Feeds

Ballmer: Apple's iPhone will be a niche player

That's right, Steve - and it's a good thing too

Business security measures using SSL

Well, almost never. This time Apple has had to factor in the cost of delaying Mac OS X 10.5 Leopard to allow it to pull its operating system software coders across to the iPhone's OS, though we've only Apple's word for why Leopard was delayed. Perhaps it doesn't want its marketing team distracted from the iPhone by having to launch a major OS upgrade too, particularly one so clearly lined up against Microsoft's latest.

Which brings us back to Ballmer. Here's what he said:

"There's no chance that the iPhone is going to get any significant market share. No chance. It's a $500 subsidised item. They may make a lot of money. But if you actually take a look at the 1.3 billion phones that get sold, I'd prefer to have our software in 60, 70 or 80 per cent of them, than I would to have two or three per cent, which is what Apple might get."

Some 252m handsets shipped in Q1, according to market watcher Strategy Analytics. Two per cent of that is just over 5m devices. We don't know what subsidy if any AT&T is contributing to the cost of the iPhone, but even if it's just eating up its hardware profit in return for the gains it'll make in airtime charges, that means Apple's getting at least $500 per phone. So 5m units amounts to $2.5bn.

sneakmove's paper iphone
Make your own iPhone...

There's no way Apple's going to win two per cent of the mobile phone market immediately, much less three per cent or even the four per cent that Ballmer also suggests. But it does show that a niche product has the potential to make big bucks.

The consumer electronics world is full of examples of companies that do very nicely by pitching otherwise mainstream products at very specific audiences. Think Bose. Think Bang & Olufsen. Think Porsche. Apple has managed to do the same in the computer market - the only strategy it could adopt, to be honest - and it started out doing the same thing with the iPod.

Its approach to the iPhone is no different, though the perhaps unexepected scale of the iPod's mass-market success will inevitably persuade some that Apple wants to be Nokia. Only the Apple TV has been positioned from day one as a mass-market product - Apple calls it the "DVD player for the 21st Century" - but that's because, unlike the iPhone and the debutante iPod, it's cheap to make and cheap to sell.

The antithesis of the iPhone, in other words. Apple TV is predicated on big demand from day one. The iPhone isn't, and to assume otherwise is plainly incorrect. Yes, Apple would like to sell huge numbers of iPhones. Yes, it would like it to follow the iPod's trajectory. But it knows it's up against very large, very well established rivals, and it will be developing its product, its marketing and its strategy accordingly, waiting for the moment that one Excel cell changes from red to black.

New hybrid storage solutions

More from The Register

next story
Half a BILLION in the making: Bungie's Destiny reviewed
It feels very familiar - but it's still good
Apple's big bang: iPhone 6, ANOTHER iPhone 6 Plus and WATCH OUT
Let's >sigh< see what Cupertino has been up to for the past year
Huawei ditches new Windows Phone mobe plans, blames poor sales
Giganto mobe firm slams door shut on Microsoft. OH DEAR
A SCORCHIO fatboy SSD: Samsung SSD850 PRO 3D V-NAND
4Gb/s speeds on a consumer drive, anyone?
Phones 4u website DIES as wounded mobe retailer struggles to stay above water
Founder blames 'ruthless network partners' for implosion
Get your Indian Landfill Android One handsets - they're only SIXTY QUID
Cheap and deafening mobes for the subcontinental masses
Apple's SNEAKY plan: COPY ANDROID. Hello iPhone 6, Watch
Sizes, prices and all – but not for the wrist-o-puter
prev story

Whitepapers

Providing a secure and efficient Helpdesk
A single remote control platform for user support is be key to providing an efficient helpdesk. Retain full control over the way in which screen and keystroke data is transmitted.
Saudi Petroleum chooses Tegile storage solution
A storage solution that addresses company growth and performance for business-critical applications of caseware archive and search along with other key operational systems.
Security and trust: The backbone of doing business over the internet
Explores the current state of website security and the contributions Symantec is making to help organizations protect critical data and build trust with customers.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.