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Microsoft to challenge iPhone on price

updated 12:20 pm EDT, Thu March 19, 2009

MS on Win Mobile and Yahoo

Microsoft chief Steve Ballmer in an interview Thursday revealed the company's current approach to competing with rivals, particularly Apple. The executive noted he believes that Apple may have difficulties as smartphones gain market share as the iPhone is relatively expensive to make. Where Ballmer estimated that an iPhone costs about $500 before factoring in carrier subsidies, he saw the "sweet spot" as being phones that have a pure cost between $150 and $200, which are more likely to include Windows Mobile.

Touchscreens are considered important by Ballmer, though he downplayed the iPhone's emphasis on its premium capacitive screen as a possible liability versus the cheaper, resistive screens that are required on Windows Mobile handsets with touch input.

"We want to provide vendors with ability to make Windows phones up and down the price scale," he said. "The way they do [touch] on the iPhone is not an inexpensive component. We'll do it in a way that you can afford to do it on most phones."

The early Microsoft employee also clarified the role of his firm's upcoming retail stores and said they will be more of a "showcase" for Microsoft's products rather than a direct source for a large portion of its product sales, which will still go to third-party retailers. "Apple actually sells about half of all Apple machines through its stores or online," he said. "We're not going to do that for PCs."

Ballmer also reiterated that his company is still open to doing a search deal with Yahoo and said that he's had only one opportunity to talk to new Yahoo chief Carol Bartz since she took her position in January. If any deal is to take place, a conversation will happen "when she's ready" rather than under pressure from either company.

by MacNN Staff



  1. rytc

    Joined: Dec 1969



    Ballmer either has his facts badly wrong or MacNN does. On another page here the 'pure cost' of making an iPhone is quoted as $174 - that sits smack bang in the middle of MS' supposed sweet spot.

  1. JeffHarris

    Joined: Dec 1969


    Price only

    Microsoft can only compete on price. They lack the vision and skill to do anything else. Why is it that after 20 years Windows is still a bloated derivative POS.

    Monopoly power and leverage alone does not make good products.

  1. G4_Kessel

    Joined: Dec 1969



    Ballmer is a douche bag. Nothing but drivel ever comes out of his mouth. At least Bill Gates wasn't a complete nut case!

  1. Salty

    Joined: Dec 1969



    So what they're saying is Windows mobile is cheap c***... funny as a sales person I think the same thing. Problem is anyone who wants a cheaper smart phone will get a BlackBerry Pearl.

  1. appleuzr

    Joined: Dec 1969


    oh ballmer

    When is this guy going to learn to keep his mouth shut and let his product speak for iteself.

  1. eddd

    Joined: Dec 1969



    more talk from Ballmer designed to keep investors hopeful. He's been wrong with nearly every statement so far when it comes to the iPhone. I'm tempted to say he doesn't get it, but I think he doesn't really believe what he's saying.

  1. testudo

    Joined: Dec 1969


    Re: Weird

    Ballmer either has his facts badly wrong or MacNN does. On another page here the 'pure cost' of making an iPhone is quoted as $174 - that sits smack bang in the middle of MS' supposed sweet spot.

    Not weird. The price your quoting is the theoretical take-apart price. But as many people will tell you, there's a lot of extra costs that go into the device. Research and Development, overhead, profit.

    Look at the other article where it describes the plan-less iPhone at $600 or more.

  1. trevc

    Joined: Dec 1969


    What do you expect?

    Balmer is, well ... Balmer.

    I don't think Microsoft is really benefiting with him in his position.

    What is this price point, as before things were subsidized, I bought one retail for less than $500 and the price over time should actually come down. Obviously not fact based.

    As far as the screen, the higher quality screen is appreciated. I'm not sure what screen HTC uses, but a friend is anti-apple (I know, I know, he's still a friend) and his wife had an iPhone so he knew how the screen 'felt' but when he bought an HTC, he took it back after the first morning of using it becuase it seemed he really had to push on the screen to make things work.

    Generally, you do get quality with Apple products and I for one will shell out a bit more for this, just not THAT much!

  1. PBG4 User

    Joined: Dec 1969


    Haha Ballmer

    This is the guy that said the iPhone wouldn't sell. Kind of invalidates his opinions on iPhone pricing/sales/target market for me.

  1. JulesLt

    Joined: Dec 1969


    Less for less

    He knows very well that people just see features in terms of 'touch' - not whether it's actually well implemented or not - having an AppStore rather than the actual applications.

    He's also talking manufacturer price to the carrier / retailer, not the build price. Of course Apple have some high margins they can reduce here if they need to, but that's never been their strategy.

    Where I think he's wrong is that they have a solution that can scale to both ends of the market.

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