Ballmer on the iPhone

A really interesting interview with Steve Ballmer appears in USA Today.  Ballmer is asked about the iPhone and says that “[T]here’s no chance that the iPhone is going to get any significant market share. No chance.”.  He continues, “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.”  I’m with Ballmer on this one, but I’m not with him on the conclusion. 

2% or 3% market share is damn impressive 25-40 million phones.   Apple reported on 1/2007 that they have sold their 100,000,000th iPod.  Even assuming that 10-20% of iPod heavy users switch to the more expensive iPhone, the goal of 25 million iPhones a year isn’t going to easy to reach.  I guess Ballmer originally meant to say Apple won’t get more than a tiny market share in the overall phone market.  Overall, he’s right: the $500 iPhone won’t get more than 2-3%.   (A $100 iPhone is a different story, though.)

But so what?   Even with “only” 10,000,000 iPhones a year, Apple is still doing an amazing job compared to sales of smart phones by Microsoft, Palm and even RIM.   Microsoft’s 2008 goal is to sell 20M Windows Mobile devices.  So Ballmer’s comment might be valid for, say, Nokia’s Kallasvuo, whose company does own some 36% of the market; but as long as Microsoft’s own share is barely 2%-3%, I’d be just a bit more cautious.

Personally, I can’t wait to see if Apple manages to get it right on their first try.  It took giants like Nokia and Motorola good many generation to get to where they are.  If Apple can hit a home-run on the first strike, that’s just absolutely unbelievable.  But I’m not placing my bets just yet.


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