Skip to Content

Former Microsoft CEO Steve Ballmer Admits He Was Wrong About the iPhone

by

In a new Bloomberg interview with Steve Ballmer, the former Microsoft CEO revisited his famously dismissive remarks about the iPhone when it launched back in 2007.

Shortly after Steve Jobs revealed the first iPhone, then-Microsoft CEO Ballmer was asked what he thought of the device during a press conference.

steve-ballmer-admits-microsoft-surface-isn-t-an-instant-hit-updated--a61fe0a13e

500 dollars? Fully subsidized? With a plan? I said that is the most expensive phone in the world. And it doesn't appeal to business customers because it doesn't have a keyboard. Which makes it not a very good email machine. ... Right now, we're selling millions and millions and millions of phones a year. Apple is selling zero phones a year. In six months, they'll have the most expensive phone by far ever in the marketplace.

Speaking to interviewer Emily Chang recently, however, Ballmer praised Apple's cellular subsidy model and admitted he wished he had come up with it first.

I wish I had thought of the model of subsidizing phones through the operators. People like to point to this quote where I said the iPhones will never sell. Well the price of $600 or $700 was too high and it was business model innovation by Apple to get it essentially built into the monthly cell phone bill.

Ballmer also admitted it was a mistake for Microsoft not to make handsets and tablets sooner. "I would have moved into the hardware business faster and recognized that what we had in the PC, where there was a separation of chips, systems, and software, wasn't largely going to reproduce itself in the mobile world," he said.

Steve Ballmer is asked about Apple's iPhone in 2007

Ballmer revealed his decision to take Microsoft into the hardware business contributed to the breakdown of his relationship with co-founder Bill Gates. "There was a fundamental disagreement about how important it was to be in the hardware business," Ballmer said. "I had pushed Surface. The board had been a little reluctant in supporting it. And then things came to a climax around what to do about the phone business."

Microsoft entered the hardware market in 2012 with the Surface RT tablet, which sold poorly and saw the company take a $900 million charge to write down the value of inventory. Since then, Microsoft's Surface range has taken off, and generated more than $4 billion in sales for the company for the fiscal year ending June 2016.

Top Rated Comments

122 months ago
"You can’t connect the dots looking forward; you can only connect them looking backwards."

- Steve Jobs
Score: 16 Votes (Like | Disagree)
122 months ago
Back in 2000, I bought my Nokia 8250 on a phone subsidy in Australia. Phone subsidies have been a common practice for a very long time. I'm not sure why Apple is getting the credit for it.
Score: 13 Votes (Like | Disagree)
the8thark Avatar
122 months ago
Ballmer was not wrong. That's the thing.
Apple realised the truths in what Ballmer said and worked on them to make the iPhone sell. If everyone had to pay $750 or more outright for their iPhone, no one would. The whole phone plan subsidising where you get to pay off the cost of the phone along with your bill over 24 months is what really allowed the iPhone to take off.
It was comments like Ballmer's that prompted Apple to go for the subsidised approach.

Ballmer's lament about not entering the hardware market sooner is not really a vaid one. MS traditionally is not a hardware company, it's a software company. Apple does the hardware and software vertically integrated whole solution in one approach. An approach MS traditionally has not done.

The interviewer is asking Ballmer - Why is MS not doing what Apple does?
His answer is so captain obvious - Because MS is MS and not Apple.
Score: 12 Votes (Like | Disagree)
122 months ago
took him long enough to admit it.

Score: 9 Votes (Like | Disagree)
infinitejest Avatar
122 months ago
Apple managed to build the first great phone. The business model existed before...
Either he still doesn't want to give Apple credit for it or he's really that much of an idiot and is still not getting it.
Score: 5 Votes (Like | Disagree)
122 months ago
Ballmer is having trouble admitting the real reason why he was wrong.

The iPhone wasn't successful because of the subsidized model, which existed prior to the iPhone. The iPhone was a success because it was simply a way better phone.

Ballmer not admitting this is the reason he's not the CEO.
Score: 4 Votes (Like | Disagree)

Popular Stories

Apple Event Logo

Apple Released Seven New Products Today

Wednesday March 11, 2026 7:05 am PDT by
Starting today, the seven new Apple products that were announced last week are available at Apple Stores and beginning to arrive to customers. The colorful MacBook Neo and all of the other new products are on display at most Apple Store locations around the world starting today. Apple Stores have inventory of the new products for both walk-in customers and Apple Store pickup, but...
iOS 27 Mock Quick

10+ New Features Coming in iOS 27

Friday March 13, 2026 2:13 pm PDT by
We're only three months away from Apple's WWDC 2026 event, which will see the company unveil iOS 27. With the fully revamped version of Siri possibly delayed until September, iOS 27 is shaping up to be the update we wanted iOS 26 to be. There will be new Apple Intelligence features, updates for the iPhone Fold, and more, with the latest rumors summarized below. Foldable iPhone Features...
Apple 50 Years of Thinking Different

Apple Announces 50th Anniversary Plans

Thursday March 12, 2026 6:10 am PDT by
Apple today announced that it will celebrate the company's 50th anniversary over the coming weeks, but it has yet to reveal any specific plans. Apple was founded on April 1, 1976, so the company will turn 50 on April 1, 2026. "While Apple is known for looking forward, this milestone offers a special moment to reflect on the journey that has brought the company here, to celebrate the...