Ballmer: “The iPhone stinks. Microsoft rules. What’s new?”

Despite the fact that I think Ballmer is holding Microsoft back from the 21st Century, I do like his snarky comments. In an interview with USA Today, Ballmer makes some of his most explosive comments to date. When read alongside Bill Gates’ comments on Apple a few weeks back, it’s becoming very clear:

Microsoft has an Apple fetish that is causing it all sorts of frustration.

The reason is clear: Microsoft is the king of the 20th Century, but has failed to make any sort of an impact on the 21st Century, the XBox excepted (though FIFA is still terrible on it, though I guess that’s EA’s fault for trying to ship it before it was ready). Online? Nowhere. Zune? Not turning any iPod-listening heads.

And yet…and yet…Ballmer can be so brazen:

What type of future does MSN have? It’s in third place, and that’s a tough place to be in the search market.

A: Well, in a way it is and in a way it isn’t. Online activity is really quite fractured. Microsoft has the most visitors. Yahoo actually has people spending the most total time with them. And Google makes the most money.

You can bet that Ballmer isn’t super-concerned with having the most visitors. He doesn’t get paid to be visited by lots of people. He gets paid to find ways to have people pay for those visits, in one way or another. So, to answer the question forthrightly, Microsoft is losing in the online world. Big time. And he should be very, very concerned.

Instead, he seems more concerned with painting competitors into a corner:

You asked me, what’s our business, and I said horizontal software, but we go to market in four ways. I would tell you that most companies in our business never go to market in more than one way. IBM is an enterprise company. Google is an advertising company. Apple is a hardware company. They’re one-trick ponies, because there is a lot of groupthink in all companies.

I think we’ve actually done better in saying we’re going to have (more) multiple ways of thinking than any organization in our industry, and I count that as one of our great achievements as a business.

IBM…one trick pony??? Apple? His slur comes closest to hitting Google (I’ve said much the same thing, but what a trick to have!). But what he doesn’t acknowledge is how shockingly “one trick” (or two-trick, counting both Windows and Office) Microsoft is. It’s the ‘innovator’s dilemma’ – Microsoft is a prisoner of its own successful past. To the company with two multi-billion dollar 20th Century cash cows, everything looks like a 20th Century cash cow problem.

But it’s not. We’ve moved on. Microsoft is the one-trick pony playing catch up here, and it’s called “desktop.” The company has made great strides in the enterprise, too (SQL Server, Windows, Sharepoint), but all of this also factors into its client/server myopia; its inability to truly innovate on the Internet.

On that point, here’s a telling comment:

Q: Have you learned any lessons from the rollout of Vista that could apply to other products that you sell?

A: A lot of what we did with Vista was very similar to what we’ve used for some of our other big launch products. It was beneficial for customers to be able to think about new Windows and new Office at the same time. That doesn’t mean we’ll always do them together. But in a sense, it let customers think about them as one decision.

No, it doesn’t mean that, but the “one-trick” Microsoft surely benefits from having people upgrade Office in lockstep with Windows, and has done its best to provide technical hooks in Sharepoint to help prod the unwilling into making the leap sooner rather than later. Once you’re into the Microsoft ecosystem, it’s very hard to go halfway. Brilliant, but damning.

And now on to the Apple fetish. Microsoft clearly has Apple envy, and it doesn’t suit the company:

Q: People get passionate when Apple comes out with something new — the iPhone; of course, the iPod. Is that something that you’d want them to feel about Microsoft?

A: It’s sort of a funny question. Would I trade 96% of the market for 4% of the market? (Laughter.) I want to have products that appeal to everybody.

Now we’ll get a chance to go through this again in phones and music players. There’s no chance that the iPhone is going to get any significant market share. No chance. It’s a $500 subsidized item. They may make a lot of money. But if you actually take a look at the 1.3 billion phones that get sold, I’d prefer to have our software in 60% or 70% or 80% of them, than I would to have 2% or 3%, which is what Apple might get.

In the case of music, Apple got out early. They were the first to really recognize that you couldn’t just think about the device and all the pieces separately. Bravo. Credit that to Steve (Jobs) and Apple. They did a nice job.

But it’s not like we’re at the end of the line of innovation that’s going to come in the way people listen to music, watch videos, etc. I’ll bet our ads will be less edgy. But my 85-year-old uncle probably will never own an iPod, and I hope we’ll get him to own a Zune.

Except for the fact that most of his music will be bought through iTunes, which won’t work on the Zune. He doesn’t care about joining “the social.” He just wants something that works with the most widely used software, and that’s iTunes/iPod.

Anyway, what Ballmer’s sleight of hand fails to capture is the fact that the “96%/4%” comment is a complete slam on Microsoft in basically all new markets, not on Apple (or Google/etc.). Microsoft is playing catch up in the 21st Century.

All that said, I do wish we had a truly open market where I could buy any device and the music I got from Microsoft, Apple, etc. would just work. Someone sent me a Zune the other day and I can’t use it with most of the music I have (bought through iTunes). That’s pretty annoying.

Anyway, it’s good that we still have somewhat obnoxious CEOs in the tech world. We’ll know when we’ve finally reached commoditization when the Larry Ellisons, Steve Ballmers, etc. are all retired and all new CEOs come from Harvard Business School. What a boring world that will be.