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Apple's iPhone Sales Are No Big Whoop, Says Microsoft Executive

Posted by: Peter Burrows on October 22

The blogosphere is buzzing about comments made by an Intel executive about the iPhone’s performance as a Net browser(though as Gizmodo and others point out, he was actaully dissing the non-Intel chip inside the device).

But if Intel is unimpressed with the product, one executive at Microsoft is less than blown away by Apple’s success in the marketplace. In an interview at our offices today, I asked Robbie Bach for his thoughts on the breakout quarter Apple just announced, when it sold 6.9 million iPhones—a million or two more than even bullish Wall Street analysts expected. Bach, who runs the $8-billion-a-year Entertainment & Devices Division that includes the Windows Mobile phone business, had nothing bad to say about the product, per se. But he’s reserving judgment as to whether Apple can maintain its momentum.

In fact, Bach says he was not surprised that the iPhone outsold Research-in-Motion’s Blackberry in the quarter. “Apple had a big launch of a new product, and they launched at scale in a lot of new countries with a lot of new [wireless] operators. This quarter, RIMM is having its big launch, and at some point we’ll have our big launch. We’ll have to see where things normalize” for Apple.

Longer term, he and other Microsofties suggest that Apple faces a market share ceiling, since operators want to offer many kinds of phones to satisfy many kinds of users. “Does AT&T like having iPhone on its network? Sure. But they want to have balance in that ecosystem, where there’s three or four big partners. That’s why we’re so attactive to them—because we work with Samsung, Sony-Ericsson, LG, HTC, Motorola. Don’t get me wrong, the iPhone is a cool device. But it’s not about choice.”

There’s no denying that. But Microsoft has been making this choice argument for years, while Apple’s iPhone sales bonanza last quarter felt like the start of something new. Maybe Apple did finagle things in a way that maximized iPhone sales for just one quarter, and momentum will quickly fade. But I wouldn’t bet on it.

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Reader Comments

Dave

October 22, 2008 08:45 PM

Robbie Bach is biased. Why don't you ask the fox if it should be allowed into the chicken coop?

Mac-Guru

October 22, 2008 09:26 PM

When was the last time people stood in line for days to purchase _anything_ that Microsoft or Dell makes?

They can't even bribe people to take their stuff anymore.

KenC

October 22, 2008 10:03 PM

"But they want to have balance in that ecosystem, where there’s three or four big partners."

LOL!!! Quick, someone ask him if we can have 3 or 4 big Operating System partners!!!

Synthmeister

October 22, 2008 10:20 PM

Man these guys are not only whistlin' in the dark, they are shootin' in the dark. They just got lapped by Apple in the US over the past year in the mobile space, and this year the rest of the world will follow suit—just like with the iPod. Only this time it's worse because they've been in the mobile space for years and Apple has only been in the mobile space for 1.5 years.

Also, Samsung, Sony-Ericsson, LG, HTC, Motorola will be working with Android and possibly Symbian in the future. That kind of "choice" wasn't available in the PC market. MS will actually have to compete on merit this time.

MS is all about choice, as long as you choose MS.

GearsofPeace

October 22, 2008 10:48 PM

"The Xbox360 is a cool device. But its not about choice"
"The Zune is a.." ok, its not even that cool :p

Pete

October 22, 2008 11:25 PM

Freedom of choice is not having to purchase products that run a Microsoft OS.

Jon T

October 23, 2008 08:15 AM

Robbie Bach is still at Microsoft? I thought the Xbox and Zune disasters would have seen him on his way a long time ago.
But then perhaps that level of failure is regarded as normal these days by a gallumphing, past its sell by date, company like Microsoft.

John

October 23, 2008 11:34 AM

Ask Robbie what percent of employees own Iphone. It's so bad, that they had to advertise to employees to not buy Iphones.

dig

October 23, 2008 12:00 PM

Just like GOP election politics, when your opponent is pulling ahead sling some mud, typical defensive behavior. These guys should spend less effort on making commentary and more effort developing products people want.

Steve J

October 23, 2008 12:58 PM

The kinds of comments that explain why Microsoft is, and will remain, well...Microsoft.

Jose

October 23, 2008 01:13 PM

Villeicht, villecht but Mr.Job is doing an excellent job and all the rest need to make a superjointventure to beat Mcs, ipods, iphones..... ¡Vive la difference!

henry p.

October 23, 2008 01:40 PM

the iphone is a very cool device. but there are so many people out there like my mother who just need a small flip phone to make calls. this represents a surprising percentage of the phone buyer market. there is no question the iphone has and will continue to prosper, but in terms of making a large dent into this industry is unlikely. I define large as greater than 30% market share.

JAhrends

October 23, 2008 01:51 PM

I actually REALLY like my XBOX 360. The funny thing is that it is the ONLY Microsoft product that I consider to be reliable. The funny thing about that is that it is by its nature almost like an apple product.

Lee R.

October 23, 2008 02:34 PM

Apple's "real" earnings grew a staggering 124.6% in Q4

http://www.appleinsider.com/articles/08/10/23/apples_real_earnings_grew_a_staggering_124_6_in_q4.html

a must read!

Al

October 23, 2008 11:28 PM

I remember when the first XBox was coming out and Microsoft was showing off their pre-production model and somebody discovered it was just a mock up and the XBox software that was being demoed on screen was actually running on a PowerMac G5 hidden under the table. Oh that was hilarious!

Then there was the time Gates had to send out a memo telling Microsoft employees to hide their iPods. I bet no memo was needed for the iPhone, just Ballmer's death stare.

Microsoft employees are way smarter than their management because they can recognize a good product when they see one.

can't tell you

October 24, 2008 01:46 AM

I work for an AT&T retail location in a not too large market. The economy sucks, but guess what is my best selling phone? iPhone. This device isn't a fad unless it is found to be insecure otherwise, the future of communications is here. By the way, I use a Blackberry, but really enjoy the iPhone, so if I'm a company guy, I'm not one sided in the device used.

Cobrasoft

October 24, 2008 03:20 AM

This that this that... in the end apple still needs microsoft office to survive...

Kevan / Free-iPhone-3G-Apps.com

October 24, 2008 03:37 AM

Considering the fact that Microsoft just reported their quarterly losses, I mean, er, profits - obviously they'd say that Apple's sales are no big whoop.

What position are they in to even say that the iPhone 3G would even cause a dent in their amazing Vista sales?

Adam

October 24, 2008 10:08 AM

20-bucks says if Apple decided to let other companies use its iPhone OS that Microsoft would be pretty much have to end their attempts at a mobile OS.

xzi

October 24, 2008 10:26 AM

These apple fanboys are always so ridiculous. XBOX is a failure now? No one waited in line for XP and Vista?

Gimme a break, argue for your product, but don't claim that the largest company the world owned by the richest man in the world is a failure now becuase 6.9 milllion people bought an iPhone... get over yourself.

Stephen

October 24, 2008 10:29 AM

Apple now has outsold RIM, probably will outsell Windows Mobile licenses and has more cash in the bank than Microsoft in an era where cash is king! My prediction is Ballmer is gone in two years tops!

IluRapii

October 24, 2008 12:21 PM

Apple is such a BS company. They pretend to give "options" in the form of "apps" or other crappy twists of programming in an effort to "connect" you whatever the hell that means anyway. The sad thing is, people are duped by it all the time. Yeah people stand in line for that s*%$, heck I even have one because it was given to me. But its all about the intial thrill, not the longstanding usage. I hardly use mine anymore for anything other than basic stuff. Apple is gimicky and elitist.

TheWBee

October 24, 2008 12:53 PM

Meh, Apple will screw this up just like they did in the 90's with the PC market.

I am thankful that they're a thorn in Microsoft's side though because competition is a good thing.

Ken

October 24, 2008 04:47 PM

It's interesting that Microsoft refers to choice in the marketplace as they don't offer consumers choice in operating systems where Vista is being forced down the IT and consumer pipelines over XP. There reason for choice is simple, if they had developed the OS and hardware like Apple, their market strategy would be more monopolistic and agressive than Apple's. But because they only developed the OS, their ONLY choice was to work different wireless vendors and carriers.

Ian

October 26, 2008 01:55 PM

Well, The SonyEricsson Xperia is just about ten times cooler than Iphone...

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A blog on the daily doings of Apple and the many companies in its orbit, with insight and analysis by two longtime Apple-watchers BusinessWeek Senior Writer Peter Burrows and BusinessWeek.com Senior Technology Writer Arik Hesseldahl.

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