Steve Ballmer, the ex-CEO of Microsoft, has admitted in an interview with Bloomberg that he was wrong about the original iPhone. Ballmer had back then said that the iPhone was too expensive to sell in formidable numbers and that while Apple might make money from it, its market share will be too small.
Microsoft back then was focused on providing its software to smartphones that were developed by OEMs and ODMs like HTC. The company’s Windows Mobile OS, however, become largely irrelevant after the launch of the original iPhone and Android soon after.
The exact words of Steve Ballmer on the original iPhone in 2007 were as follows:
“There’s no chance that the iPhone is going to get any significant market share. No chance,” said Ballmer. “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.”
In his Bloomberg interview, though, Ballmer says that Apple’s decision to subsidize the iPhone through carriers was ingenious. This innovation in the business model allowed many consumers to buy the iPhone who would have otherwise shied away from spending $600-$700 on a smartphone back then.
The ex-CEO of Microsoft also admitted in the interview that his decision to get Microsoft into the hardware business put a strain on his relationship with Bill Gates who was not in agreement with the Redmond company selling hardware directly to consumers. He also said that the company’s decision to not move into the hardware market early was a mistake.
Microsoft tried numerous times over the last few years to gain traction in the smartphone market with its Windows Mobile OS. The company also purchased Nokia, once the largest smartphone maker, in 2014 for $7.2 billion to bolster its smartphone business. However, the move backfired for the company as both Windows Mobile and Nokia smartphones are now non-existent from the market, with the company writing off its Nokia acquisition as a failure in 2015.