Apple's 'Awe Dropping' iPhone 17 Event: Follow along with our live blog.

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

Nicksd84 Avatar
115 months ago
"You can’t connect the dots looking forward; you can only connect them looking backwards."

- Steve Jobs
Score: 16 Votes (Like | Disagree)
Euphemia Avatar
115 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
115 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)
Smartass Avatar
115 months ago
took him long enough to admit it.

Score: 9 Votes (Like | Disagree)
infinitejest Avatar
115 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)
MrX8503 Avatar
115 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

iPhone 17 Pro 3 4ths Perspective Aluminum Camera Module 1

New iPhone 17 Pro Details: Brighter Display, Best Battery Life, and More

Wednesday September 3, 2025 5:33 am PDT by
Apple's iPhone 17 Pro and iPhone 17 Pro Max models will feature a number of significant display, thermal, and battery improvements, according to new late-stage rumors. According to the Weibo leaker known as "Instant Digital," the iPhone 17 Pro models will feature displays with higher brightness, making it more suitable for use in direct sunlight for prolonged periods. The iPhone 16 Pro and...
airpods pro 2

Two Versions of AirPods Pro 3 Coming With These Differences

Monday September 8, 2025 4:51 am PDT by
Apple is preparing to launch two versions of the AirPods Pro 3 over 2025 and 2026, according to a Weibo leaker. Yesterday, supply chain analyst Ming-Chi Kuo reported that Apple is planning to debut the AirPods Pro 3 this year. They could arrive as soon as this week at Apple's "Awe dropping" event. Crucially, Kuo added that Apple is planning to introduce a successor to this year's AirPods ...
iPhone 17 Pro in Hand Feature Lowgo

iPhone 17 Pro's Biggest Design Mystery is Finally Solved

Friday September 5, 2025 9:33 am PDT by
Apple is set to unveil the iPhone 17 series in just four days from now, and the biggest design mystery surrounding the Pro models has finally been solved. In a report outlining his expectations for Apple's event next week, Bloomberg's Mark Gurman said the iPhone 17 Pro models will have "a new cutout area on the bottom two-thirds of the phone that doubles as the wireless charging area."...
iPhone 17 Pro Dark Blue and Orange

iPhone 17 and iPhone 17 Pro: Release Date and Pre-Orders

Monday September 8, 2025 11:30 am PDT by
Apple will be holding its annual iPhone event on Tuesday, September 9, to unveil the iPhone 17, iPhone 17 Air, iPhone 17 Pro, and iPhone 17 Pro Max. Assuming that Apple sticks to its familiar pattern, the iPhone 17 series should be available to pre-order starting Friday, September 12 at 5 a.m. Pacific Time / 8 a.m. Eastern Time. The release date for the devices should be one week later, on Fr...
Awe Dropping MR Live Coverage Article

Apple Event Live Blog: iPhone 17, New Apple Watches, and AirPods Pro 3 Expected

Tuesday September 9, 2025 8:55 am PDT by
Apple's "Awe Dropping" event kicks off today at 10:00 a.m. Pacific Time, where we're expecting to see the iPhone 17 lineup, several updated Apple Watch models, and the third-generation AirPods Pro unveiled, and perhaps some other announcements. Apple is providing a live video stream on its website, on YouTube, and in the company's TV app across various platforms. We will also be updating...