Ballmer Dismisses Apple iPhone Over $500 Price Tag, Lack of Keyboard

smugmacgeek

Microsoft Chief Executive Officer Steve Ballmer says Apple's $500 iPhone will fail to win business customers because it lacks a physical keyboard for email, leaving cheaper Windows Mobile devices positioned to dominate.

AI-assisted summary of Ballmer Laughs at iPhone — original source. Check the original for full context.

Source published: 2007-09-18

Key ideas

Steve Ballmer dismissed Apple's $500 subsidized iPhone as the most expensive phone in the world, arguing its lack of a physical keyboard would alienate business customers. (0:00)
Ballmer contrasted the iPhone with Windows Mobile devices like the $99 Motorola Q, which already offered music, web, and email capabilities at a fraction of the cost. (0:00)
Highlighting market volume, Ballmer emphasized that Microsoft partners sold millions of phones annually while Apple was entering the market with zero sales. (1:06)
In the portable media player sector, Ballmer claimed the Zune had quickly captured a 20% to 25% share of devices priced at $249 and above. (1:06)

Detailed notes

## Background Published on YouTube by channel smugmacgeek on September 18, 2007, the video captures Microsoft CEO Steve Ballmer reacting to the initial iPhone announcement. The brief page description mocks the device's premium cost, stating, "$500 for a phone???? LOL".

## TL;DR Microsoft CEO Steve Ballmer dismisses Apple's newly announced iPhone, criticizing its $500 subsidized price tag and lack of a physical keyboard as major deterrents for enterprise email users. He highlights affordable Windows Mobile alternatives like the $99 Motorola Q and emphasizes that Microsoft's partners sell millions of phones annually compared to Apple's zero. While conceding Apple's dominance with the iPod, Ballmer defends the Zune's early penetration in the high-end media player market and expresses strong confidence in Microsoft's overarching mobile strategy.

## Atmosphere & style The clip has a candid, dismissive, and self-assured tone, punctuated by Ballmer's characteristic chuckle and relaxed corporate bravado. His casual body language and amused disbelief frame Apple's bold hardware move as an overpriced, impractical novelty rather than a serious threat. Viewed in hindsight, the exchange feels rich with dramatic irony, capturing a legacy tech titan confidently leaning on current sales volume while underestimating an impending paradigm shift.

## Bulletin - [00:00](https://www.youtube.com/watch?v=eywi0h_Y5_U&t=0s) Steve Ballmer dismissed Apple's $500 subsidized iPhone as the most expensive phone in the world, arguing its lack of a physical keyboard would alienate business customers. - [00:00](https://www.youtube.com/watch?v=eywi0h_Y5_U&t=0s) Ballmer contrasted the iPhone with Windows Mobile devices like the $99 Motorola Q, which already offered music, web, and email capabilities at a fraction of the cost. - [01:06](https://www.youtube.com/watch?v=eywi0h_Y5_U&t=66s) Highlighting market volume, Ballmer emphasized that Microsoft partners sold millions of phones annually while Apple was entering the market with zero sales. - [01:06](https://www.youtube.com/watch?v=eywi0h_Y5_U&t=66s) In the portable media player sector, Ballmer claimed the Zune had quickly captured a 20% to 25% share of devices priced at $249 and above.

## Key takeaways - [00:00](https://www.youtube.com/watch?v=eywi0h_Y5_U&t=0s) Ballmer reacted with dismissive laughter to Steve Jobs's unveiling of the iPhone at Macworld. - [00:00](https://www.youtube.com/watch?v=eywi0h_Y5_U&t=0s) Ballmer criticized the iPhone's $500 fully subsidized price tag, calling it the most expensive phone in the world. - [00:00](https://www.youtube.com/watch?v=eywi0h_Y5_U&t=0s) The lack of a physical hardware keyboard was cited by Ballmer as a major barrier for business and enterprise email users. - [00:00](https://www.youtube.com/watch?v=eywi0h_Y5_U&t=0s) Ballmer expressed strong confidence in Microsoft's Windows Mobile strategy over Apple's new entrant. - [00:00](https://www.youtube.com/watch?v=eywi0h_Y5_U&t=0s) The Motorola Q was highlighted as a viable $99 alternative that included email, web browsing, music playback, and messaging. - [01:06](https://www.youtube.com/watch?v=eywi0h_Y5_U&t=66s) Microsoft emphasized its massive volume lead, selling millions of phones each year while Apple was selling zero. - [01:06](https://www.youtube.com/watch?v=eywi0h_Y5_U&t=66s) Ballmer separated the market competition into two distinct categories: mobile phones and dedicated portable media players. - [01:06](https://www.youtube.com/watch?v=eywi0h_Y5_U&t=66s) Ballmer conceded Apple's dominant market position with the iPod in portable media players. - [01:06](https://www.youtube.com/watch?v=eywi0h_Y5_U&t=66s) The Microsoft Zune was positioned around unique differentiators such as wireless networking and community features. - [01:06](https://www.youtube.com/watch?v=eywi0h_Y5_U&t=66s) Ballmer claimed the Zune secured between 20% and 25% of the high-end media player tier ($249 and higher).

## Detailed walkthrough ### [00:00](https://www.youtube.com/watch?v=eywi0h_Y5_U&t=0s) Steve Ballmer's Initial Reaction to the iPhone Announcement

When asked about Steve Jobs unveiling the iPhone at Macworld just as Microsoft's Zune was beginning to gain traction, Microsoft CEO Steve Ballmer chuckles dismissively at Apple's pricing and hardware design. Ballmer recounts his immediate reaction to the device carrying a five-hundred-dollar price tag even after carrier subsidies, declaring it fundamentally unsuited for the enterprise market due to its form factor. As Ballmer stated, “$500 fully subsidized with a plan I said that is the most expensive phone in the world and it doesn't appeal to business customers because it doesn't have a keyboard which makes it not a very good email machine.” While acknowledging that it may or may not sell well, he remains confident in Microsoft's existing ecosystem and product lineup.

Ballmer contrasts Apple's approach with Microsoft's current Windows Mobile strategy, pointing out that consumers already have access to versatile, significantly cheaper alternatives. He highlights hardware options like the Motorola Q, which sells for just $99 while providing a complete suite of capabilities including music playback, web browsing, email, and instant messaging. Because of this broad accessibility and functional feature set, Ballmer reiterates strong satisfaction with Microsoft’s positioning in the mobile sector, remarking, “So I kind of look at that and I say well I like our strategy I like it a lot.”

- **iPhone Price Point:** $500 fully subsidized on a carrier contract. - **Enterprise Criticism:** Lack of a physical hardware keyboard impairs its utility as an email device for business users. - **Windows Mobile Alternative:** The Motorola Q priced at $99, offering email, web, music, and instant messaging.

---

[01:06](https://www.youtube.com/watch?v=eywi0h_Y5_U&t=66s) Competing Across Mobile Phones and Portable Media Players

Addressing how Microsoft intends to compete after Apple captured widespread media attention at Macworld with both the iPhone and updated iPods, Ballmer divides the competitive landscape into phones and portable entertainment devices. On the phone front, Ballmer emphasizes Microsoft's massive head start in volume against Apple's non-existent footprint. As Ballmer puts it: “Right now we're selling millions and millions and millions of phones a year Apple is selling zero phones a year in six months they'll have the most expensive phone by far ever in the marketplace and let's see you know what's the expression let's see how the competition goes.”

Turning to music and entertainment players, Ballmer readily concedes that Apple holds a dominant, preeminent market position with the iPod. However, he explains that Microsoft entered the space due to strategic synergies with its broader portfolio and unique hardware features, specifically around community engagement and wireless networking. Despite entering an incumbent-dominated market, Ballmer notes that the Zune quickly captured an estimated 20% to 25% share of the high-end tier (devices priced at $249 and above). He expresses firm confidence that Microsoft is firmly in the game, aggressively driving innovation, and forcing Apple to actively keep pace.

- **Phone Market Comparison:** Microsoft partners sell millions of Windows Mobile handsets annually, compared to zero phones currently sold by Apple. - **Zune Market Penetration:** Captured roughly 20% to 25% of the premium portable media player market ($249 and higher). - **Zune Differentiators:** Integrated wireless networking capabilities and community sharing features.

## Mentioned Steve Ballmer, Steve Jobs, iPhone, Apple, Macworld, Microsoft, Zune, Windows Mobile, Motorola Q, iPod

## Video description $500 for a phone???? LOL

[Source](https://www.youtube.com/watch?v=eywi0h_Y5_U)

中文简报

鲍尔默因500美元售价及缺乏键盘看衰苹果iPhone 微软首席执行官史蒂夫·鲍尔默表示，苹果售价500美元的iPhone将无法赢得企业客户，因为其缺乏用于发送电子邮件的物理键盘，而更便宜的Windows Mobile设备则有望占据主导地位。微软首席执行官史蒂夫·鲍尔默对苹果新发布的iPhone不以为然，批评其500美元的合约补贴价以及缺乏物理键盘，称这些是阻碍企业电子邮件用户的主要因素。他强调了价格亲民的Windows Mobile替代产品，例如99美元的摩托罗拉Q，并指出微软的合作伙伴每年销售数百万部手机，而苹果的销量为零。尽管承认苹果在iPod领域的统治地位，鲍尔默仍为Zune在高端媒体播放器市场的早期渗透进行了辩护，并对微软的整体移动战略表达了强烈信心。史蒂夫·鲍尔默将苹果售价500美元的合约机iPhone斥为世界上最昂贵的手机，并认为其缺乏物理键盘将疏远企业客户。 (0:00) 鲍尔默将iPhone与Windows Mobile设备进行了对比，例如99美元的摩托罗拉Q，后者以极低的价格就已经提供了音乐、网页和电子邮件功能。 (0:00) 在强调市场销量时，鲍尔默指出微软合作伙伴每年销售数百万部手机，而苹果则是以零销量进入该市场。 (1:06) 在便携式媒体播放器领域，鲍尔默声称Zune在249美元及以上的设备中已迅速占据了20%至25%的市场份额。 (1:06)

Reading summary

Following the unveiling of the iPhone, Microsoft CEO Steve Ballmer dismissed Apple's entry as an overpriced device ill-suited for enterprise users, expressing strong confidence in Windows Mobile's existing market volume and lower-cost alternatives. Critique of iPhone Pricing and Enterprise Viability (0:00) Ballmer reacted dismissively to Apple's announcement, criticizing the iPhone's $500 carrier-subsidized price point as the most expensive phone in the world. He argued that the absence of a physical hardware keyboard fundamentally limited its utility as an email tool, preventing it from appealing to enterprise and business customers. In contrast, Ballmer emphasized the strengths of Microsoft's existing Windows Mobile strategy, which offered consumers versatile devices at significantly lower costs. He pointed to hardware such as the $99 Motorola Q, which integrated email, web browsing, music playback, and instant messaging, asserting that this broader affordability validated Microsoft's market positioning. Mobile Volume Advantage and Zune's Market Position (1:06) Assessing competition across consumer electronics, Ballmer drew a distinction between mobile phones and portable media players. In smartphones, he highlighted Microsoft's massive head start, noting that partners were selling millions of Windows Mobile units annually while Apple was selling zero ahead of entering the market with its high-priced handset. Regarding portable entertainment, Ballmer conceded that Apple maintained a dominant market position with the iPod. However, he maintained that Microsoft's Zune had established a viable presence by capturing an estimated 20% to 25% of the premium tier (devices priced at $249 and above) by offering differentiators such as wireless networking and community-sharing features. Ballmer framed the competitive landscape as an ongoing contest where Microsoft held entrenched volume in mobile phones and was actively challenging Apple's media player dominance, leaving open how Apple's high-priced, keyboardless phone would fare once commercially available.

精炼阅读摘要

微软首席执行官 Steve Ballmer 在 iPhone 发布后对其高昂售价及缺乏实体键盘的设计提出质疑，认为其难以打动企业客户，并坚称微软凭借 Windows Mobile 的庞大出货量与 Zune 的差异化功能，在移动与媒体设备领域具备更具竞争力的战略定位。质疑 iPhone 硬件设计与高昂定价 (0:00) Ballmer 对苹果在 Macworld 大会上公布的 iPhone 定价和硬件形态持怀疑态度。他指出，即便利用户获得运营商全额补贴，iPhone 的售价仍高达 500 美元，是市场上最昂贵的手持设备。在形态设计上，Ballmer 认为缺乏实体硬件键盘削弱了该设备作为电子邮件收发工具的核心效能，因而根本无法吸引看重商务办公属性的企业客户。与苹果的高价策略相对比，Ballmer 强调了 Windows Mobile 阵营在性价比与功能完备性上的优势。他以当时售价仅为 99 美元的 Motorola Q 为例，指出低成本机型同样完整支持音乐播放、网页浏览、电子邮件及即时通讯服务。基于这种广泛的市场准入门槛与实用功能组合，Ballmer 表示对微软现行的移动战略极为满意。移动手机市场规模的先发优势 (1:06) 在分析手机市场的竞争前景时，Ballmer 重点突出了微软既有生态与苹果初涉该领域之间的悬殊规模差距。他表示，微软合作伙伴当时每年可销售数以百万计的 Windows Mobile 设备，而苹果在手机市场的销量当前仍为零。即使苹果计划在六个月后正式发售其史上最昂贵的手机产品，微软也拥有坚实的装机规模作为后盾，其实际竞争格局仍需交由市场后续检验。便携媒体播放器的差异化竞争 (1:06) 针对便携式娱乐与音乐播放器市场，Ballmer 坦承苹果的 iPod 已经确立了无可动摇的领先地位。但他解释称，微软推出 Zune 旨在与更广泛的产品组合产生战略协同，并依托独特的社区互动与内置无线网络功能实现硬件层面的差异化突围。关于商业进展，Ballmer 声称 Zune 已经迅速夺取了高端媒体播放器市场（定价在 249 美元及以上档位）约 20% 至 25% 的市场份额。他据此坚信，微软已在该赛道站稳脚跟并持续驱动技术创新，迫使主导市场的苹果必须跟进应对竞争。 Ballmer 的论述立足于当时 Windows Mobile 的庞大出货基础、低价全键盘设备的实用性以及 Zune 在高端市场的初步渗透，体现出对既有生态的强烈信心；但他对 iPhone 的质疑高度依赖于“全键盘邮件收发”这一传统企业需求的评估标准，留下了全触控形态与高定价模式能否被更广泛消费群体接受的悬念。

Detailed notes — zh

## Background 该视频由 YouTube 频道 smugmacgeek 于 2007 年 9 月 18 日发布。视频简介以极具嘲讽意味的「$500 for a phone???? LOL」（一部手机要500美元？？哈哈）为题，记录了微软前首席执行官史蒂夫·鲍尔默（Steve Ballmer）对苹果初代 iPhone 的公开回应。 ## TL;DR 在接受采访时，微软 CEO 史蒂夫·鲍尔默针对史蒂夫·乔布斯最新发布的初代 iPhone 做出了广为人知的评价。鲍尔默认为 iPhone 凭借附带合约后高达 500 美元的定价，堪称全球最昂贵的手机，且因缺乏实体键盘而无法在企业邮件市场取得成功，相较之下 99 美元的 Windows Mobile 阵营设备（如摩托罗拉 Q）具备极佳的性价比与实用性。在市场竞争格局上，他强调 Windows Mobile 拥有每年数千万部的庞大出货基础，而苹果销量为零；同时在便携播放器战场，鲍尔默指出微软 Zune 已在 249 美元以上的高端市场抢占了 20% 至 25% 的份额，展现出十足的战略自信。 ## Atmosphere & style 整个片段充满了科技史早期极具戏剧张力的傲慢与火药味，鲍尔默那标志性的仰头大笑与讥讽表情极具视觉冲击力。访谈对话节奏紧凑，面对主持人的追问，鲍尔默表现出居高临下的掌控感与坚定的防御姿态，试图用详实的数据与商业逻辑来淡化苹果的威胁。后视镜视角下观看这段对话，其强烈的笃定与随后智能手机产业的巨变形成了极具讽刺感的历史反差。 ## Bulletin - [00:00](https://www.youtube.com/watch?v=eywi0h_Y5_U&t=0s) 鲍尔默对初代 iPhone 报以讥笑，认为即使附带运营商合约补贴后仍高达 500 美元且缺少物理键盘，使其根本无法吸引企业级客户。 - [00:00](https://www.youtube.com/watch?v=eywi0h_Y5_U&t=0s) 鲍尔默强调 Windows Mobile 阵营的性价比优势，指出仅需 99 美元的摩托罗拉 Q 就能全面覆盖音乐、上网、邮件和即时通讯功能。 - [01:09](https://www.youtube.com/watch?v=eywi0h_Y5_U&t=69s) 在智能手机出货规模上，鲍尔默指出 Windows Mobile 手机年销量达数千万部，而苹果销量为零，对苹果入局竞争表现得极为自信。 - [01:09](https://www.youtube.com/watch?v=eywi0h_Y5_U&t=69s) 在便携播放器领域，鲍尔默承认 iPod 的主导地位，但强调 Zune 凭借 Wi-Fi 社交共享在 249 美元以上高端市场夺得了 20% 至 25% 的份额。 ## Key takeaways - [00:00](https://www.youtube.com/watch?v=eywi0h_Y5_U&t=0s) 主持人询问乔布斯在 Macworld 发布初代 iPhone 后微软 CEO 鲍尔默的第一反应。 - [00:00](https://www.youtube.com/watch?v=eywi0h_Y5_U&t=0s) 鲍尔默以标志性的笑声回应，直指 iPhone 合约补贴后仍需 500 美元，是市场上最昂贵的手机。 - [00:00](https://www.youtube.com/watch?v=eywi0h_Y5_U&t=0s) 鲍尔默断言全触控屏幕缺少物理键盘是严重缺陷，导致 iPhone 无法成为合格的邮件生产力设备。 - [00:00](https://www.youtube.com/watch?v=eywi0h_Y5_U&t=0s) 鲍尔默认为高昂价格叠加键盘缺失，让 iPhone 对微软极度看重的企业客户完全不具备吸引力。 - [00:00](https://www.youtube.com/watch?v=eywi0h_Y5_U&t=0s) 鲍尔默力挺 Windows Mobile 的战略路线，称其设备兼具性价比与完善的功能生态。 - [00:00](https://www.youtube.com/watch?v=eywi0h_Y5_U&t=0s) 鲍尔默以 99 美元的摩托罗拉 Q 为例，证明 Windows Mobile 能以更低门槛提供音乐、网页、邮件及即时通讯全套体验。 - [01:09](https://www.youtube.com/watch?v=eywi0h_Y5_U&t=69s) 鲍尔默将竞争拆分为两个战场：智能手机领域微软占据统治级出货量，便携播放器领域则是苹果防守。 - [01:09](https://www.youtube.com/watch?v=eywi0h_Y5_U&t=69s) 在手机出货规模对比上，鲍尔默指出 Windows Mobile 每年出货数千万部，而苹果当时的出货量为零。 - [01:09](https://www.youtube.com/watch?v=eywi0h_Y5_U&t=69s) 鲍尔默对半年后上市的 iPhone 持轻蔑态度，认为带一款史上最昂贵且无基数的手机入局难以逆转局势。 - [01:09](https://www.youtube.com/watch?v=eywi0h_Y5_U&t=69s) 在便携娱乐播放器领域，鲍尔默坦然承认苹果 iPod 拥有绝对的统治地位。 - [01:09](https://www.youtube.com/watch?v=eywi0h_Y5_U&t=69s) 鲍尔默拿出市场测算数据，称 Zune 在 249 美元及以上的高端细分市场已经斩获了约 20% 至 25% 的份额。 - [01:09](https://www.youtube.com/watch?v=eywi0h_Y5_U&t=69s) 微软为 Zune 赋予了无线网络互联与社区音乐共享等创新功能，试图以此在巨头腹地实现差异化破局。 ## Detailed walkthrough ### [00:00](https://www.youtube.com/watch?v=eywi0h_Y5_U&t=0s) 评初代 iPhone：高昂售价与缺少实体键盘的缺陷主持人谈到微软的 Zune 播放器此前刚刚取得了一些市场进展，紧接着史蒂夫·乔布斯（Steve Jobs）便在 Macworld 大会上拿出了初代 iPhone，随即询问史蒂夫·鲍尔默（Steve Ballmer）在看到这款产品时的第一反应。鲍尔默带着标志性的讥笑回应，直接将矛头对准了 iPhone 高昂的定价策略和硬件形态。在他看来，一款即便附带运营商合约补贴后售价仍高达 500 美元的手机，根本无法在主流市场立足，尤其是对于微软极度重视的企业级客户群体。鲍尔默明确指出，iPhone 放弃物理键盘而采用全触控屏幕的设计是一个根本性缺陷，这会让它在商务核心场景中大打折扣。鲍尔默断言：“带着合约全额补贴还要 500 美元，我说那是世界上最昂贵的手机，而且它对企业客户毫无吸引力，因为它没有键盘，这使它成不了一台非常好用的邮件设备。”他虽然承认这款设备最终可能会卖得不错、也可能卖不好，但他坚信微软自身的战略路线更为稳健。他举例指出，市场上已有优秀的 Windows Mobile 阵营设备，比如仅需 99 美元就能买到的摩托罗拉 Q（Motorola Q）；该设备功能十分全面，不仅能听音乐、上网、收发电子邮件，还能进行即时通讯。鲍尔默强调：“我看着那些现状然后对自己说，我喜欢我们的战略，我非常喜欢它。” - **iPhone 定价阻力**：合约补贴后仍需 500 美元，被鲍尔默视作当时市场上最昂贵的手机。 - **商务定位缺陷**：缺乏实体全键盘，导致收发邮件的生产力体验被严重质疑。 - **Windows Mobile 性价比优势**：摩托罗拉 Q 售价仅为 99 美元，同时具备音乐、浏览网页、邮件及即时通讯（IM）等全套功能。 --- ### [01:09](https://www.youtube.com/watch?v=eywi0h_Y5_U&t=69s) 手机与播放器双线战局：Windows Mobile 的规模与 Zune 的破局面对主持人关于乔布斯在 Macworld 上凭借 iPhone 和新款 iPod 席卷全场焦点、微软 Zune 该如何与之竞争的追问，鲍尔默将手机与便携娱乐设备拆分为两个完全不同的战场来分析。在智能手机领域，鲍尔默对苹果展现出十足的轻蔑与自信，指出两家公司当时的销量规模根本不在一个数量级上。鲍尔默直接给出了双方的实力对比：“眼下我们每年售出成百上千万部手机，而苹果一年的销量是零；六个月后，他们将带着市场上迄今为止最昂贵的手机入局，那么就让我们看看，俗话怎么说的来着，让我们看看竞争会如何发展。” 转到音乐与娱乐播放器领域，鲍尔默坦然承认苹果和 iPod 占据着绝对的霸主地位，但他坚称微软进入该领域具有充分的战略协同效应。微软为 Zune 注入了独特的创新功能，尤其是围绕无线网络连接与社交社区打造的共享体验。鲍尔默拿出具体数据佐证，指出在苹果极为强势的腹地中，微软成功在高端市场撕开了一道口子。在售价 249 美元及以上的高端播放器细分区间内，多数市场测算显示 Zune 拿下了大约 20% 到 25% 的份额。尽管承认苹果是当前赛道的擂主，但鲍尔默坚称竞争才刚刚开始，微软正在全力推进创新，乔布斯也必须在后续竭尽全力才能跟上微软的步伐；如果不是认准该行业正处于变革期，微软根本不会入局参与这场竞争。 - **手机出货基数悬殊**：当时搭载微软 Windows Mobile 系统的手机年销量达到数千万级别，而苹果手机的实际出货量为零。 - **高端播放器突破**：在 249 美元及以上的高端便携媒体播放器市场，Zune 上市后成功占领了约 20% 至 25% 的市场份额。 - **差异化竞争壁垒**：Zune 依托与微软生态的协同，主打基于无线网络与社区互联的音乐共享创新体验。 ## Notable quotes > [00:00](https://www.youtube.com/watch?v=eywi0h_Y5_U&t=0s) 带着合约全额补贴还要 500 美元，我说那是世界上最昂贵的手机，而且它对企业客户毫无吸引力，因为它没有键盘，这使它成不了一台非常好用的邮件设备。 — 史蒂夫·鲍尔默 ## Mentioned 史蒂夫·鲍尔默, 史蒂夫·乔布斯, 微软, 苹果, iPhone, Zune, Windows Mobile, iPod, 摩托罗拉 Q, Macworld ## Video description $500 for a phone???? LOL [Source](https://www.youtube.com/watch?v=eywi0h_Y5_U)

Source quotes

[0:00] 史蒂夫·鲍尔默: 带着合约全额补贴还要 500 美元，我说那是世界上最昂贵的手机，而且它对企业客户毫无吸引力，因为它没有键盘，这使它成不了一台非常好用的邮件设备。

Original transcript

[0:00] they let me ask you about the iPhone and [0:02] the Zune if I may the Zune was getting [0:05] some traction and Steve Jobs goes to [0:08] Macworld and he he pulls out this iPhone [0:10] what was your first reaction when you [0:11] saw that $500 fully subsidized with a [0:16] plan I said that is the most expensive [0:18] phone in the world and it doesn't appeal [0:21] to business customers because it doesn't [0:23] have a keyboard which makes it not a [0:24] very good email machine now it may sell [0:27] very well or not I you know we have our [0:30] strategy we've got great Windows Mobile [0:32] devices in the market today we you can [0:35] get a Motorola Q phone now for $99 it's [0:39] a very capable machine it'll do music [0:42] it'll do internet it'll do email it'll [0:45] do instant messaging so I I kind of look [0:48] at that and I say well I like our [0:50] strategy I like it a lot how do you [0:54] compete with that though he sucked out a [0:56] lot of the spotlight in the last few [0:59] weeks because of what happened at Mac [1:00] Mac world not only with the iPhone but [1:03] with the new iPod how do you compete [1:06] with that with the Zune right now well [1:09] let's take phones first right now we're [1:11] selling millions and millions and [1:12] millions of phones a year Apple is [1:15] selling zero phones a year in six months [1:18] they'll have the most expensive phone by [1:21] far ever in the marketplace and let's [1:24] see you know what's the expression let's [1:26] see how the competition goes in the case [1:29] of music and entertainment players Apple [1:31] app absolutely has a preeminent position [1:33] we said we want to be in this mark that [1:36] there's a lot of reasons why there's [1:37] synergy with other things that we're [1:39] doing we think we've got some unique [1:40] innovations particularly what we're [1:42] doing with community with wireless [1:44] networking and we came into the market a [1:46] market which they're very strong and we [1:49] took know about the most estimates to [1:50] say we took about 20-25 percent of the [1:52] high end of the market [1:53] we weren't down at some of the lower [1:55] price points but for devices $249 and [1:59] over we took you know let's say about [2:01] 20% of market so I feel like we're in [2:02] the game we're driving our innovation [2:05] hard and ok we're not the incumbent he's [2:08] the incumbent in this game but at the [2:11] end of the day he's gonna have to keep [2:12] up with [2:13] we're gonna drive as well and you still [2:15] feel like you can be very competitive in [2:17] that space sure absolutely [2:19] we didn't think there was transformation [2:21] going on we wouldn't be black