Ballmer claims Microsoft won't lose money on Zune

[AppleInsider]

Microsoft CEO Steve Ballmer says his company will not lose money on the sale of its Zune digital media players this holiday shopping season, but admits it won't make much money either.

In a Q & A session with BusinessWeek about Web 2.0 and the rising competition, Ballmer concedes that it's the "guys who can touch us in multiple places" that are seen as Microsoft's top competitors rather than those "guys who can touch us in any one place."

Ballmer highlighted the open source movement and advertising as two alternative business models in which he believes Microsoft must focus its energies in order to compete effectively.

"In the case of open source, we couldn't adopt the business model. We adopted a competitive approach that so far has worked very well," he said. "In the advertising case, we can embrace that model. We don't have to sit here and say it's that bad."

"A third model," Ballmer said, "is that there are cases where software gets monetized through hardware. That's what an iPod is. iPod is a software thing. You just happen to collect the money on the hardware."

Ballmer said his company's upcoming Zune player fits into the hardware model because the value, if its successful, is all in the software. "It's in community [the ability to share music and pictures with other Zune users]," he said. "I want to squirt you a picture of my kids. You want to squirt me back a video of your vacation. That's a software experience."

"The truth is," Ballmer added, "if it makes money, it will be built into the gross margin on the hardware. We'll figure out how to make money on the community perhaps later though advertising or other means."

Microsoft Chief Executive Steve Ballmer | Photo Credits: AP

Asked how much money Microsoft will lose per Zune, Ballmer said, "None."

"Apple put the hammer down there, dropped the price [of its 30GB iPod] down to $249," he continued. "If they had been $299, it would have been nicer. They have the advantage of scale. So we're at $249, too. We don't make a lot of money, not to start out."

[ View this article at AppleInsider.com ]

[zenatek]

Wow I can totally picture saying that "Hey Jim, Let me squirt these photos of Maxim's top 100 women over to you."

WTF

[bdj21ya]

Originally Posted by AppleInsider

"I want to squirt you a picture of my kids. You want to squirt me back a video of your vacation. That's a software experience."

The way Ballmer describes it, it sounds more like a "hardcore" experience than a "software" experience. Am I the only one uncomfortable with all this squirting going on?

[Buck]

Good to know I wasn't the only one puzzled with his choice of words...
Here's a great review of Zune by the way, dunno if anyone's already posted this - http://www.roughlydrafted.com/RD/Hom...974628809.html

[ulyssespdx]

uh:

1. Steve Ballmer--ugliest. guy. ever. i just want to punch his pimply face each time i see it. for no good reason.

2. the article was masterful doublespeak. in short, they *will* lose money, and are betting on software sales and "community" buy-ins to make up the difference.

3. "Apple has the advantage of scale"? wtf? Microsoft has access to production scales as big as the iPod, anytime they want.

4. the Zune-sucks-really-really-a lot. a lot. it sucks. much.

[kim kap sol]

Ooomph chicka ooompha chicka, bong-da-da-dong-da-da-dong. Ooomph chicka ooompha chicka, bong-da-da-dong-da-da-dong. Ooomph chicka ooompha chicka, bong-da-da-dong-da-da-dong. Ooomph chicka ooompha chicka, bong-da-da-dong-da-da-dong. Ooomph chicka ooompha chicka, bong-da-da-dong-da-da-dong. Ooomph chicka ooompha chicka, bong-da-da-dong-da-da-dong. Ooomph chicka ooompha chicka, bong-da-da-dong-da-da-dong. Ooomph chicka ooompha chicka, bong-da-da-dong-da-da-dong.

[jadams]

I guess those comments just show how much better Apple is in this market, they make profits on iPod sales AND from iTS sales - no supporting a loss leading piece of hardware here. It seems MS STILL doesn't get it...

[Eduardo]

He lost me at "squirt".

Did he really say 'squirt'?

[byamabe]

I don't understand MySpace so maybe that's why I don't understand this whole Zune sharing thing. Could someone explain it? Is everyone at a party supposed to have to have a Zune so they can share music, but not listen to the same songs. Some sort of shared, isolated experience.

[Clive At Five]

Originally Posted by Steve Balmer

A third model is that there are cases where software gets monetized through hardware. That's what an iPod is. iPod is a software thing. You just happen to collect the money on the hardware.

And Zune is different because they're using the mirroring the exact same closed business model used by Apple. Excellent.

Originally Posted by Steve Balmer

Apple put the hammer down there, dropped the price down to $249. [...] So we're at $249, too.

WRONG. You're at $249.99. Weiner.

Originally Posted by Steve Balmer

I want to squirt you a picture of my kids.

Originally Posted by Steve Balmer

...guys touching us in multiple places...

Anyone else starting to question this guy's... everything? Enough said.

Originally Posted by Apple Insider

"We don't make a lot of money, not to start out."

The word is "won't," not "don't." Who proof-read this anyway?

-Clive

[DCQ]

How out of touch are these people?

"Squirt"? WFT?

If I were an investor, I'd sell based on that alone...

[Hobbes]

Er, squirt?

There was a lot of weirdly tortured corporatespeak in that interview. I can't say I learned a whole lot, or even sure what exactly was said in some cases.

Apple *does* have advantage of scale, btw -- no question. They're selling tens of millions of iPods every year. MS is still learning to play at this game, as shown by their slightly botched 360 roll-out.

[Caribou Killa]

Originally Posted by kim kap sol

Ooomph chicka ooompha chicka, bong-da-da-dong-da-da-dong. Ooomph chicka ooompha chicka, bong-da-da-dong-da-da-dong. Ooomph chicka ooompha chicka, bong-da-da-dong-da-da-dong. Ooomph chicka ooompha chicka, bong-da-da-dong-da-da-dong. Ooomph chicka ooompha chicka, bong-da-da-dong-da-da-dong. Ooomph chicka ooompha chicka, bong-da-da-dong-da-da-dong. Ooomph chicka ooompha chicka, bong-da-da-dong-da-da-dong. Ooomph chicka ooompha chicka, bong-da-da-dong-da-da-dong.

...Developers Developers Developers Developers
Developers Developers Developers Developers...

[DCQ]

Man, I just reread it. And between the squirting and the "touching us in multiple places" I think I need a shower.

:shiver:

On the up side, I heard Mark Foley just ordered one.

[Ireland]

Didn't read what he claims, don't care about what that monkey thinks.

[Guartho]

Originally Posted by AppleInsider

"The truth is," Ballmer added, "if it makes money, it will be built into the gross margin on the hardware. We'll figure out how to make money on the community perhaps later though advertising or other means."

So basically, if I buy a Zune now, later it will get flooded with ads? Thanks Ballmer... but no thanks.

[Clive At Five]

Originally Posted by ulyssespdx

3. "Apple has the advantage of scale"? wtf? Microsoft has access to production scales as big as the iPod, anytime they want.

Yes, but they know they can't sell the volume of Zunes than Apple can sell iPods. Thus, they can order in the volumes that Apple can, and THUS can't take as steep of discounts that Apple can. That's why Zune must sell at a loss, despite what Balmer says to keep shareholders happy.

-Clive

[minderbinder]

"guys who can touch us in multiple places"?
"I want to squirt you a picture of my kids"?

Who does this nutcase have writing his copy, Tobias Fünke?

[pdoisy]

English not being my mother tongue and wondering about all comments, I looked in the Mac OSX dictionary for "squirt" where one definition says: |skwərt|, verb [ trans. ], transmit (information) in highly compressed or speeded-up form".
Sounds like Ballmer is a very educated man!
Ok, ok, just having fun, I know what you mean...

[running]

this itherview is not only about zune but also about many other things ... the interview is very interesting, its good to know what "leader" thinks...

[monkeyastronaut]

Originally Posted by AppleInsider

"I want to squirt you a picture of my kids. You want to squirt me back a video of your vacation. That's a software experience."

This guy is not up to date with the capabilities of Zune. I've done a lot of Zune reading on the 'net (basically all Zune sites and Microsoft sponsored developer and marketing blogs for Zune) and you can't send videos through Zune's wireless feature. At least not at launch.

You can do that for songs (3 plays in 3 days, or 3p3d) and pictures, but not with videos.

[murk]

Squirt fits perfectly with the French Canadian slang meaning of Zune.

[nagromme]

"I want to squirt you a picture of my kids. You want to squirt me back a video of your vacation."

That's what I want, is it? However, unless BOTH you AND I own a Zune, we can't squirt. We'll still have settle for me handing you my player to look at the photos Is that so terrible? Is that a problem that needs a solution? (Don't get me wrong, it's a neat extra--like the stopwatch built into iPods--but how frequently will it be used in reality? And the iPod stopwatch doesn't drain battery life waiting to find other users in range for exciting 3-day music loans.)

"We'll figure out how to make money on the community perhaps later though advertising or other means."

Does "figure out how to make money later" sound like a good business plan?

Asked how much money Microsoft will lose per Zune, Ballmer said, "None."

That's still not completely clear to me. That sounds like it COULD mean that MS will lose money per hardware sale, but "predicts" that they will make it up in other ways to break even. (Including the advertising budget, and the loss of PlaysForSure WMA revenue from its WMA licensees it is now competing against?) Not that it matters, MS will survive a loss.

From Buck's "Zune vs. iPod Myths" link:

"According to a CNet MP3.com interview with Microsoft executives from two weeks ago, "the Zune won't immediately have video playback capability." ... ""You’re right that there’s not a lot of emphasis on [video playback on the Zune] and that really kind of goes to maybe a big vision difference and competitive difference that we see with Apple right now. Our goal right now is to celebrate music." ... "Microsoft isn't supporting Audible audiobooks, nor providing any support for podcasting, nor has it announced any support for notes, tasks, calendars, contacts, or games. So all it does is play music. "

What?

"If your number one fan is sending you hate mail, you have a problem. So what's with all the Zune related web sites carefully repeating the same talking points? It's called astroturfing. Instead of inspiring actual interest in a grassroots fashion, Microsoft has resorted to spreading fake grass, crafting each site to suggest the appearance of something other than the advertisement it is."

Myth 10: Available in Brown

Haha, actually this myth is true...

And on top of it all, it's not even compatible with other Microsft WMA stores

But they gave me a chance to use different smileys 8)

[murk]

If you could be a billionaire but had to look like SB, would you take the deal? Oh, and had to be obnoxious, too.

[samurai1999]

Originally Posted by Buck

Good to know I wasn't the only one puzzled with his choice of words...
Here's a great review of Zune by the way, dunno if anyone's already posted this - http://www.roughlydrafted.com/RD/Hom...974628809.html

good read...
"
According to a CNet MP3.com interview with Microsoft executives from two weeks ago, "the Zune won't immediately have video playback capability." Yikes! It’s supposed to be out the middle of November.
"


"– Lack of emphasis on video: Lee: “You’re right that there’s not a lot of emphasis on it and that really kind of goes to maybe a big vision difference and competitive difference that we see with Apple right now.
"
Bigger screen, no video


Yikes!

[Chucker]

Thousands of Microsoft employees must be hanging their heads in shame right now.

[bdj21ya]

Originally Posted by murk

If you could be a billionaire but had to look like SB, would you take the deal? Oh, and had to be obnoxious, too.

I'd take the billion, use part to get some lipo, some personality classes, then enjoy the rest of the dough.8)

[aegisdesign]

Originally Posted by Eduardo

He lost me at "squirt".

Did he really say 'squirt'?

He did. But even before that I was thinking I'd rather not touch him in one place never mind multiple places. Euww!

[aegisdesign]

Originally Posted by murk

If you could be a billionaire but had to look like SB, would you take the deal? Oh, and had to be obnoxious, too.

I can be obnoxious for a lot less if you like.

[Mr.Scott]

Originally Posted by Chucker

Thousands of Microsoft employees must be hanging their heads in shame right now.

My thoughts, exactly. Or better yet, would they be crazy enough to show their heads? Uh...I wouldn't.

Apple Rules!

[Silencio]

Originally Posted by minderbinder

Who does this nutcase have writing his copy, Tobias Fünke?

Someone's got to fill the gaping void left by the death of Arrested Development. Who'd have thought it'd be Ballmer?

[Woody56292]

I don't care what the definition of squirt is, he should of used something else.

Oh, and what is this I hear about Zune not having video? It cannot share video ( to the best of my knowledge ) but it can definately play them. they are including 5 music videos after all...

edit: ( WMV and H.264 support ) just to clarify.

[mdotcheung]

sad sad sad..... this guy doesn't even sound like he knows his own product. I hope there are analysts around the world reading that article and wisely recommending SELL on MSFT stock.

[Tazznb]

Ummm... which you sure you aren't making this up from a fake dictionary?

Originally Posted by pdoisy

English not being my mother tongue and wondering about all comments, I looked in the Mac OSX dictionary for "squirt" where one definition says: |skwərt|, verb [ trans. ], transmit (information) in highly compressed or speeded-up form".
Sounds like Ballmer is a very educated man!
Ok, ok, just having fun, I know what you mean...

squirt ~ To cause to come out in a squirt, of liquids; SYN. force out, squeeze out, eject.

An instrument out of which a liquid is ejected in a small stream with force.

A small, quick stream of fluid; a jet.

These are ALL the definitions that I pulled off my PC. That Balmer guy is just friggin wierd.

[BuzDots]

That Balmer guy is just friggin wierd.

That Balmer guy is just friggin UGLY

The exact reason you don't see pictures of Hugh Hefner nude - he knows who to use to represent his corporation!!!

[JeffDM]

Originally Posted by monkeyastronaut

...you can't send videos through Zune's wireless feature. At least not at launch.

Add something more to that: why would you want to? Do you want to just sit there for fifteen minutes for a file? Copying a file wirelessly would take 10x to 20x as long as it would with USB or Firewire, and that's assuming low interference and a solid "g" connection. To speed that up, you need wireless "n", meaning Zune 2 or Zune 3, and previous versions of the Zune would only connect at the slow speed.

With this claim to Zune profitability, is that with or without the chair damage budget?

[Pascal007]

Originally Posted by Tazznb

Ummm... which you sure you aren't making this up from a fake dictionary?

squirt ~ To cause to come out in a squirt, of liquids; SYN. force out, squeeze out, eject.

An instrument out of which a liquid is ejected in a small stream with force.

A small, quick stream of fluid; a jet.

These are ALL the definitions that I pulled off my PC. That Balmer guy is just friggin wierd.

I can't believe that even the English dictionary on a Mac is more complete ! According to the New Oxford American Dictionary, 2nd edition (standard with Mac OS X Tiger) :

squirt |skw?rt|
verb [ trans. ] cause (a liquid ) to be ejected from a small opening in something in a thin, fast stream or jet : she squirted soda into a glass.
• cause (a container of liquid) to eject its contents in this way : some youngsters squirted a water pistol in her face.
• [ trans. ] wet (someone or something) with a jet or stream of liquid in this way : she squirted me with the juice from her lemon wedge.
• [ intrans. ] (of a liquid) be ejected from something in this way.
• [ intrans. ] (of an object) move suddenly and unpredictably : he got his glove on the ball but it squirted away.
• transmit (information) in highly compressed or speeded-up form.

noun
1 a thin stream or small quantity of liquid ejected from something : a quick squirt of perfume.
• a small device from which a liquid may be ejected in a thin, fast stream.
• a compressed radio signal transmitted at high speed.
2 informal a person perceived to be insignificant, impudent, or presumptuous : what did he see in this patronizing little squirt?

DERIVATIVES squirter noun

ORIGIN Middle English (first recorded as a verb): imitative.

[TBaggins]

So Microsoft ISN'T going to lose money on the Zune?? HAHAHAHA, yeah, right.

Wanna know how Ballmer's lying? His lips are moving.

Honestly, he should stick to what he does best, which is screaming incoherently and throwing chairs. Wotta douche.

.

[nagromme]

Making fun of Ballmer's stage presence is just childish.

Nonetheless....

http://youtube.com/watch?v=m6rqXHX3O48

Young FrankenSteve

[ricksbrain]

If Ballmer proclaims the Zune won't lose money, it's either because he's lying, or because Toshiba was duped.