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
118 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
118 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
118 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
118 months ago
took him long enough to admit it.

Score: 9 Votes (Like | Disagree)
infinitejest Avatar
118 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
118 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

Apple Shopping Event 2025

Apple Announces 2025 Black Friday Event, Here's What You Can Get

Thursday November 20, 2025 6:28 am PST by
Apple's annual four-day Black Friday through Cyber Monday shopping event is returning on Friday, November 28 through Monday, December 1 in many countries, including the United States, Canada, Australia, New Zealand, France, Germany, Italy, Spain, the United Kingdom, Belgium, the Netherlands, Sweden, Thailand, and others. During the shopping event, customers can get an Apple gift card with...
iPhone 17 Pro Cosmic Orange

10 Reasons to Wait for Next Year's iPhone 18 Pro

Wednesday November 19, 2025 4:00 am PST by
Apple's iPhone development roadmap runs several years into the future and the company is continually working with suppliers on several successive iPhone models at the same time, which is why we often get rumored features months ahead of launch. The iPhone 18 series is no different, and we already have a good idea of what to expect for the iPhone 18 Pro and iPhone 18 Pro Max. One thing worth...
iOS 26

iOS 26.2 Adds These New Features to Your iPhone

Thursday November 20, 2025 10:50 am PST by
iOS 26.2 is currently in beta testing. The upcoming update includes a handful of new features and changes on the iPhone, including a new Liquid Glass slider for the Lock Screen's clock, offline lyrics for Apple Music, and more. In a recent press release, Apple confirmed that iOS 26.2 will be released to all users in December, but it did not provide a specific release date. Keep reading...
hikawa phone grip stand apple%402x

Apple Launches Second Limited-Edition iPhone Accessory in a Month

Friday November 21, 2025 3:53 am PST by
Apple has begun selling the Hikawa Phone Grip and Stand, a new limited-edition iPhone accessory designed with accessibility in mind. Designed by LA-based Bailey Hikawa to celebrate the 40th anniversary of accessibility at Apple, the grip uses magnets to securely snap onto any iPhone with MagSafe. Apple says it can be removed with ease, and doubles as a stand with two different viewing...
ipad mini 7 feature red and blue

iPad Mini 8: Four Major New Features to Expect

Wednesday November 19, 2025 7:50 am PST by
Apple's eighth-generation iPad mini is highly likely to arrive next year, offering a significant refresh of the device with at least four major new features. OLED Display The next-generation version of the iPad mini could feature an OLED display, as part of Apple's plan to expand the display technology across many more of its devices. Apple's first OLED device was the Apple Watch in 2015, ...
applecare apple care banner

Apple Brings New AppleCare+ Options to India

Tuesday November 18, 2025 8:42 am PST by
Apple today announced an expansion of AppleCare+ coverage in India, with new options for monthly and annual plans, and the addition of Theft and Loss for iPhone for the first time. Options for monthly and annual AppleCare+ plans in India provide more choice and flexibility, allowing users to keep coverage for as long as they require. Apple's vice president of Worldwide iPhone Product...
watchos 26 workout app

Apple Watch Users Claim Workout App Is Now Worse in Every Way

Thursday November 20, 2025 7:01 am PST by
Apple Watch owners have been voicing their frustration online over changes to the Workout app that Apple introduced in watchOS 26, with many finding the redesigned interface makes starting exercises difficult and exasperating. When Apple launched watchOS 26 in September, the Workout app went from large, easily tapped workout tiles to a scrolling, corner-button interface. Instead of tapping a ...
apple wallet drivers license feature iPhone 15 pro

Two More U.S. States Commit to Offering iPhone Driver's Licenses in Apple Wallet App

Thursday November 20, 2025 8:21 am PST by
In select U.S. states, residents can add their driver's license or state ID to the Apple Wallet app on the iPhone and Apple Watch, and then use it to display proof of identity or age at select airports and businesses, and in select apps. Earlier this week, Illinois became the 13th state in the U.S. to offer the feature. Subsequently, we shared a list of additional states that are committed...
android iphone airdrop quickshare

iPhone Users Can Now AirDrop Files to Android Devices

Thursday November 20, 2025 9:47 am PST by
Google today announced a new cross-platform feature that allows for file sharing between iPhone and Android users. With AirDrop on the iPhone and QuickShare on Pixel 10 devices, there is a new file transfer function available. The file sharing option works on Apple devices that include iPhone, iPad, and Mac, along with the Pixel 10, Pixel 10 Pro, Pixel 10 Pro XL, and Pixel 10 Fold....
iOS 26

Everything New in iOS 26.2 Beta 3

Monday November 17, 2025 3:20 pm PST by
Apple provided developers with the third beta of an upcoming iOS 26.2 update, and there are still new features that are being added with each beta that we get. We've rounded up all of the changes that Apple made in beta 3. AirDrop Apple added new AirDrop functionality, providing a way for two people to share files temporarily without having to add one another as contacts. iOS 26.2...