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  (Source: Reuters)
Ballmer and Microsoft don't see Android as a competitor

Google and Microsoft are fierce competitors in the search market. That rivalry spilled over into the mobile phone OS market when Google launched the Android OS to compete against Windows Mobile.

Microsoft CEO Steve Ballmer said Thursday that he felt building Android was financially unsound for Google. Ballmer said at an analyst's day for partner company Telstra, "They (Google) can hire smart guys, hire a lot of people, blah dee blah dee blah, but you know they start out way behind, in a certain sense."

Ballmer continued saying, "I don't really understand their (money making) strategy. Maybe somebody else does. If I went to my shareholder meeting, my analyst meeting, and said, 'hey, we've just launched a new product that has no revenue model!'...I'm not sure that my investors would take that very well. But that's kind of what Google's telling their investors about Android."

Ballmer believes that Google's vision for Android was to offer the OS for free to get its search onto mobile phones. The catch in Ballmer's mind is that he believes mobile providers will still expect to be paid for search. Ballmer and Microsoft maintain that Google is not considered a top competitor at this point.

At the same Telstra event, the world's first live demo of 21Mbps speeds on the Telstra Next G network failed. Ballmer joked that he had damaged the demonstration and claimed to have seen the demo work in a private display.

Telstra CEO Sol Trujillo says that his company is working with Sierra Wireless, Qualcomm, and Ericsson to bring faster mobile broadband modems to market. Trujillo says that external modems aren’t all Telstra is working on.

Handsets using the new fast network will be offered as well. Trujillo is quoted by CNET News saying, "We're not only working with companies like Sierra and working on the dongle data card side of things, but we're also working with the companies that are on the handset side of things. Yes, we will have devices...but I'm not going to tell you when, because we like competing to win."

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not surprised
By Tamale on 11/7/2008 10:15:48 AM , Rating: 2
Would it be ballmer if he wasn't poo-pooing his competitors' every action?

RE: not surprised
By blazeoptimus on 11/7/2008 10:20:43 AM , Rating: 3
I think these comments generally fall under the category of "There making a competitive product, so we have to "poo-poo" it" - That being said, doesn't it seem a little bit like the Pot calling the kettle black, to say that Google isn't making a financially sound decision with developing a product. I'm sure Microsoft has NEVER done that.

RE: not surprised
By TomZ on 11/7/2008 10:23:52 AM , Rating: 3
I'm sure Microsoft has NEVER done that.

LOL, you must be joking. Say what you want about Microsoft, but at the end of the day, they exist to make money, and they know that. It's a pretty well-run company from that perspective.

RE: not surprised
By Hieyeck on 11/7/08, Rating: 0
RE: not surprised
By Sunrise089 on 11/7/2008 11:23:21 AM , Rating: 4

TomZ got the sarcasm just fine, he just disagreed with the assertion that MS makes similar kind of moves.

RE: not surprised
By fteoath64 on 11/9/2008 12:20:27 AM , Rating: 2
Agree. MS makes too many mistakes and did not recover from most. The best one they did was with Xbox program where it at least made it this far.

The WinMo program seems to slow down at V6.0. Maybe a complete overhaul is needed ?. Look at Symbian and Palm OS Garnet. Both of these are pretty much end-of-life, so the really new ones are iPhone OSX and Android. MS needs good people which I think they are not getting for some reason. In fact, Ray Ozzie is a god-send for them!. He is an awesome CTO.

RE: not surprised
By Yawgm0th on 11/7/2008 11:24:27 AM , Rating: 2
I don't think he did miss the sarcasm. He's disagreeing with it. The vast majority of Microsoft's decisions are VERY sound from a financial standpoint. Even among Microsoft's blunders, only a select few weren't profitable.

RE: not surprised
By michael2k on 11/7/08, Rating: 0
RE: not surprised
By augiem on 11/7/2008 3:23:18 PM , Rating: 2
The original Xbox was always considered a long term investment. Look how well MS is doing now with the 360. That would never have happened if they only had a short-sighted 5 year outlook. There's a reason MS is #6 most profitable company in the world. (

Zune and Ultimate TV were failed attempts at launching new products, yes, but they were hardly offered for free.

RE: not surprised
By mondo1234 on 11/7/2008 5:51:13 PM , Rating: 2
But MS has gone into markets knowing that they are losing money on particular products in order to undercut the competition in the name of market share. This is no big deal IMHO, just Balmer sounding off. I dont believe Google charges the front end, it usually makes money on the back end of the deal.

RE: not surprised
By michael2k on 11/7/08, Rating: 0
RE: not surprised
By phxfreddy on 11/9/2008 10:05:06 AM , Rating: 3
What's all this poop talk about? You are poo poo'ing his poo poo.

RE: not surprised
By Inkjammer on 11/7/2008 10:28:50 AM , Rating: 2
I've often wondered how YouTube paid for its bandwidth, even before Google took them over. Ads are one thing, but bandwidth on that scale...

RE: not surprised
By drebo on 11/7/2008 4:31:52 PM , Rating: 2
When you get the traffic to use huge bandwidth, your traffic is such that the advertising companies will pay you enough to support that bandwidth. The cost of advertising is directly proportional to the amount of traffic that hits the page.

RE: not surprised
By omnicronx on 11/7/2008 10:50:37 AM , Rating: 1
Ya I second that, except for the Zune, they have been successfully in pretty much ever sector they have entered.

RE: not surprised
By michael2k on 11/7/2008 1:04:51 PM , Rating: 2
You forgot Live Search (you know, Google's home turf), now at #3 behind Yahoo, YouTube, and even Amazon for search queries?

Or how about the UltimateTV, which they ultimately canceled? Or what about IE, which, like Android, loses them money, but unlike Android, doesn't help them gain dominance in Internet Search or other internet activities?

RE: not surprised
By michael2k on 11/7/2008 12:28:39 PM , Rating: 1
They are profitable, but I don't think they actually know how to MAKE money. They are just riding along on their monopoly... which as dropped 5% in the last 5 years. Slowly, but steadily.

"They (Microsoft) can hire smart guys, hire a lot of people, blah dee blah dee blah, but you know they start out way behind, in a certain sense."
As applied to Live Search, Zune, and the XBox

"I don't really understand their (money making) strategy. Maybe somebody else does. If I went to my shareholder meeting, my analyst meeting, and said, 'hey, we've just launched a new product that has no revenue model!'...I'm not sure that my investors would take that very well. But that's kind of what Microsoft's telling their investors about X."
As applied to Internet Explorer, Hotmail, and Silverlight.

This is the same Ballmer that said “There's no chance that the iPhone is going to get any significant market share. No chance. It's a $500 subsidized 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% or 70% or 80% of them, than I would to have 2% or 3%, which is what Apple might get.”

And now? Apple is now the world's #2 smartphone maker behind Nokia but ahead of both RIM and Microsoft:

RE: not surprised
By YoshoMasaki on 11/7/2008 12:51:46 PM , Rating: 1
Surely you must be joking, sir.

Microsoft Losing Money Roundup:
Windows ME
XBox 360
Windows Mobile
Windows Embedded Devices
MS Business Solutions

RE: not surprised
By blazeoptimus on 11/8/2008 8:53:15 AM , Rating: 2
LOL, you must be joking. Say what you want about Microsoft, but at the end of the day, they exist to make money, and they know that. It's a pretty well-run company from that perspective.

I could say the same for Google. The sarcasm in my comment does not go against what you've said. Every company makes mistakes, including Microsoft. They have made unprofitable decisions, and they will make them again. To say that a company is infallible, as your comment suggests, is unreasonable. If that's not what your saying, then I'm not entirely sure why you made your comment?

RE: not surprised
By robinthakur on 11/10/2008 6:42:06 AM , Rating: 2
I believe he was being sarcastic. Google is clearly using Android in the opposite way to Apple's OSX, by starting at the mobile device level and probably eventually building up to a desktop version. I would say that Google is already the mobile search app of choice for most people, Balmer is a little behind the curve on that one.

I think that even if MS bought Yahoo and rebranded/retooled Live Search to the best of their ability, it would still be a loser for them. They have lost mindshare and billions of dollars trying to compete with and being led by Google and its making them look weak and desperate. Google's whole business, whilst not solely based on ads revenue is far more tightly focused around the internet than MS's old-school workstation based OS's. They do make lots of money, though the mechanism of the way they do that is rarely visible to the public as such. I think its pretty clear that lots of their products like Gmail, Chrome, Mapping and Apps will one day very soon work together to offer a low bandwidth mobile OS. Its like building an OS on an installment basis ;) Android is about popularising that concept with the consumer and showing them another way to work. Microsoft won't and can't do that because they are far more inflexible than Google for many reasons like legacy compatibility, bloat and shareholder demands to name but a few. The entertainment division overall is still heomeraging money even on the rare occasion when MS can claw a few million back on the Xbox side from the billions they've invested in it.

RE: not surprised
By on 11/7/08, Rating: 0
RE: not surprised
By Clauzii on 11/7/2008 11:38:52 AM , Rating: 2
Is he on coke????

He sometimes act like that anyway...

It Begins with Ads...
By Inkjammer on 11/7/2008 10:27:11 AM , Rating: 3
It's all about the text ads.

Google will no doubt integrate every Google App known to man onto their phone (and for free!) integrated with Google Ads. Down the road, perhaps Google will offer premium services for some of their apps with extended functionality and support at a reasonable fee. By putting out the platform completely free they can expand their market and gain a foothold, so when they decide to branch out, they're already established.

Google gains massive market share for free, comes out with product, profits. Not hard to understand. It'd be like if YouTube started offering streaming, rentable movies. They already pull in just a few million people a day. It's not like they don't have a built in target market.

RE: It Begins with Ads...
By Grast on 11/7/2008 11:48:27 AM , Rating: 2

It is hard to understand. No company puts millions of dollars into a product with ZERO ZERO revinue stream being generated by the product. This means that Google shareholders are hoping that at a later date. Google will find a way to make money from all of the Android phones in the market.

In the mean time, Google is losing money every quarter on a product which might never result in profit being generated. That is a big risk to take on.

I am not saying the Google is going to fail. I am just saying the Google has taken on substancial risk with Andriod. If the risk turns to be too great, the stock holders will ask for a change in direction or leave google.

In the end as Balmer pointed out, Google is taking a substantial risk.

RE: It Begins with Ads...
By JediJeb on 11/7/2008 12:08:04 PM , Rating: 2
If the phone makers need an OS and Google is giving it to them for free, then the only money Google is out is the R&D for it. If they make enough off of the adds built into the searchs run on it to recoup that R&D expense, then they have broke even and have not lost anything, even with no actual revenue stream from the OS. If they make some of the money back from adds in searches done by people using phones with a MS OS, then they have made money for their OS off of MS's product, that is even better. I think Google is smart enough to already have an idea how to pay for it all.

RE: It Begins with Ads...
By michael2k on 11/7/2008 12:32:40 PM , Rating: 2
Um... Microsoft does it ALL the time.

Look at IE
Look at SilverLight
Look at Hotmail

In other words, pot+kettle+black

And as for losing revenue every quarter on a product that might never result in profits being generated?
Windows Live Search
XBox (though they finally had three quarters of profits in a row after seven years of losses)

RE: It Begins with Ads...
By Inkjammer on 11/7/2008 2:28:27 PM , Rating: 2
But to be fair, I don't think any of the iPod's competitors really make a lot of money from their devices. Apple sort of cornered that market.

RE: It Begins with Ads...
By Gzus666 on 11/7/2008 2:53:58 PM , Rating: 2
Right, but I thought Microsoft hires the best in the world and no one can touch their innovation and high quality products?

In reality, MS did do a lot of monopolizing on things and when actual competition came in they couldn't buy out, they were in trouble. Now they are learning they have to actually make innovations and quality products again to set themselves apart, rather than just muscling their way in like they did in the past.

RE: It Begins with Ads...
By michael2k on 11/7/2008 3:24:37 PM , Rating: 2
That is only because none of Apple's competitors actually made a better product until far too late.

In other words, Microsoft is starting WAY behind... which is what Ballmer has accused Google of here.

RE: It Begins with Ads...
By kmmatney on 11/7/2008 9:48:09 PM , Rating: 2
The trouble with Zune, IMO, is that for the most part they just copy the specs and price of the iPod. Why don't they put out a 24GB Zune to best the 16GB Nano? With the Zune at the same price and specs as Apple's offerings, there is no compelling reason to buy one.

RE: It Begins with Ads...
By Kary on 11/7/2008 12:12:03 PM , Rating: 2
Google doesn't have to gain market share. To do so would invite more monopoly hearings on Google (see Google/Yahoo deal).

How do you make more money without more market share...increase the size of the market.

They don't even have to force their search on people (<cough> Microsoft <cough>) as people willing turn to Google for most of their searches.

If you can't compete criticize
By othercents on 11/7/2008 10:15:51 AM , Rating: 2
Really is this all this dude does. I think he said the same thing about the iPhone and how it would be a flop and couldn't compete against Microsoft. Just build something better and let your products speak for themselves.


RE: If you can't compete criticize
By Homerboy on 11/7/2008 11:34:32 AM , Rating: 2
what do you expect a competitor to say about another competitor's competing product? "HOLY SH!T Their device/software/widget is amazing!!! Everyone should buy it!!"

RE: If you can't compete criticize
By Gzus666 on 11/7/2008 11:51:38 AM , Rating: 2
I would expect them to put out a better product, you know, compete. They flap their jaws cause they have nothing to compete with it for now. Their new mobile platform was delayed and now Android is the hype for now.

Hopefully they realize this and actually work hard to make a good platform, that way everyone has to keep competing for our business. It is a joke to try to downplay well done products this blatantly. At least try to attack things they do wrong, not how they make their money.

RE: If you can't compete criticize
By Grast on 11/7/2008 12:05:14 PM , Rating: 2
The difference here is the Apple intended the iphone to be a revenue stream. Google on the other hand does not have a sound business model for generating profit from the Andriod. I am not claiming to be an expert. However, Balmer's point about going to the board of directors and stockholders with a plan to spend millions of dollars on a product with out a sound revenue stream included is rather wierd.

RE: If you can't compete criticize
By Gzus666 on 11/7/2008 12:28:40 PM , Rating: 2
Cause Google has done so poorly in the past? They know what they are doing, clearly they know how to make money from services more than yourself.

By michael2k on 11/7/2008 12:37:34 PM , Rating: 2
Google ads.

Android is another input for data mining, like their gmail, picasa, and other free services. The more data Google gets, the better their ad placement program is, and the better their ad placement program is, the more likely a user is likely to click on an ad, and therefore generate profits for Google.

If Google doesn't use Android, then they don't have a platform to deploy their services. Gmail is not the default on the iPhone, Symbian, WinMo, or Palm. Nor is Picasaweb or Chrome. Heck, Google discovered that the iPhone had more searches than all other phones combined, so releasing Android just to increase their search marketshare without being tied to Apple makes sense.

Desktop OS next?
By CyborgTMT on 11/7/2008 2:59:58 PM , Rating: 2
Since Google is a major sponsor of Wine, how long until we see a free, ad supported server based OS capable of running Windows programs? I can't wait to see Ballmer's reaction to that one.

RE: Desktop OS next?
By Gzus666 on 11/7/2008 3:07:57 PM , Rating: 2
I believe Google was quoted to want to have a desktop OS by 2010, but that was a few years ago, before Android really got off the ground. Could be sooner, but I have a feeling if Android takes off like it seems like it will, we will see it rather soon.

RE: Desktop OS next?
By fteoath64 on 11/9/2008 12:07:48 AM , Rating: 2
Android is going to be the DeskTop OS!. It may sound strange but it makes a lot of sense and the Twit people are convinced Android will be the desktop OS as Goog;e evolve it for mobile.

The day when Android runs on iPhone classic hardware will be a serious "wake-up" call for Apple and their draconian controls on iPhone OSX.

RE: Desktop OS next?
By DanoruX on 11/7/2008 8:52:34 PM , Rating: 2
No need for ad-support when there's ReactOS in development.

Memory Loss Setting In?
By kelmon on 11/8/2008 5:35:02 AM , Rating: 3
I don't really understand their (money making) strategy. Maybe somebody else does. If I went to my shareholder meeting, my analyst meeting, and said, 'hey, we've just launched a new product that has no revenue model!'...I'm not sure that my investors would take that very well.

*COUGH* Internet Explorer *COUGH*

By Chipper Smoltz DT on 11/7/2008 11:38:53 AM , Rating: 2
Hey guys, let's just have a "wait and see" response to all of this. Any form of competition would be beneficial to us. What we don't need is a monopoly on everything. What we need are choices and from those we could pick depending on the factors or attributes and characteristics that we value. Let them come up with improved products and services as they try to outdo each other in capturing a significant amount of market share... then we'd surely benefit from all of these in the end... a big "Hell No" to Monopolies!!! (~_~)

By omgwtf8888 on 11/7/2008 2:14:07 PM , Rating: 2
Microsoft is in the same predicament that GM found itself in, a huge company that has gotten complacent. GM was once king and they made great, advanced tech, cars. But complacency and poo pooing japanese cars ended them up where they are today. GM kept shoveling out poo-poo cars just like Microsoft is shoveling out poo-poo operating systemns. The G1 with the android OS is way cool. The only mistake Google made was tieing it to T-Mobile. If they could have landed it with Verizon, I would snatch one up. People are looking for slick, cool, new, and unique. Google and Apple are pursuing that and Microsoft isn't. Windows 7 will be a dusted off version of Vista and honestly, neither is going to be any more useful then XP. As companies feel the fiscal pinch, open source operating systems and office software are going to dominate. Microsoft need to remove its head from its poo hole and start innovating, or we will see another American Icon of success bite the dust.

Just a suggestion...
By riku0116 on 11/7/2008 3:02:04 PM , Rating: 2
Maybe they should start improving their poor excuse for a mobile browser before calling their competition "way behind".

By deputc26 on 11/7/2008 3:16:30 PM , Rating: 2
"I don't really understand their (money making) strategy. Maybe somebody else does. If I went to my shareholder meeting, my analyst meeting, and said, 'hey, we've just launched a new product that has no revenue model!'...I'm not sure that my investors would take that very well. But that's kind of what Google's telling their investors about Android."

This is hilarious cause Ballmer is being honest, He truely doesn't understand. The most successful companies aren't the ones with the most analytical all-controlling money-is-king business model but the one's that truely have vision behind all those things mentioned above. MS started that way but has decayed into something that must answer to a dried up board and cynical investors long ago.

This is just a marketing statement
By randomly on 11/7/2008 10:16:02 PM , Rating: 2
This is just like his statement "There is not chance Apple will sell significant numbers of iPhones, No chance."

Like virtually all his statements these are for marketing purposes to further Microsoft position. Whether they are true or not is irrelevant. The objective is propaganda.

To take them at face value is just gullibility.

By codeThug on 11/8/2008 12:58:47 AM , Rating: 2
L. Ron Ballmer is THE Android.

By fibreoptik on 11/11/2008 10:36:49 AM , Rating: 2
And Ballmer is financially unsound for Microsoft.

What's his point? Maybe he should just take a seat and shut his corn hole for a bit.

"If you look at the last five years, if you look at what major innovations have occurred in computing technology, every single one of them came from AMD. Not a single innovation came from Intel." -- AMD CEO Hector Ruiz in 2007
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