Michael Arrington of Techcrunch had a chance to sit down with Microsoft’s CEO Steve Ballmer to discuss MS’s future strategies. When asked about a future MS branded phone Steve answered the following:
MA: It seems like a lot of people really like the Zune HD, it’s selling out. When you look at the Zune and the Xbox, you seem to be more than capable of creating, successful end consumer devices that are hardware tied to services. When do we get our Microsoft phone? I know you guys keep saying “We will not build a Microsoft branded phone…”
SB: Well let me ask you a question. I’m going to answer your question with a question. Which is to say, look, lets just break hardware devices into two broad categories. Really high volume, and more niche. And I’ll call anything that’s under about 50 million a year niche. And I’ll call anything that’s north of 300 million a year non-niche. PC’s are not niche devices. Part of the reason I think they’re non-niche devices is, multiple people can manufacture them, they all interoperate, they work together, etc. TVs are not niche. You know, there’s more than well over 300 million of those sold a year. They interoperate in that case mostly based on standards, but with some innovation. Phones are not niche. The categories where, I think, a single player can control a large percentage of the volume are the smaller categories. What does Apple sell every year of iPods: 30 million, order of magnitude, something like that. What is the whole video game market is maybe 30 or 40 million in units a year. But when you get these categories that are 300 million, 500 million, a billion, a billion-five a year, the truth of the matter is you’re gonna want multiple points of manufacture, with a lot of innovation around it whether its supply chain, for geographic diversity, and our basic play with our software is to try and be super high volume. So I think you can have an Apple in the phone business, or a Rem, and they can do very well, but when 1.3 billion phones a year are all smart, the software that’s gonna be most popular in those phones is gonna be software that’s sold by somebody who don’t make their own phone. And, we don’t wan’t to cross the chasm in the short run and lose the war in the long run and that’s why we think the software play is the right play for us for high volume, even though some of the guys in the market today with vertically oriented solutions may do just fine.
Now, everybody (but me) seems to think that Pink is going to be one or two Microsoft branded phones but once aigain Microsoft is denying that they are ever going to do sell their owned branded devices. Oh well, we will know soon engough I guess.