Watch as Steve Ballmer, Microsoft CEO, scoffs at Apple's iPhone because of its $500 price tag. Ballmer says it’s too expensive, it’s not a good email device, and it’s not going to appeal to business customers. Instead, Ballmer believes the $99 Windows-enabled Motorola Q phone is a better strategy for success.
RSS Readers, access the video here.
Ballmer doesn’t get it, does he?
While Microsoft is satisfied with just meeting customer needs, Apple is ONLY satisfied by fulfilling consumer desires. There is virtually nothing desirous about Microsoft products (Xbox 360 excluded). Apple, on the other hand, is all about desire. Every product they develop is desirous. And by tapping into consumers’ desire, Apple transcends the need to price products cheap. Apple has mastered the art of producing products that people buy based on emotional "wants" and not merely on functional needs.
People will gladly pay more for something desirous. Apple has proven that, is proving that, and will continue proving that. Comprende Steve?
*** Kudos to Mike Landman for the hook-up. ***
Remember the Lisa?
Let's wait till it arrives, shall we?
Posted by: Patrick Nolan | January 19, 2007 at 12:46 AM
He scares me.
And you're right, he doesn't get it. Price does matter, but aspiration matters more.
Posted by: Spike | January 19, 2007 at 07:33 AM
Is it that he doesn't get it or that he really does get it but he is desperately trying to prevent others from getting it (getting the iPhone I mean)?
Posted by: Bill Gammell | January 19, 2007 at 12:44 PM
Disclaimer: I'm not defending Ballmer, MSFT, Zune or the hilariously mentioned PHUNE they're surely coming out with in, oh, four more years.
However... the phone is too damn expensive for the people who want it and won't touch the business market where all smart phones are sold. He's right on these points. He's dead wrong on the Q, of course, which is a poor man's Treo.
Aspiration is great -- I aspire to own an Aston Martin -- but it has to make sense for the people at whom it is aimed. I think they missed with this. Call me when it's $199.
Posted by: Stephen Denny | January 19, 2007 at 02:00 PM
Stephen ... you gotta admit there is a MAJOR difference between spending $200,000+ for an Aston Martin and spending $500 for an iPhone.
I don't think asking people to drop $500 on an iPhone is out of the question. Most folks can easily charge $500 on their credit card.
Now, a businessperson trying to expense a $500 iPhone is a different story ... but ... I don't think Apple's iPhone audience is the business market--it's the people market.
Posted by: johnmoore (from Brand Autopsy) | January 19, 2007 at 02:18 PM
OK, I'll admit the difference. Call it creative license. But: no business person is going to get away with a $500 music device that can also be used as a business device. The CFO will have their scalp on the corporate lodgepole. A Blackberry is less than half of this and has less "distractions".
Your point, which I agree with, is that the market they have is the one they created with the iPod -- and trying to feed these heavy music consumers a $500 phone feels an awful lot like feeding a $1000 Walkman (MiniDisc) to people without the disposable income. I lived through that back in the day. The MD people just didn't listen to the screaming data they were presented with and they paid for it. The iPhone (or whatever it will be called) is much more beautiful, better thought out, etc., than MD was. But the economics and targeting problem remain.
It looks beautiful. It is aspirational. But it's very expensive, especially for those who will actually be in the market to buy it -- namely the iPod user.
Who knows. I may be betting against the hit product of the year. But it feels itchy right now.
Posted by: Stephen Denny | January 19, 2007 at 03:31 PM
Apple pursues what Steve Jobs calls BMW strategy: selling a product at a good premium to a core group of loyal users and not worrying about market share. If Apple wanted to be Dell they could release something boring and generic at low price, but this is the identity of Apple. The iPhone is not for everybody. Just their target market who love great design and really cool tech products.
Posted by: chuck | January 22, 2007 at 12:28 AM
Chuck is very right, especially this part: "The iPhone is not for everybody. Just their target market who love great design and really cool tech products."
"Really cool" being the most important part. The probelm with being "really cool" is that all "cool" things, unleashed on a long enough timeline, inevitably become mainstream. That means they are uncool.
I don't know if any one in this discussion realizes this, but the hipster with white earbuds is now a lame ass fashion tragedy to the kids that made the look cool in the first place.
The future for Apple is the present for Sony.
Posted by: Dan Gordon | January 22, 2007 at 01:18 AM
The iPhone is a Bohemian Treo.
It replaces business with art.
"Communicating" with "connecting."
Treos and Blackberries seem very corporate, why not create something with the same basic functionality for the creative souls out there? Why not charge something historically comparable to the Treo? The early adopters will pay the premium.
Dan, your edge-to-mainstream analysis is correct. Except Apple is creating a new edge. They're taking advantage of the very principle you're citing.
It's Microsoft's Zune and others who are patterning after the iPod who are becoming cliché.
Posted by: DUST!N | January 24, 2007 at 03:54 PM