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January 9, 2008, 9:14 am

Why Microsoft won’t make an iPhone

picture-3.jpgHas Bill Gates learned the lesson of Zune?

Having gone up against the iPod with Microsoft’s (MSFT) MP3 player and failed to make much of a dent in Apple’s (AAPL) dominant share of the portable digital music market, Gates seems to be conceding the field for all-in-one devices to the iPhone.

Thompson Financial reports today that in an interview with a German newspaper, Frankfurter Allgemeine Zeitung, Microsoft’s chairman said he did not intend to make a combination cell phone/music player.

“No, we won’t do that. In the sector of such smartphones, we are purely concentrating on the software with our programme Windows Mobile.” (link)

That’s a strategy that will put Microsoft in competition more with Google’s Open Handset Alliance than with Apple’s iPhone.Of course, licensing high-margin operating systems and application software, and letting others duke it out in the cut-throat hardware markets, is how Microsoft made its first billions.

Because it won’t work. You would have to start it to turn it off. Don’t forget all of the extras that you would have to buy: phone book, voicemail button and think of
all the viruses

Posted By Perry, Irvine, CA : January 16, 2008 1:59 am

Bill Gate is co-founder of Microsoft. People that think Bill Gate don’t have any leverage with MS is crazy in the head. We know he not a CEO of Microsoft because he want to focus with his Foundation.

Posted By Jack, Houston Texas : January 14, 2008 3:49 pm

No - being a parasite on the computer industry due to IBM’s incompetence is how Microsoft made their first billions.

Posted By John Kantor, St. Petersburg, FL : January 14, 2008 9:52 am

They won’t make an iPhone because they can’t. They are an engineering focused company - feature/benefit - how much can we stuff into the package.

http://humanvoice.wordpress.com/2008/01/10/iphone-changes-everything/

Posted By tomob : January 10, 2008 10:18 pm

Hahahaha, iphone. hahahahaha. hahahahahaha. hahahah. i mean seriously. hahahaha. what a piece of garbage. Now Windows Mobile my love. havnt payed for a piece of software in 5 years, over 1000 apps I have personally enjoyed the pleasure of testing and using. Ive got a game boy emulator, a nes emulator, a gba emulator, and a not so perfect snes emulator. hundreds of games, hundreds of apps, apps that will do everything from track my calories, to html programming on the fly. crazy skins, and just all out customization. I can program a cisco router, telnet to my phone system, attatch a gps, break into wifi networks, edit a spreadsheet or presentation or AN ACTUAL WORD DOC or anything else i want to get into that day.

And you want me to replace this with an Iphone, hahahahaha. hahaha hahahah hahaha. and once more, cause im actually laughing at this, hahahaha. what am i going to do, spend 500 dollars and make calls and browse the web. come on you can do that for 100 dollar phone, and itll play music too. hahahahaha.

I guess the solution for MS is to take the stance of buying an election, the old people vote and spend the money, appeal to them and your golden.

But remember, i turned a windows mobile phone into an all around badd ass computer. and i wont give that up for a more limited technology at a higher price with 0 expansion capabilites or even options. On a last note, apple doesnt even trust you idiots with changing your own battery. Ive been through 3 so far on my 6700. meaning i woulda been in the hole for what another 3 to 500 dollars by now if it was an iphone, cause you cant even swap batteries, there admitting its disposable with that one to me. and i wish i could spend my life on internet researching like some of you, but just imagine the amount of already made and tested applications that are out there for windows mobile. and you want the less than 100 that you can use on iphone. pretty retarded. the japanese are laughing at all of this right now with there cellphones that even project keyboards, use vibration for audio and not mics, offically webcam on the street with a phone, those are innovators, those are designers, not apple old people.

Posted By NY NY : January 10, 2008 10:15 pm

1)Gates is not running microsoft. He is just a stock holder like you and me…except he got more…you can too if you can afford to buy more shares.
2)microsoft mobile phone software makes more $$ than hardward.
3)iphone is just a fancy touch screen.
there is no business functionality like a crack berry. it’s a closed system that there is no 3rd party software. You are at the mercy of apple to give you more functions.
At least MS$ didn’t make PC only works for MS$ software…or else I am stuck with just MS Office and MS games on my PC.
4)Not a lot of people has apple computer. If it’s that good, it would be everywhere like Ipod.
5)you guys apple fans are the frog at the bottom of the well…
please check online the japanese are using for cell phones.
it’ a credit card, it’s a television and it’s a music /movie player and can even control toy robots and they all have 3G at minmum and can browse and read novels.
Our ipod is just a fancy looking phone with a touch screen and fancy interface . other than that…there is nothing good about it technocially or functionally.

Posted By a.houston.tx : January 10, 2008 11:49 am

I do not think Microsoft ever considered their products on the same level as Apple; just look at Zune and Windows in contrast to iPod and Mac OS X. There is no comparison. Apple makes high quality, high level, top of the line products. Microsoft is a cloning company that makes cheap and mediocre (at best) products that it can sell for less. Analogies abound: Porsche (Mac) to a Focus (PC) is fairly good.

Microsoft won the computer wars because PCs are cheap, easy to make, and the licensing was easy. As companies went for cheap, they got what they paid for and the rest is history. At least with the shoddy PC market, the need for numerous IT departments, Geek Squads, and others are necessary to keep PCs running. Sort of like building lousy highways that need repair every year, they keep a niche employed.

It is not fair to compare Microsoft to Apple. That is like WalMart and Saks Fifth Avenue.

Posted By S Barr, Chicago, IL : January 10, 2008 11:15 am

I wish fanboys would stop making comments about competitor products and just be objective.

I’ve used Windows Mobile and the iphone and I love them both but for different reasons. Windows Mobile helps with business while the iphone is entertaining.

Posted By Kshorty1, New Carrollton, MD : January 10, 2008 10:10 am

Posted By maddawg, DC : January 9, 2008 3:53 pm

“hope to compete with apple?? there’s no competition from apple….a niche is not competition…it’s usually just a shiny package that stimulates the few brain cells of imbiciles until their eyes glaze over….in a sentence, a very, very, very, very small minority of consumers.”

There’s no competition from Apple because Microsoft chickened out and refused to play. Their Zune is getting whipped by the iPod. And just when they were making progress with their xBox, little Nintendo whips them with their Wii. Google is mopping the floor with them on the internet. Microsoft just can’t compete unless they have monopolistic control. In the music world, Microsoft would be known as a “one hit wonder”.

“less than 1% is considered competition nowadays?!?!?! lol….keep me laughing girls…”

It may be less than 1% of the whole cell phone market. But Apple is competing in sbout the 10% portion of the market that makes up the smartphones. The portion of the market that actually makes money for the cell phone makers. Microsoft could only compete in the “dumb” phone market. The phones that 90% of the people didn’t pay for because the carrier gave them away. Having a Microsoft OS in a smartphone would be the equivalent of an oxymoron. The vast majority of the cell phones with Microsoft Window Mobile installed are owned by people that don’t have a data plan. So hows that working for Microsoft? More people surf the internet with an Apple iPhone than all other cell phones with Microsoft Mobile. Not bad for a “niche” cell phone.

“microsoft may not be interested in making all-in-one cell phones but the 99.99% of the rest of the cell phone industry is…apple doesn’t have a chance in this arena unless they bring their product to the masses, not just the “how much more can i pay than i have to for medioce, wish i knew what technology was, consumer”.
(thankfully there is less than .05% of those people)”

Why don’t you ask Micheal Dell how that little company of his is doing bringing his products to the masses by selling $399.00 computers at Walmart? Unlike other companies, Apple doesn’t need to sell their products at a loss to the masses for the sake of market share. If Apple can sell over 100 million iPods to (by your estimate) less than .05% of the consumers, then why can’t Microsoft sell more than several million Zunes to the other 99.95% of the consumers? What is Microsoft doing wrong? Could it be that on a level playing field, without resorting to abusing monopolistic power, Microsoft can’t compete?

“they can keep their over priced, standard technology niche products, and their less than 1% market share.

shiny packaging never gained more than the low single digit market share of anything…as apple knows well.

the real big boys are going NOWHERE; they’re in this game for keeps, not for niches…they’ll continue to squash little niches.”

What happened to IBM in the PC market? Oh yeah,…one of the big boys couldn’t hack it but little Apple (which happens to have a larger market cap than IBM) is still making money in their little niche computer market. The big boys better watch out because “niches” like Apple and RIMM will steal their breakfast, lunch and dinner.The trouble with most of the big boys is that they’re stuck using that crappy mobile OS by Microsoft. It’s very tough to innovate around that. In the tech world, if you don’t (or can’t) innovate, you will soon be extinct. And I don’t see any innovations coming out of the big boys. Palm is already on the endanger speices list. Like Microsoft, the big boys innovate by copying Apple.

Posted By DavidW, San Bruno, CA : January 10, 2008 8:27 am

Microsoft hire programmers, Apple hire designers. Looks can kill!

Posted By Syahid A., Bangi, Malaysia : January 10, 2008 2:31 am

“The iPhone is nothing remarkable and MS knows that a similar hardware without the Apple logo would not sell.”

Ahhh, not sure how you come up with that. It is, simply, the best V1 of any hardware I have ever used. It is really quite amazing. I take it you were being ironic in your comment.
Microsoft once said they would not enter the MP3 market either. The Zune, while not bad, offers nothing special. And the interface is a bit awkward.
-M
http://cartoonshmartoon.blogspot.com/

Posted By mfearing : January 9, 2008 10:46 pm

“Apple’s products look and work better, and there is nothing out there remotely approaching the iPhone or Apple’s Leopard operating system.”

I agree with the Leopard comment but not the iPhone. While anxiously awaiting the iPhone’s official arrival here in Thailand I have been researching other smart phones.

With the Symbian OS used cooperatively across all the main competitors there is currently a ton of mature software of every sort that is simply not there for the iPhone. Perhaps once the iPhone and the Touch are unlocked and developers get some incentive this will change.

My decision rests with how the iPhone is marketed here. I want to select my own phone carrier, buy time in minutes and not on a monthly plan, and put whatever software and content I want on it. Every phone here is that way now and I anxiously await the iPhone’s official unveiling here in Thailand to see if I will buy it or something like the Nokia N95 8GB.

Posted By Jim, Korat, Thailand : January 9, 2008 10:01 pm

“shiny packaging never gained more than the low single digit market share of anything…as apple knows well.”

This makes me laugh at your ignorance, maddawg !

In your eager, envious and extremely poor attempt of slagging Apple you seem to forget a certain product made by them called the iPod + iTunes.

I rest my case !

Posted By Martin, New York, NY : January 9, 2008 6:58 pm

New title for this article,”Why Americans wont buy Microsofts Geeky Nerdy devices that have no style.

Posted By Lakehills, TX : January 9, 2008 6:50 pm

I want to point out that Gates is no longer the CEO of Microsoft, so I dont know why you put Gates name in this article.

Posted By Lakehills, TX : January 9, 2008 6:47 pm

How does a person get through to the dunderheads who wrote the highly critical comments about Apple in your last issue? Apple’s products look and work better, and there is nothing out there remotely approaching the iPhone or Apple’s Leopard operating system. Bill Gates has high market share in OS’s because he got in on the ground floor with IBM, and no other reason. His OS is arcane, clunky and difficult. In a head-on war with Apple, without the huge advantage his association with IBM gave him, he would be bankrupt in a month.

Posted By William Pierce, Sydney, New South Wales, Australia : January 9, 2008 5:07 pm

hope to compete with apple?? there’s no competition from apple….a niche is not competition…it’s usually just a shiny package that stimulates the few brain cells of imbiciles until their eyes glaze over….in a sentence, a very, very, very, very small minority of consumers.

less than 1% is considered competition nowadays?!?!?! lol….keep me laughing girls…

microsoft may not be interested in making all-in-one cell phones but the 99.99% of the rest of the cell phone industry is…apple doesn’t have a chance in this arena unless they bring their product to the masses, not just the “how much more can i pay than i have to for medioce, wish i knew what technology was, consumer”.
(thankfully there is less than .05% of those people)

they can keep their over priced, standard technology niche products, and their less than 1% market share.

shiny packaging never gained more than the low single digit market share of anything…as apple knows well.

the real big boys are going NOWHERE; they’re in this game for keeps, not for niches…they’ll continue to squash little niches.

Posted By maddawg, DC : January 9, 2008 3:53 pm

The title of this article should be “Why microsoft is unable to make an iPhone (that actually works)”

Posted By Jeff, Troy, MI : January 9, 2008 3:40 pm

“That’s a strategy that will put Microsoft in competition more with Google’s Open Handset Alliance than with Apple’s iPhone.”

Microsoft is not putting itself in competition with Google’s Open Handset. This is a market Microsoft entered 7 years ago and they already have a huge lead and a huge market. Huge compared to the so called dominant iPhone too.

Posted By Eric, Washington : January 9, 2008 2:58 pm

What happened to my other comment?

Posted By Waldo, LA, CA : January 9, 2008 2:50 pm

It is important to note as well that at CES Microsoft announced Windows Mobil sales of 20 million for 2008. That represents a 100% increase! It’s more than double what Apple hopes to sell. It is important to note that, in order for this to happen, phone manufaturers have to make sacrifices by accepting lower margins. Palm has been a particularly good partner in this respect. Other manufacturers need to contribute full featured, lower cost phones with deep discounts if they hope to compete with Apple. They need to learn from the PC industry.

Posted By Waldo, LA, CA : January 9, 2008 2:43 pm

Tell Steve Jobs that he can’t have my Zune 80 - he has to buy his own. Apple is so uncool right now - ipod classic is the new media joke. White ear phones mean that you just over paid on your music - Buy the way Amazon is discounting the ipod classic - can’t give them away - sorry Apple fanboy

Posted By Joemiz : January 9, 2008 2:19 pm

A very insightful article! This proves that Microsoft is not sitting around waiting for Apple to lead the way. Bill gates at the CES keynote demonstrated a device - a little box with a wire attached to it - that when pointed at a movie theatre across the street would show the movies playing at that theatre. This will make binoculars obsolete. It will also avoid people from crossing the street and putting their lives in danger.
Phone manufacturers should all embrace Windows Mobile. That way Microsoft can do what they do best and create a constant steam of revenue so that they can continue expanding into other markets, such as auto, and retail sales and even credit card processing.

Posted By Noah, LA, CA : January 9, 2008 1:43 pm

ipods are great- if you’re battery doesn’t die after a year

Posted By rob, oakland ca : January 9, 2008 1:00 pm

If Microsoft, whos primary business is software, is prepared to make a piece of hardware, why did they make the Zune? Naturally the answer is two fold: to make money and to gain some market share ( against Apple ). If they really were a switched on company they would have realized years ago that if they made a computer and the software and sold a package that ACTUALLY WORKED! they would make lots more money and they would have had a platform through which they could introduce other devices and software. The zune was a mistake and a diversion they succumbed to while most of their customers are left frustrated by software that simply cannot be made to work on every machine available.

Posted By Andre, Redmond WA : January 9, 2008 12:51 pm

I would like to know what phone or music player is better, easier to use more reliable or has more accessories that the iphone or ipod. Laughable. Cheaper isnt always better…and “smaller plaers with more memory” are usually unreliable, and have terrible user interfaces as well as bad integration with software. Stick to the kool aide and buy crap if you want. lol

Posted By Jjohn Tampa fl : January 9, 2008 12:32 pm

Wow. In this comments section, the MS fantards have certainly spoken! Decisively, too! You guys get paid for this?

Posted By Jetspank, Washington, DC : January 9, 2008 12:32 pm

I must say that I have to disagree on the comment, that iPods were made for young adults or for those even younger. When my “old” MP3 player crashed due to malfunction, I searched the internet for more space and maybe even an updated version from that firm. Having sworn I would never do any buisness with Apple, simply because of the brand itself and what was said about the firm, I suddenly found myself with an iPod with 80Gb with a screen and after having laid my hands on a MacBook I simply changed the way, that I look on Apple. So when they launch iPhone in this country, where I am from, I will with out a doubt buy it, if the prize is less than the expected equivavelent in US§ of way over 1200. And regarding my age; I am 34 and no longer a rookie.

Posted By Allan, Denmark, Europe (EU) : January 9, 2008 12:31 pm

why should Microsoft do?., MS knows that a similar hardware without the Apple logo would not sell.

Posted By Saran, Columbus IN : January 9, 2008 12:28 pm

The new Zune is freaking awesome. I like those much better than the iPoops.

Posted By D, Seattle : January 9, 2008 12:11 pm

Zune is on par with iPod in terms of hardware. Apple sells because of the cool factor. The iPhone is nothing remarkable and MS knows that a similar hardware without the Apple logo would not sell. There are already superior phones available by several manufacturers.

Posted By Harold, LA, CA : January 9, 2008 12:04 pm

The Zune is awesome though. I own one and got a 30 gig for what I would pay for an 8 gig ipod. Great quality too!

Posted By Jennifer, Columbus, OH : January 9, 2008 11:50 am

I will say this. The MP# is for adults and the iPod is for children and young adults. I find the sleek small compact MP3 with more memory for more music and downlads more apealling. Microsoft is the king and will always be the king of software hands down.

Posted By William Johnson, Arlington, Texas : January 9, 2008 11:33 am

Oh Boy, another Apple puffing story disguised as financial news.

Posted By Len : January 9, 2008 10:49 am

Competition would not harm.

Posted By George W. Rosenberg, Durham, NC : January 9, 2008 10:40 am

Keep in mind that windows mobile is already running on a ton of cell/mobiles.

Posted By UP, San Diego CA : January 9, 2008 10:33 am

M$ has proved it does a bad job of QC with hardware. They really should just stick to software.

I hate Apple’s control freak attitude when it comes to software but love it with their hardware. I wish the could find a way to loosen up there software to hardware gripping. I know I know it’s how the rap the mac heads for profit but still…

P.S. I own Apple stock and a Mac mini (though I don’t ever use it) so save the flamming please.

Posted By James, Troy MI : January 9, 2008 9:57 am

Always with the overstatements about Apple can’t do this and MS won’t win that. MS won’t swallow up its Windows Mobile just to launch an iPhone competitor. Stop thinking so simple. There has to be a reason to do something, not just because it will irritate or make Apple or Google lose some money. Fluff.

Posted By Jack R, Dallas, TX : January 9, 2008 9:34 am

Of course, Gates (or was it Ballmer) also claimed they wouldn’t be making a music player about six months before they released the Zune.

Posted By JT, Oak Ridge, TN : January 9, 2008 9:24 am
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Philip Elmer-DeWittSilicon Valley veterans like to joke that Steve Jobs must be surrounded by a reality distortion field; if you get too close to him, you start to believe what he's saying. Thanks to the success of the iPod, the launch of the iPhone and the renewed interest in the Mac, Apple has made believers out of millions of customers - and made a lot of investors rich. But Philip Elmer-DeWitt believes that an ounce of skepticism never hurts when writing about the company. He should know. He's been covering Apple - and watching Steve Jobs operate - since 1982, first for Time Magazine, then for Business 2.0, and now for Fortune.
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