In a new Bloomberg interview with Steve Ballmer, the former Microsoft CEO revisited his famously dismissive remarks about the iPhone when it launched back in 2007.

Shortly after Steve Jobs revealed the first iPhone, then-Microsoft CEO Ballmer was asked what he thought of the device during a press conference.

steve-ballmer-admits-microsoft-surface-isn-t-an-instant-hit-updated--a61fe0a13e

500 dollars? 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. ... 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.

Speaking to interviewer Emily Chang recently, however, Ballmer praised Apple's cellular subsidy model and admitted he wished he had come up with it first.

I wish I had thought of the model of subsidizing phones through the operators. People like to point to this quote where I said the iPhones will never sell. Well the price of $600 or $700 was too high and it was business model innovation by Apple to get it essentially built into the monthly cell phone bill.

Ballmer also admitted it was a mistake for Microsoft not to make handsets and tablets sooner. "I would have moved into the hardware business faster and recognized that what we had in the PC, where there was a separation of chips, systems, and software, wasn't largely going to reproduce itself in the mobile world," he said.

Steve Ballmer is asked about Apple's iPhone in 2007

Ballmer revealed his decision to take Microsoft into the hardware business contributed to the breakdown of his relationship with co-founder Bill Gates. "There was a fundamental disagreement about how important it was to be in the hardware business," Ballmer said. "I had pushed Surface. The board had been a little reluctant in supporting it. And then things came to a climax around what to do about the phone business."

Microsoft entered the hardware market in 2012 with the Surface RT tablet, which sold poorly and saw the company take a $900 million charge to write down the value of inventory. Since then, Microsoft's Surface range has taken off, and generated more than $4 billion in sales for the company for the fiscal year ending June 2016.

Top Rated Comments

Nicksd84 Avatar
119 months ago
"You can’t connect the dots looking forward; you can only connect them looking backwards."

- Steve Jobs
Score: 16 Votes (Like | Disagree)
Euphemia Avatar
119 months ago
Back in 2000, I bought my Nokia 8250 on a phone subsidy in Australia. Phone subsidies have been a common practice for a very long time. I'm not sure why Apple is getting the credit for it.
Score: 13 Votes (Like | Disagree)
the8thark Avatar
119 months ago
Ballmer was not wrong. That's the thing.
Apple realised the truths in what Ballmer said and worked on them to make the iPhone sell. If everyone had to pay $750 or more outright for their iPhone, no one would. The whole phone plan subsidising where you get to pay off the cost of the phone along with your bill over 24 months is what really allowed the iPhone to take off.
It was comments like Ballmer's that prompted Apple to go for the subsidised approach.

Ballmer's lament about not entering the hardware market sooner is not really a vaid one. MS traditionally is not a hardware company, it's a software company. Apple does the hardware and software vertically integrated whole solution in one approach. An approach MS traditionally has not done.

The interviewer is asking Ballmer - Why is MS not doing what Apple does?
His answer is so captain obvious - Because MS is MS and not Apple.
Score: 12 Votes (Like | Disagree)
Smartass Avatar
119 months ago
took him long enough to admit it.

Score: 9 Votes (Like | Disagree)
infinitejest Avatar
119 months ago
Apple managed to build the first great phone. The business model existed before...
Either he still doesn't want to give Apple credit for it or he's really that much of an idiot and is still not getting it.
Score: 5 Votes (Like | Disagree)
MrX8503 Avatar
119 months ago
Ballmer is having trouble admitting the real reason why he was wrong.

The iPhone wasn't successful because of the subsidized model, which existed prior to the iPhone. The iPhone was a success because it was simply a way better phone.

Ballmer not admitting this is the reason he's not the CEO.
Score: 4 Votes (Like | Disagree)

Popular Stories

iOS 26

iOS 26.2 Coming Soon With These 8 New Features on Your iPhone

Thursday December 11, 2025 8:49 am PST by
Apple seeded the second iOS 26.2 Release Candidate to developers earlier this week, meaning the update will be released to the general public very soon. Apple confirmed iOS 26.2 would be released in December, but it did not provide a specific date. We expect the update to be released by early next week. iOS 26.2 includes a handful of new features and changes on the iPhone, such as a new...
Google maps feaure

Google Maps Quietly Added This Long-Overdue Feature for Drivers

Wednesday December 10, 2025 2:52 am PST by
Google Maps on iOS quietly gained a new feature recently that automatically recognizes where you've parked your vehicle and saves the location for you. Announced on LinkedIn by Rio Akasaka, Google Maps' senior product manager, the new feature auto-detects your parked location even if you don't use the parking pin function, saves it for up to 48 hours, and then automatically removes it once...
Foldable iPhone 2023 Feature 1

Apple to Make More Foldable iPhones Than Expected [Updated]

Tuesday December 9, 2025 9:59 am PST by
Apple has ordered 22 million OLED panels from Samsung Display for the first foldable iPhone, signaling a significantly larger production target than the display industry had previously anticipated, ET News reports. In the now-seemingly deleted report, ET News claimed that Samsung plans to mass-produce 11 million inward-folding OLED displays for Apple next year, as well as 11 million...
AirPods Pro Firmware Feature

Apple Releases New Firmware for AirPods Pro 2 and AirPods Pro 3

Thursday December 11, 2025 11:28 am PST by
Apple today released new firmware designed for the AirPods Pro 3 and the prior-generation AirPods Pro 2. The AirPods Pro 3 firmware is 8B30, up from 8B25, while the AirPods Pro 2 firmware is 8B28, up from 8B21. There's no word on what's include in the updated firmware, but the AirPods Pro 2 and AirPods Pro 3 are getting expanded support for Live Translation in the European Union in iOS...
iOS 26

15 New Things Your iPhone Can Do in iOS 26.2

Friday December 5, 2025 9:40 am PST by
Apple is about to release iOS 26.2, the second major point update for iPhones since iOS 26 was rolled out in September, and there are at least 15 notable changes and improvements worth checking out. We've rounded them up below. Apple is expected to roll out iOS 26.2 to compatible devices sometime between December 8 and December 16. When the update drops, you can check Apple's servers for the ...
AirTag 2 Mock Feature

Apple AirTag 2: Four New Features Found in iOS 26 Code

Thursday December 11, 2025 10:31 am PST by
The AirTag 2 will include a handful of new features that will improve tracking capabilities, according to a new report from Macworld. The site says that it was able to access an internal build of iOS 26, which includes references to multiple unreleased products. Here's what's supposedly coming: An improved pairing process, though no details were provided. AirTag pairing is already...
iOS 26

Apple Seeds Second iOS 26.2 Release Candidate to Developers and Public Beta Testers

Monday December 8, 2025 10:18 am PST by
Apple today seeded the second release candidate version of iOS 26.2 to developers and public beta testers, with the software coming one week after Apple seeded the first RC. The release candidate represents the final version iOS 26.2 that will be provided to the public if no further bugs are found. Registered developers and public beta testers can download the betas from the Settings app on...
iPhone 14 Pro Dynamic Island

iPhone 18 Pro Leak Adds New Evidence for Under-Display Face ID

Monday December 8, 2025 4:54 am PST by
Apple is actively testing under-screen Face ID for next year's iPhone 18 Pro models using a special "spliced micro-transparent glass" window built into the display, claims a Chinese leaker. According to "Smart Pikachu," a Weibo account that has previously shared accurate supply-chain details on Chinese Android hardware, Apple is testing the special glass as a way to let the TrueDepth...
ipad blue prime day

iPad 12 Rumored to Get iPhone 17's A19 Chip, Breaking Apple Tradition

Wednesday December 10, 2025 12:22 pm PST by
The next-generation low-cost iPad will use Apple's A19 chip, according to a report from Macworld. Macworld claims to have seen an "internal Apple code document" with information about the 2026 iPad lineup. Prior documentation discovered by MacRumors suggested that the iPad 12 would be equipped with an A18 chip, not an A19 chip. The A19 chip was just released this year in the iPhone 17, and...
studio display purple

Apple Studio Display 2 Code Hints at 120Hz ProMotion, HDR, A19 Chip

Thursday December 11, 2025 4:19 am PST by
Apple's next-generation Studio Display is expected to arrive early next year, and a new report allegedly provides a couple more details on the external monitor's capabilities. According to internal Apple code seen by Macworld, the new external display will feature a variable refresh rate capable of up to 120Hz – aka ProMotion – as well as support for HDR content. The current Studio...