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Steve Ballmer Says Smartphones Came Between Him and Bill Gates (fortune.com)

Posted by EditorDavid on from the CEO-vs-former-CEO dept.

Steve Ballmer once said Apple's iPhone would flop because it cost too much -- though he now admits that he failed to anticipate carriers subsidizing the cost of the phone. But that was only the beginning. An anonymous reader quotes Fortune: The former CEO of Microsoft says he and Gates drifted apart over Microsoft's move into the hardware business in the early 2010s, according to Bloomberg. Ballmer says he was the one who pushed for Microsoft to design smartphones and tablets at a time when Apple was already well established. He says Gates and the board seemed reluctant to do so. "There was a fundamental disagreement about how important it was to be in the hardware business," Ballmer told Bloomberg. "I had pushed Surface. The board had been a little -- little reluctant in supporting it. And then things came to a climax around what to do about the phone business."
Microsoft eventually took a $900 million write down for its first tablet, the Surface RT -- plus most of the value of their $9.5 billion acquisition of Nokia Oyj's handset unit as Microsoft pushed into hardware. "Ballmer's only regret: not doing it sooner," Bloomberg reports, adding that Surface is now profitable and this year will generate more than $4 billion in sales.

6 of 114 comments (clear)

  1. Microsoft did mobile wrong by Anonymous Coward · · Score: 3, Insightful

    I think Microsoft did mobile all wrong. It should have focused on the software and let hardware makers decide the models to use it. Buying Nokia was a huge mistake although at the time Microsoft probably figured a big cell phone company like Nokia was a big advantage to pushing Windows mobile. I haven't used Windows mobile OS since 7.5 but even then it was a OS that could easily run well on cheaper and slower hardware. When you look at the sales figures today, Android is now killing IOS in sales. Even Apple hurts itself by not allowing IOS on more devices to give people options. I am a iPhone user myself, but see the much more flexible Android OS as a big advantage over Apple's closed end ecosystem. For example if a Samsung Galaxy phone would drop a 3.5 mm audio jack, a person could easily find another good Android phone with one. If you want USB C charging, or wireless, you can find options for those too. Microsoft obviously lost out on mobile which will hurt their OS going forward.

    1. Re:Microsoft did mobile wrong by Anonymous Coward · · Score: 0, Insightful

      I've 'played' with Microsoft's tablets in the early 2000's. They were awful. Windows XP Tablet Edition. You had to use a pen like a mouse to use desktop applications. The few tablet like features were things like write recognition, but it was faster to simply type then write. That's why those tablets were laptops with a screen that could be twisted and turned so it covered the keyboard. Microsoft still thinks that tablets should have keyboards today, and those Surface tablets are in fact still laptops. An iPad is a tablet and only a tablet, so developers have to write tablet apps. On Surface a developer would say: just attach the keyboard we already have a desktop app...

      The Microsoft smart phones were mini laptops with the funny start button and the funny Win 3.11 like crashes. I've worked at a company that forced its employers to use MS smart phones, 1-2 years before the first iPhone was released. They also had to take a regular cell phone with them to make phone calls because Microsoft's phones failed at the most important part of a phone: making phone calls. I've never seen as much nerd rage over smart phones as back then. I was lucky to be a programmer and not a sales man or technician who were required to use the Windows smart phones. They lost 15-20 minutes trying to fill in the mandatory (by business rules) document on their smart phone after every customer. When you have 5-10 customers on a day, you lose multiple hours just messing with a buggy and user unfriendly smart phone.

      That's why Microsoft failed despite being the first to recognize the needs of the business market. Futuristic but buggy phones might be okay to satisfy our inner nerd, but it isn't ready to be used in business by people who just want things to work and things that help you to work better and faster.

  2. wake up, Ballmer by ooloorie · · Score: 3, Insightful

    The problem with Microsoft's phone effort wasn't that Microsoft didn't invest in it soon enough or early enough; in fact, Microsoft was the dominant smartphone player prior to iPhone. The reason Microsoft lost in the smartphone market was because their product sucked.

  3. Proof of Ballmer's incompetence... by Lumpy · · Score: 3, Insightful

    Honestly Gates knew how to run a business and he knew that cell phone hardware was a stupid idea. And the world did prove gates right. The first mess starting with the BlackJack phones running WinCE and then the reboot attempt with the windows OS phones, every single attempt was a complete failure.

    --
    Do not look at laser with remaining good eye.
  4. phone subsidies by mixed_signal · · Score: 4, Insightful

    Apparently Ballmer didn't know squat about the phone business, and didn't bother to ask. Classic behavior for American financial types running technology businesses. Carriers had been subsidizing mobile phone costs since at least the mid-1990s after the PCS spectrum auctions.

    From the Bloomberg article,
    "I wish I'd thought about the model of subsidizing phones through the operators," [Ballmer] said.

  5. Re:Ballmer still did everything wrong by guacamole · · Score: 1, Insightful

    This is a great post. Microsoft and its followers have created some kind of a cult following around the Surface Pro "tablets", and they actually claim it is a good "tablet", actually the best out there. But in reality the Surface Pro is basically an PC Ultrabook, with a detacheable keyboard. It's very lousy as a tablet, when used in tablet-mode without keyboard, and it's a lousy laptop too, because it's pretty awkward to use this thing as "LAPtop". Most Surface Pro users, use this device as a PC ultrabook, with a keyboard attached while telling everyone "what a great tablet, the best". In the end, their needs would have been served much better by a convertible ultrabook such as the Lenovo Yoga series.

    The shocking thing about this whole story is that Microsoft has ruined its OS for the desktop and notebook users, which are like 99% of all Windows users, in order to promote Windows on these "mobile" devices. In reality, both microsoft tablet and phone are nearly dead, while the desktop users are stuck with an OS that is having an identity crisis.