
Steve Ballmer Says Smartphones Broke His Relationship with Bill Gates - denis1
https://www.bloomberg.com/news/articles/2016-11-04/steve-ballmer-says-smartphones-broke-his-relationship-with-bill-gates
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ktRolster
This quote tho:

 _" I wish I'd thought about the model of subsidizing phones through the
operators," he said. "You know, people like to point to this quote where I
said iPhones will never sell, because the price at $600 or $700 was too high.
And there was business model innovation by Apple to get it essentially built
into the monthly cell phone bill."_

Apparently he didn't realize cell phone companies had been doing that for
nearly a decade before the iPhone.

~~~
elorant
I can understand why he didn't realize that. He's a super rich individual and
chances are he doesn't personally pay his bills. What I find shocking is that
no one in the chain of command bothered to mentioned to him that you know we
could subsidize the price. Which tells me that something in high management
around that era should be quite rotten.

~~~
sqeaky
I have a taken a new job every year or two for the past 10 years. Every place
I go is ignoring best practices and mired in their tiny problems as though
they were unsolvable. These problems would all simply evaporate if not for
their incest of thought.

This behavior that you find shocking, I find completely normal and
predictable.

~~~
sbuttgereit
I do business systems consulting and I cannot tell you how true this is... not
only are they mired in their tiny problems, sometimes they jealously guard
them as well.

I think the most common kind of manager-think is some sort of dedication to
appear being conservative in judgments; this can be true for any low level
supervisor through to the topmost levels of management. This results in two
behaviors: 1) you don't go out on limbs and you work to minimize all risk
rather than take well-considered risks; and 2) the problems you deal with
daily are "safe problems" that everyone from the board to the employees have
accepted as facts of life and their existence is unlikely to get you fired or
put you in a bad light.... even if it ought. So you don't solve your problems
because the solutions may bring unknown problems of their own. Taking risks,
and failing occasionally, is simply seen as failure and successes aren't
remembered as long as failures (we remember bad news better than good news)...
and any new thinking or new action is seen as risk.

~~~
drspacemonkey
>not only are they mired in their tiny problems, sometimes they jealously
guard them as well.

My current position is very much like this. They spent _months_ digging
themselves into their current hole. Any attempt to replace their shovels with
ladders turns into an argument over how long they spent making their shovels.

------
macspoofing
>"There was a fundamental disagreement about how important it was to be in the
hardware business,"

And that's not a settled answer. The two giants in mobile, Apple and Google,
have diametrically opposite approaches. Apple has the entire verticle, from
SOC to the OS. Google controls primarily the OS and application stack. Both
are incredibly successful. Microsoft could never have been an Apple. But they
could have been a Google. They could have had Android, and I don't think they
would have complained if that was the case.

>Ballmer said the mistake was getting into handsets and tablets too late.

What is he talking about? Microsoft was in the handset and tablet business
since the 90s. Their offering didn't resonate. They were also always afraid of
cannibalizing their Office and Windows business. Their actions in the 90s and
early 2000s also built up a lot of ill-will, so nobody was rooting for them.

>Apple Inc.'s iPhone would never sell because it cost too much? He now wishes
he'd realized how Apple was going to make it work -- through mobile carrier
subsidies.

That's also part of the problem. Ballmer was obsessed with Apple and while he
focused on Apple, Android took over the market.

~~~
mc32
I remember when the Courier[1] demo came out. I was excited about it... Then
deeply disappointed when it was unceremoniously shelved. It's speculation
whether it would have been a successful product, but I think the idea back
then had potential but Ballmer was unwilling to gamble on it.

[PS] On the other hand, he did gamble on long-term things like Azure, so it's
not like he made all the wrong bets --but it seemed like an obvious bet to go
with something like a Courier, specially after all the buzz it created.

[1][https://en.wikipedia.org/wiki/Microsoft_Courier](https://en.wikipedia.org/wiki/Microsoft_Courier)

~~~
jalfresi
To this day, I sometimes come across images of the Courier, and day-dream
about what was possible the ideal portable for me. I loved everything about
the potential of that project.

Still do.

~~~
FreezerburnV
You and me both. To this day I deliberately don't think about it, because it
just makes me sad that what seemed to be incredible potential was shelved. I
guess the Surface products are the closest to that potential, but for a long
time all we had was the iPad and awful Android tablets. And I still feel like
all of it doesn't live up to the ideals the Courier had.

I'm now going to go and forget this comment happened so I don't spend the day
depressed about where technology went.

------
the_duke
So Apple invented carrier subsidies for cell phone purchases just for the
iPhone, and that's why the iPhone worked?

Yeah. Solid reasoning there, Ballmer...

They were a thing long before the iPhone.

But then again, hugely successful people almost never say: "yeah, I was an
idiot who just didn't see it".

And he was very successful in terms of increasing revenue and working the
markets.

~~~
kohanz
That said, it still blows me away when I see my friends taking these
"subsidies" without understanding that they are basically paying full price
for the phone, if not more.

~~~
the_duke
Where I live there is very high competition in the mobile carrier market, and
subscriptions are incredibly cheap.

I'm always amazed at how many are actually throwing away money by accepting a
'subsidied' phone which forces you to take a contract 2-3 times as expensive
as you would actually need it.

Even if you see it as 0% financing, in my quick calculations it always worked
out to be more expensive than just buying the phone outright.

~~~
kohanz
Here in Canada, prices are not cheap yet, but getting better slowly due to
increasing competition. What I see is that the subsidized plan makes sense in
the moment, in that it's the regular plan + the cost of the phone divided over
24 months, but the problem with that is that cost of a regular plan, or the
features (e.g. amount of data, minutes) that are provided by it, are going to
improve substantially over the next 6 month and even moreso over the next
12-24 months. If you can afford it, you're much better off buying the phone
outright and then going month-to-month with the cheapest plan you can find.
The problem is, most of the people doing this can't fathom affording buying
the phone outright, but it's easier to stomach as a hidden cost.

------
intrasight
Hindsight is 20/20

More important decision would have been "consumer" vs "business". Even if they
invested in phones earlier, it would have made no difference if the company
was still run by salespeople focused on business seat sales.

------
almata
I actually think Ballmer really was the perfect finance-oriented CEO between
tech-oriented Gates and Nadella. Except instead of 14 years it'd probably have
been better a 5-8 years period or so. Sadly, 14 years was a too long period
and maybe Microsoft lost some good trains along that time.

------
d3ckard
People seem to be too rash to bash him about subsidies. Yes, they were
standard before. No, phones at the time did not cost nearly as much. Prices of
modern top-notch smartphones are insane. The trick was in hiding the price and
Ballmer just did not expect how much people are willing to pay monthly. I
wouldn't guess it either.

------
treebeard901
It may be true Microsoft didn't want to get into mobile initially but this
quote from Ballmer in 2007 about the iPhone says everything: "it doesn't have
a keyboard, which makes it not a very good email machine."

The [old] Microsoft was not able to see mobile as anything other than another
way to sell outlook.

~~~
snerbles
> The [old] Microsoft was not able to see mobile as anything other than
> another way to sell outlook.

This is best evidenced by their pre-iPhone smartphones, most of which were
little more than PocketPCs with keyboards and cellular hardware tacked on.

------
Joeboy
Warning: This page autoplays video (/audio).

------
legitster
The point they made about mobile carrier subsidies is surprisingly big. A $600
phone even today languishes without carrier support (though I believe on a
carrier subsidy, the total cost of the phone ends up being something like a
grand to the customer). But Apple kind of invented the concept of "phone-as
a-service"?

------
Nokinside
Gates-Ballmer era in Microsoft was incredibly successful, but not because they
had technological insight or creativity.

It's hard to come up with any technological innovations from inside Microsoft
in 80's and 90's. Microsoft strategy was to buy out companies that seemed to
build something new and either integrate the software or bury it. Gates and
Ballmer were both smart and ultra-aregressive ruthless businessmen. Technology
was always secondary to business.

Few examples of their failures and corrective measures: The internet and the
browser, Java and Smartphones. In each case they were hopelessly late and
their reaction was buying spree, failure and repeat until success.

~~~
kyberias
"any technological innovations ... in 80's and 90's"

What? Ok, first, do you think they've ever innovated anything? During the
2000's? What exactly?

Wasn't Windows NT, for example, innovative? The kernel is still powering the
Windows operating system.

Internet Explorer was a hugely successful browser dominating the market.

Innovation isn't only creating something from scratch. One can also create
innovative products by acquiring the basis for that and developing until it is
successful.

Of course they're approach has been to "repeat until success". And they quite
often get there.

~~~
gizmodo59
> Internet Explorer was a hugely successful browser dominating the market.

Mostly because it was shipped with Windows and many people wont change it (Non
tech). Furthermore, setting aside the anti-trust case, I would rather say they
did not capitalize on that start they got IMHO.

~~~
yuhong
Though the Netscape Mariner debacle probably didn't help either.

------
serg_chernata
Does anyone know if Bill Gates also opposes Microsoft's manufacturing of other
hardware such as Surface products or was it just the mobile phones?

~~~
ComputerGuru
I never detected that Gates was less than genuine in his zeal for the Zune
(the few times he spoke about it, that is).

------
sharemywin
The stars aligned(aka Jobs was brilliant) with the iphone. $199 cheap enough
for consumer(with subsidy).

leverage people's current ipod music investment into the iphone. no buttons.
slick design.

"felt like phone as an app on my new ipod."

really easy to use for non-tech people.

~~~
xenobioticants
> leverage people's current ipod music investment into the iphone.

Yeah, no. Before streaming by and far the most amount of people didn't buy
music in iTunes. They either torrented it or (if technically challenged)
simply bought it physically and then ripped it to iTunes.

~~~
jonnathanson
_" (if technically challenged) simply bought it physically and then ripped it
to iTunes."_

Minor nitpick, but ripping from CD to iTunes in the early days was a
nontrivial process for the technically challenged. I'd argue that audiophiles
were the group most likely to have done this, i.e., to get lossless music
files. (The resulting file sizes were monstrous, of course, and this
eventually led to some storage issues. But I digress.)

I'd argue that the technically challenged were the _vanguard_ of buying music
files on iTunes. The tech-savvy were torrenting, and everyone else found the
iTunes store a really easy way to click and download music. In fact, I
distinctly remember snarky comments back in the day about how paying $0.99 per
track on iTunes was "a tax on technical illiteracy."

~~~
xenobioticants
If you inserted a CD, iTunes instantly offered to rip it for you, fully
automatically. Didn't even need to fiddle with settings, it was literally just
pressing 'ok'.

I'd say of the technically challenged there was a subset that used iTunes to
buy maybe a few tracks or albums, and certainly not enough to keep them
'trapped' in the Apple ecosystem.

~~~
jonnathanson
_" If you inserted a CD, iTunes instantly offered to rip it for you, fully
automatically."_

You're correct. I think my memory of product timelines in the early days is a
bit hazy.

Even still, I'd love to see data that ripping from CD was a prevalent use case
_at all_ in the early days. I believe it was originally intended as an
onboarding process / ecosystem-lock mechanism. The assumption: a lot of
consumers (at the time) have CD libraries; by allowing them to easily port
over to iTunes, we can port their libraries onto our ecosystem; from there, we
have them. That was clearly the idea...but I'd love to learn more about how
common a use case this ended up being.

------
MarkMMullin
As a person who used to make their living completely off the msft stack and
now is completely off it - I'd redo that headline to say every action of
Ballmer's probably helped break his relationship with Gates - yes, Gate's
Microsoft was very predatory and could be a very bad actor, but Ballmer's
entire achievement was to help drive non-msft solutions to dominance and leave
Nadella in a Sisyphean role -

