Ballmer: We're cheaper than Apple! (but not Linux)

Whenever Microsoft starts to look like a company that is ready to play fair with open source, along comes its CEO, Steve Ballmer, to ruin all the goodwill the rest of the company has created.

Linux. It's all about Linux. We've been competing with Linux for a number of years. I want to describe our value proposition. We are a high-volume player. We do not, like Apple, believe in low volume, very high prices. Apple's a great company, does a fine job, but their model says high margin, high quality, high price, that's kinda how they come to market.

We say we want big market share, but with big market share you take the lower price.

Well, along comes Linux, and they say, "we have no price," which of course, we know for IP and other reasons, of course they have a price. But they say "we have no price." The problem you have with these so-called free alternatives is there's also not the incentive to a lot of the hard work to build out the ecosystem to support the hardware vendors that is required.

So a model like ours, which is high volume and high value but low priced but not free. You could say are you guys in the middle ground or are you where you want to be? And I say we're exactly where we want to be.

You can listen to it here:

It's bad enough that Ballmer completely botches his math on Apple's strategy. Maybe he didn't get the memo that Windows-based PC shipments have been declining even as Mac shipments continue to rise, and that even his Pyhrric victory in Netbooks is costing Microsoft money. He also seems to have missed the fact that Apple's iPhone has doubled its market share in the past year even as Windows Mobile stalls.

Ballmer says, in other words, that Macs are about "high quality and low volume," but the market says "high quality and ever increasing volume." But then, Ballmer is usually wrong when he attempts to discredit Apple.

Unfortunately, he's zero for two in his at-bats with this interview, because his attempts to discredit Linux also fall flat. Like it or not, Linux is free. He may not like that fact, but he can download Linux for free from a variety of sources. Here's Ubuntu: try it.

He wouldn't be alone. IDC is seeing a massive uptake in Linux adoption because (surprise, Mr Ballmer!) it's a highly cost-effective solution in bad economic times. U.S. retailer The Gap, for example, just dumped Microsoft Windows for Red Hat Enterprise Linux because of its positive return-on-investment and superior flexibility.

Microsoft may have been able to get Novell to "put a price on Linux" through intellectual property scare tactics, but it hasn't worked for the market leaders, Red Hat and Canonical (Ubuntu). Nor has it worked for the leading hardware and software vendors that depend on Linux, e.g., IBM, Oracle, SAP, etc.

Incidentally, these same vendors make up a significant ecosystem around Linux, the very same ecosystem that Ballmer suggests won't form due to a lack of incentives. Apparently he didn't talk to his closest partner, Intel, which is now the No. 2 contributor to the Linux kernel. I guess he didn't realize that there's a lot of money to be made around Linux, and it's money that doesn't have to be shared with Microsoft.

All of which leaves Microsoft squeezed by high-quality, high-volume strategies being used by Apple and by open-source vendors like Red Hat. It's not a battle he's going to win through soundbites. He's been trying that for years, and the market is waiting for Microsoft to learn to compete again, to build real value and to sell it.

With Windows 7, Microsoft appears to be back in action. This is welcome. Time to let your products speak louder than your hype and FUD, Mr. Ballmer.

Follow me on Twitter @mjasay.