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Steve Ballmer on Business Week Print E-mail
Written by Kostas Tzounopoulos   
Thursday, 12 October 2006
Steve Ballmer, CEO of Microsoft, had an interesting chat with Business Week editors and has some thoughts to share about Zune...

So here are some Zune related parts of this chat:

Microsoft has several high-level new hires. Are they changing the way you view the company?

Steve Ballmer Microsoft CEOAbsolutely. Classically, we're the Windows company. When it provides $20 billion in profit, it's pretty important. But there's more diversity in everything that we do. I would have been hell-bent and determined six years ago to call Xbox the Windows Game Machine. We didn't. My natural tendency would have been to call [the forthcoming digital music device] Zune something that was related to Xbox since we have some consumer franchise. And yet, we're really building consumer marketing muscle. These guys are really educating us on new ways to do things. These guys are having a fundamental impact on me as well as the company.

[.....] 

Who are Microsoft's top competitors? 

[.....]  there are cases where software gets monetized through hardware. That's what an iPod is. iPod is a software thing. You just happen to collect the money on the hardware. You could say in China and India, it's unclear whether classic software will get paid for as much as advertising, hardware, subscriptions, etc.

So our ability to embrace and benefit from or compete with new business models—and I would say ad-funded and open source, more than this hardware thing—is more the way to categorize the key competitive dynamic for us.

Does Zune fit into the hardware piece of this?Steve Ballmer, Microsoft CEO

Sure it does. Because the value of Zune, if we're successful, is all in the software. It's in community [the ability to share music and pictures with other Zune users]. I want to squirt you a picture of my kids. You want to squirt me back a video of your vacation. That's a software experience. The truth is, though, if it makes money, it will be built into the gross margin on the hardware. We'll figure out how to make money on the community perhaps later though advertising or other means.

How much money will you lose per Zune?

None. Apple put the hammer down there, dropped the price down to $249. If they had been $299, it would have been nicer. They have the advantage of scale. So we're at $249, too. We don't make a lot of money, not to start out.

 

You can read the full artile on Business Week: http://www.businessweek.com/technology/content/oct2006/tc20061011_940241.htm

 

Last Updated ( Monday, 30 October 2006 )
 
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