Ballmer claims Microsoft won't lose money on Zune

Posted:
in iPod + iTunes + AppleTV edited January 2014
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."
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Comments

  • Reply 1 of 91
    zenatekzenatek Posts: 203member
    Wow I can totally picture saying that "Hey Jim, Let me squirt these photos of Maxim's top 100 women over to you."



    WTF
  • Reply 2 of 91
    bdj21yabdj21ya Posts: 297member
    Quote:
    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?
  • Reply 3 of 91
    buckbuck Posts: 293member
    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
  • Reply 4 of 91
    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.
  • Reply 5 of 91
    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.
  • Reply 6 of 91
    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...
  • Reply 7 of 91
    eduardoeduardo Posts: 181member
    He lost me at "squirt".



    Did he really say 'squirt'?
  • Reply 8 of 91
    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.
  • Reply 9 of 91
    Quote:
    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.



    Quote:
    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.



    Quote:
    Originally Posted by Steve Balmer


    I want to squirt you a picture of my kids.



    Quote:
    Originally Posted by Steve Balmer


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



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



    Quote:
    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
  • Reply 10 of 91
    dcqdcq Posts: 349member
    How out of touch are these people?



    "Squirt"? WFT?



    If I were an investor, I'd sell based on that alone...
  • Reply 11 of 91
    hobbeshobbes Posts: 1,252member
    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.
  • Reply 12 of 91
    Quote:
    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...
  • Reply 13 of 91
    dcqdcq Posts: 349member
    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.
  • Reply 14 of 91
    irelandireland Posts: 17,547member
    Didn't read what he claims, don't care about what that monkey thinks.
  • Reply 15 of 91
    guarthoguartho Posts: 1,208member
    Quote:
    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.
  • Reply 16 of 91
    Quote:
    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
  • Reply 17 of 91
    "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?
  • Reply 18 of 91
    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...
  • Reply 19 of 91
    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...
  • Reply 20 of 91
    Quote:
    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.
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