagan

    I was wondering what happened to the McDonald's clown. Now I know: he became a cocaine addict who sweats profusely, and now runs the show at Microsoft. Mr. Ballmer really needs to take a bite of the reality cake at some point.

  3. tomassco

    Mr. Ballmer is an amazing source of humor in this turbulent world of technology. As a publisher I subscribe to my competition, and as a technology user I try to acquire as much information on current offerings in order to make an informed decision. At last check, the Iphone was $199 from AT&T. It's closest WinMo competetitor, in my opinion, the HTC Touch Diamond was available for $50 more. Of course, I'd prefer a keyboard increasing the price another $50.

    I'm by no means an Apple fanboy and have no intention of buying an Iphone. However, it is difficult to bear the blathering of someone who one would think is intelligent, yet refuses to bow to reality.