Steve Ballmer calls Apple's Mac growth a "rounding error" - Page 2

Completely forgot it was the Quicktime issue. I knew there was some kind of theft/photocopying involved, however. Good post. Takes me back.

Does anyone really care in this day and age what Microsoft has to say? Haven't you heard Microsoft is dead:

http://www.paulgraham.com/microsoft.html

Is people really paying any attention to what this guy:

http://www.youtube.com/watch?v=wvsboPUjrGc


is saying?

The best way to parse this kind of stuff is to remember that Balmer is a "sales guy" and most of what he says here is standard "sales guy speak."

When faced with Apple taking share, he frames it as a tit for tat. When faced with the fact that their hardware is better he comes out with (essentially) "just you wait and see what's coming out soon on our side." These is all standard marketing replies and the fact that he's used that "just you wait and see" crap at least a dozen times before doesn't seem to register on most investors. Microsoft has been just one quarter away from the some amazing device or other almost since they started, but they never have delivered it. To say these kinds of things isn't dumb it's shrewd and it's typical sales-spin, the interesting part of his remarks is where he genuinely seems to not understand what he's talking about. Specifically this remark:

He should get fired for saying this. He really should. Because it shows that he just does not understand anything about the markets he's dealing with, the product he himself sells, and how his company is responding to a very real threat.

He conflates hardware with software (when he talks about the "low price"), and doesn't seem to get that it's his product that's vastly overpriced for the market. If Microsoft was actually to survive on the model he suggests here, they would have to cut back to a company a fifth of their current size and drop everything they do except making Windows and Office. As a CEO he is committing the (often fatal) mistake of just not understanding what his company is or does and in what markets it should or should not operate.

The other really telling remark is when he talks about Apple "only" doing about ten million PC's a year. The PC market is yesterday. Apple already sells more iPhones than that and will sell a lot more, and a lot of other devices on the same platform as well. This statement is tantamount to when IBM used to brag about the sales of big iron back in the day when the desktop computer was emerging. They would say "PC manufacturers only make X amount of PCs a year, but we sell millions of dollars worth of (big iron)." Not realising that they were essentially the "kings" of a dying market.

His key point is that he says Windows will grab market share because their partners have some innovative hardware coming out.

As if the hardware is why people are switching to Apple products.

The reason people are switching is because of VISTA. It's because of MS's failed music initiative they abandoned. It's because of hard to use, glitchy software like Windows Mobile. It's because Windows is not only easy to exploit but also far more expensive than any other OS out there.

Very few people buy computers because they look cool. Being the CEO of the world's largest software company you would think Ballmer would understand: it's the software stupid.

The only rounding error was made by Ballmer's barber. He stopped at the scalp.

Ballmer's Apple antics were funny the first 25,000 times, but it's getting old now like his 1985 appearance in Young Frankenstein.

Retire already.

Been in business a few years, best of my market. People at times say "gosh (OMG or other alternate), you're expensive", they think it's an insult. From time to time I retorted something along the lines of "does that mean you are cheap?". Only when I was feeling particularly bolshy, usually best to let them suffer in ignorance.

Steve Ballmer and rounding error sounds like an error, shouldn't it be Steve Ballmer is a rotund error?

Which is best, fat or skinny? Measured by CEOs performance no contest!

Steve (Ballmer) don't take it personally, I love it that you are CEO of Microsoft, keep up the good work (that's great work for you down in CA)..

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Nice article. I myself saw Spamalot last night, which is Monty Python's Holy Grail on stage. Remember the Black Knight? King Arthur has chopped both his arms off, and both his legs off for good measure, but the Black Knight keeps on valiantly fighting, shouting: "Come back here you coward ... I'll bite your foot off!"

Steve Balmer and M$ are not any more bizarre than the Black Knight, but I think they're about the same.

"At least when Apple attacks us, the primary attack that comes from Apple is, 'Hey, at the end of the day, we have the coolest hardware,'"

Funny, all the Mac ads I've seen seem to be saying 'Hey, our operating system just works'.

It is the "laptop hunter" ads that say Macs are cool (but expensive).

The halo effect from the iPhone is spreading abroad.
What has happened in the U.S. will eventually start happening abroad as well.

Microsoft won the desktop computer battle.
Apple is putting up a strong fight in the notebook computer battle.
Apple has won the mobile computing battle.

Now which of these segments are growing and which are getting smaller?
Some battles have been won and lost but the war isn't over yet.
Once Apple has their custom SOC for the iPhone OS platform then we are going to see things get real interesting.

When are the analysis going to start calling this guy on the carpet. He made so many of these comment only to be proven wrong like the Iphone is a tool and will not be significant in the market place. They should be coming back and saying remember when you said this and see you were wrong why should be believe you now.

Talk about drinking the Coolaid, far too many people drive the MS flavor and are true believers.

And Microsoft shares dipped to an all time low of.... ... Silly Ballmer. When will he ever learn?

Sure. Whatever you want to believe. btw, Santa Claus isn't real.


I think the success of the latest Microsoft ads proves me right. Apple's Mac has been wallowing in the sub 10% market share for 20 years, and I don't see that changing anytime soon. Microsoft is coming off of one of its worst years and still made more profits than Apple. It is hard for Microsoft to grow its market share when it has it all. I'm sure you believe that Apple will have 90% market share soon and Microsoft will will go bankrupt. When you don't have a grip on reality anything seems possible.

Excellent point.

Here's Ballmer from long ago. At around 1:20 into the vid you'll see something all too familiar.

"just you wait and see what's coming out soon on our side."

http://www.youtube.com/watch?v=dR8SAFRBmcU

Ballmer needs to take some advice from Satchel Paige: "Don't look back. Something might be gaining on you."

Apple functions at the Premium end of the market. It isn't one big market. There are levels to it. There are consumers in particular income brackets that are locked out of Apple's demographic. This is one of the defining characteristics of any Premium product.

There are between 50-70 million Mac users. The Mac is understood as, and marketed as, a Premium product. Fewer units sold, but at much higher margins. Apple has stated quite clearly that they refuse to operate at the low-end. This means they provide a vastly different (and very attractive and coveted) user experience that people (who are able to) are willing to pay more for. Apple would not cheapen or muddy its brand image by competing on the same level with the like of Dell, for example. Either you differentiate yourself via some clear, desirable, distinguishing features, or you compete on price like the rest of the pack.

This is what has Microsoft acting so defensive: Windows still has overwhelming unit sale market share, but it is now almost entirely at the low end of the market.There are substantial implications to Microsoft under these circumstances. Just one of the reasons they are opening these Stores. MS is trying very hard to shed its bargain-bin image. A bit late for that, though.

"Market Share" is very often misunderstood. With a fraction of Microsoft's market share, Apple is not only thriving, but it also is in a position as:

1) The industry innovator
2) The most powerful brand in the industry today
3) Producer of the most coveted notebooks and devices in the industry today
4) The one to follow. Apple does everyone else's R&D for them (apparently.)

So when you discuss "market share", you need to determine exactly which end of the market you're talking about. The lion's share of what part of the market? The Premium end of the market pyramid is near or at the top. It's much more narrow, but the consumer approaches tech (and other products) from an entirely different perspective (often not on price), with different epxectations that Apple happens to cater to. Ideally, you WANT to rule the Premium end. It's these customers that build your brand, that make it desirable, and that will pay top dollar for what you provide.

About the whole "bailout" issue, you're wrong (but don't worry, you're not alone - most Windows sufferers get this part wrong.) And if you don't think you are, then show it.

Vast quantities of Windows computers are bought by businesses who want to put a cheap low end PC on every desk to do low end stuff. That's where the volume is. But when actual people want a computer, they go Mac, unless they feel they need to be compatible with apps for work. And, there is a gaming contingent. But business is where the PCs sell.

I find it funny that the room was loaded with mac and Ballmer commented on it. I can tell you I work for another Consumer Electronic company and if suppliers or anyone who does business with us walks in with a competitors product we nicely tell them is not in their best interest not to be using our products since they make their living off our business.

I bet when Apple meets with analysis they are told they are not welcome if they walk in with a competitor phone, laptop or MP3 player, and you can bet that Jobs will not sit down with anyone using a competitors product.

MS may dominate the market, but they are slowly losing the Home market and schools. They will only be left with Corporation, since it will take them a long time to transition away from PC and Windows due to past investments.

Agreed.


Having a ton of money yet failing to innovate and roll out compelling and inspiring products simply shows you're slow and lazy. A pretty dangerous position that does little to inspire investor confidence. MS can ride the coattails of its licensing cow forever, and still have a ton of money while doing nothing in particular. Then you have Apple with a fraction of MS' R&D, fewer employees, yet they are tearing up the industry and redefining whole market left and right in only a couple of years.

Suddenly that ton of money MS has doesn't look so inspiring.

Case in point: Microsoft Stores.

MS is opening stores because their brand image is horrible, they have zero mindshare, they are viewed as mere copycats that are continually embarrassed by the Premium-market focused Apple, and more telling, is that recent trends have been quite disturbing for MS:

Market share plunging from 97%+ 3-4 years ago to ~88% currently.

IE webshare plunging substantially in the wake of Firefox and other alternatives.

Overwhelming unit sale market share, but it's now almost entirely at the low end of the market.

Increasing concerns about all of this performance and their lack of focus, plus their underperforming non-core areas (Zune, etc) and no expectation of any real recovery over the next couple of quarters. Due at least in part to no vision and lousy leadership (Ballmer.)

The total failure of their marketing efforts (from Seinfeld to Laptop Hunters), and how this ties in with their free advertising for Apple.

Concerns over Google's Chrome OS (which might put even MS low-end market potential in jeopardy.)

MS' loss of control of the Premium end of the market ($1000+ notebooks), virtually owned by Apple

MS' image as a cheap, bargain-basement brand and a dinosaur company past its prime that can no longer innovate, and which depends on the ideas of others to get ahead, but get ahead too late.

So really, it's a combination of reasons. What might hurt the most, however, is their loss of the Premium end of the market and their lousy brand image. MS simply does not know what it is, and can't articulate what the hell it is. This store venture is MS' attempt to "class up" Windows and cultivate the image of "cool" and "stylish." MS wants the upper crust of income earners to choose Windows, not Apple.

Except there's a slight problem: Windows and the hardware manufacturers aren't set up for this kind of business model. The Store venture and the whole premise underlining Apple is that owning the whole widget is the first step and the most important step in providing the kind of experience that can be showcased and promoted effectively. Something that's in need of "classing up" in the first place really needs to be rethought. It's the old lipstick-on-a-pig idea.

Too many "me too" attmepts brought to market long after the party's over doesn't help matters. MS has become a follower.

The problem is (and always was), that Microsoft is just a corporate/enterprise software vendor masquerading as a home/consumer vendor. And it really shows.

Is this indicative of a downward slide? At this time, absolutely. It's been going on for years. But it's a slow process, like an old man easing into a bathtub.

You really don't know anything about Steve Jobs, do you?

P.S., I apologize. You don't know anything, period.

I agree with this response and want to embellish a bit.

People commonly refer to that $150 M investment (they bought shares... they didn't just fork over cash) as something that saved Apple's bacon. Not that it's bad to get that kind of capital, but it wasn't anywhere near the most important aspect of the settlement. The most important thing was that MS agreed to continue updating Office for Mac for at least 5 more years. Prior to the settlement, it looked like Office would be dropped. At that point in time, with Mac OS hanging on by a thread and having little more than MS Office and other third-party publication software to run on it, that would have been the death blow for Apple. Steve knew it in his bones, and he also knew that he just needed a little more time to get the new iMac prepared. So he made the "Deal with the Devil" and then never looked back.


Thompson

GM used to laugh at Toyota, Honda, excetera. They were number one much like Microsft is number one. Who is laughing now?

he who laughs last will laugh best.

what other smartphones and laptops are you talking about? if you ask any consumer and even apples' competition to site product examples with great hardware design, they all put apple on top of that list. most other companies just tie for 2nd place. i'm not talking about bells and whistles like abundance of i/o connectors, big hard drives, fastest processors. those things are fine but anyone can slap those in a system at anytime with little thought of hardware design.

and since when doesn't apple have healthy controlled growth? don't you think that apple could instantly capture 50% of the market if they introduced a $400 netbook and $700 minitower? that's what dell and acer do now but that's not healthy. that's a low margin bubble that will soon burst. it already did for dell. apple's marketshare and sales have only grown since 1999. apple has more cash in the bank than sony. if that's not corporate growth, i'm confused.

Here's how Ballmer REALLY feels about Apple. I wonder if he counted this one when he was counting the Apple logos in the crowd??

http://www.makeuseof.com/tech-fun/wp...esentetion.jpg

The fact is that most people commenting on this thread from a Fortune 500 office are doing it on a PC because their Fortune 500 company -- along with most Fortune 500 companies -- is locked into MS, and it doesn't look like that will ever change... or does it?

I would be interested to see how many Fortune 500s are still on XP these days. If a large company is going to have to make a seismic adjustment to get Windows 7 (assuming they never even bothered with Vista), which will involve replacing tens of thousands of PCs, they might as well consider Macs.

Could Apple market a sensible alternative to Windows 7 for the business environment? Would the long-term cost be lower considering the amount of time/cost/manpower it takes to support MS in the enterprise?

Yeah... that's where I lost any faith in Microsoft's opportunities with 7. He is saying (presumably referencing a graph on the screen) that the perception of value improved with the advertising, which is an important point.

But what really got me is that he misses that if Google can carve out another 5-10 point share then MSFT really is in for trouble, not financially but in terms of mindshare. When you are the dominant player, going from 95% share to 75% share over a decade is a real problem. This is made much worse to the company given the reliance of Office to drive profits.

OpenOffice is no where near close today. (Load time is especially annoying.) However, I can switch our office over to it rather than upgrade our old licenses with minimal productivity impact, and I hope that in a couple years some of the big problems are solved. If Apple put their weight behind OOo, Microsoft would have a real problem.

mmmm... I wonder if these 'new PC designs' we will see arriving with 7 will have any design resemblance to Apple designs?

that's retail

OEM copies that you get with a new PC are $30 - $150 for ultimate. plus or minus a few $$$ depending on the OEM. most copies of Windows and OS X get sold at OEM. and with Apple's margins it makes OS X a lot more expensive

that was left on stage from a previous presenter. Believe me, I would love for that to be true, but it's old news

The best opportunity for Apple is having 25% share of a Fortune 500 account. Defeat monoculture first, and let the IT people select the best platform for the application. One-size-fits-all is not as much of a slam-dunk as it used to be.

But, Fortune500 share for Apple has more to do with on-site hardware support levels than cost or operating system. The other players simply do a better job.

Not entirely. The continued development of Office for the Mac was part of the deal Apple made with Microsoft to avoid a long court battle, which involved that, the "investment," a technology sharing arrangement, the MSIE install agreement, and many thought at the time, probably some cash behind the scenes. We don't know if Microsoft would have continued Office development for the Mac had all the rest not occurred. It was all packaged up in one big announcement.

As usual for Ballmer, drivel ... pure drivel.
Consider the audience. He doesn't want to - he cannot - acknowledge weakness to these guys.
Of course, the reality is completely different. Otherwise, why would they bother to copy Apple .... iPods, Stores, etc..

of course there will be resemblance. Apple is the Win/PC design lab.

sadly, Microsoft will turn a huge profit this fall because everyone who's been holding onto XP will upgrade to win7, assuming that - since it's not called vista - it's going to work.

i can't wait for the Apple ad where "Mac" hands people thirty bucks and sends them into best buy [and a microsoft store] to fine an OS upgrade. then they go to the apple store and get snow leopard for 29 bucks.

Steve Ballmer looks like a buffoon, but he's not. His pronouncements often have a purpose beyond their surface meaning. In this case, as others have noted, he mischaracterizes Apple's primary marketing message as being about having "the coolest hardware," thus damning Apple's hardware with faint praise and diverting attention away from systems software - the area where Apple and Microsoft actually compete.

His assertion that market share gains or losses happen in a range lower than the rounding error of measurements may actually be true. Microsoft sells a lot of software, far more than Apple does. This statement makes that point, but implies another: that Microsoft is not concerned with Apple as a competitor. This is obviously false given the company's recent actions and investments in counter-propaganda. Microsoft may not feel threatened by loss of market share, but it absolutely is terrified about the relative strengths of the Apple and Microsoft brands.

Apple's successful attempts to define their brand as standing for higher quality and ease of use have the potential to erode Microsoft's market position over the medium to long term. This is partly due to the fact that Apple's software really is better, meaning that the assertions they make have legs to stand on independent of any marketing effort. But it's also due to the farcical attempts by Microsoft to define a brand for the company and/or for Windows, over the years.

Microsoft seems to be acutely aware of this deficiency. They've found an effective marketing message recently, asserting that Windows based PCs provide better values than Macintosh does. This is a good message to trumpet in a recession like the current one, that squeezes consumers hard. But over the long term, It has the disadvantage of conceding Apple's main point: that Macintosh is higher quality. If the quality and usability of Windows+non-Microsoft hardware doesn't improve significantly, meaning that the actual quality gap between Wintel and Mac will persist, then the twin barreled weapons of truth and marketing smarts could do significant damage to Microsoft's brand. This is the outcome Ballmer is trying to deflect. It's not dumb, though it's a bit pathetic.

Mac sales were up during the quarter with those ads, did you miss that memo? Most people know that mac will never have 90% market share, but unlike you they actually know why. Apple gaining 90% market share would not just hurt Microsofts bottom line, but drive the companies that Apple directly competes with out of business as well. That would be PC manufacturers like HP, Dell, Acer, Lenovo, Toshiba, etc. Microsoft having higher market share doesn't make Windows the better OS. The business models of Apple and Microsoft have a lot more influence on market share.

Apple is a computer manufacturer that uses a custom OS to promote their products. They are not in the business of selling OSX, they are in the business of selling Macs. Apple isn't wallowing in the sub 10% market, they are thriving in it. Yes Microsofts profits are still higher than Apples, but I fail to see the relevance. Using the Microsoft standard for profits makes a lot of companies look bad, but Apple is doing fine in its own right. To be honest, Microsoft should be paying more attention to Google (which is becoming more of a direct competetor than Apple is), or they will be seeing losses, not profits in the future.

aww yeah man good one! I can't wait either!

I remember once upon a time when Apple was #1 when it came to word processing and DTP. iWork recaptures a bit of this, and I love where it is going, but I'd like to see a bit more development put into it. Of course, many design/publishing houses are Mac-only, but they run Adobe or Quark.

Actually, ideally, I would think the opposite. Steve Jobs would rather meet with people who don't use his product as if you can convince them to use your product, you gain new users. But frankly, I don't think Jobs cares what you use. He may try to use his RDF to get you to use his own products, and you probably would be, by the end of the meeting.

What success? The Laptop Hunter ads were a total failure. MS should pull them and bin them along with their Seinfeld and "I'm a PC" abortions. MS pulling the Wal Mart approach simply cheapens their image. It looks they're going right for the bottom of the barrel, and they know it. I think that might be what Ballmer actually wants, strangely enough. In any case, it might already be too late for them to claw back any Premium image they might have once had.

MS simply does not know how to market anything. And their products NEED all the marketing gloss they can get.