[ktRolster]

This quote tho:

"I wish I'd thought about the model of subsidizing phones through the operators," he said. "You know, people like to point to this quote where I said iPhones will never sell, because the price at $600 or $700 was too high. And there was business model innovation by Apple to get it essentially built into the monthly cell phone bill."

Apparently he didn't realize cell phone companies had been doing that for nearly a decade before the iPhone.

[elorant]

I can understand why he didn't realize that. He's a super rich individual and chances are he doesn't personally pay his bills. What I find shocking is that no one in the chain of command bothered to mentioned to him that you know we could subsidize the price. Which tells me that something in high management around that era should be quite rotten.

[sqeaky]

I have a taken a new job every year or two for the past 10 years. Every place I go is ignoring best practices and mired in their tiny problems as though they were unsolvable. These problems would all simply evaporate if not for their incest of thought.

This behavior that you find shocking, I find completely normal and predictable.

[sbuttgereit]

I do business systems consulting and I cannot tell you how true this is... not only are they mired in their tiny problems, sometimes they jealously guard them as well.

I think the most common kind of manager-think is some sort of dedication to appear being conservative in judgments; this can be true for any low level supervisor through to the topmost levels of management. This results in two behaviors: 1) you don't go out on limbs and you work to minimize all risk rather than take well-considered risks; and 2) the problems you deal with daily are "safe problems" that everyone from the board to the employees have accepted as facts of life and their existence is unlikely to get you fired or put you in a bad light.... even if it ought. So you don't solve your problems because the solutions may bring unknown problems of their own. Taking risks, and failing occasionally, is simply seen as failure and successes aren't remembered as long as failures (we remember bad news better than good news)... and any new thinking or new action is seen as risk.

[drspacemonkey]

>not only are they mired in their tiny problems, sometimes they jealously guard them as well.

My current position is very much like this. They spent months digging themselves into their current hole. Any attempt to replace their shovels with ladders turns into an argument over how long they spent making their shovels.

[Lordarminius]

upvoted partly for the observation (which I can relate to), but mostly for introducing me to a new phrase "incest of thought"

[reacweb]

I think Ballmer is very smart and logical. It is completely crazy to spend so much money to buy a phone even if it doubles as a bad computer. I know many people do it, but IMHO it remains crazy and illogical. How do convince your boss that people will spend so much money in illogical way ?

[gumby]

> I think Ballmer is very smart and logical. It is completely crazy to spend so much money to buy a phone even if it doubles as a bad computer. I know many people do it, but IMHO it remains crazy and illogical.

It's illogical for your use case. But most people use their phone to read web pages, send messages, pay their bills, and FB/SC/etc. They don't need a non-"bad" computer. Plus they don't want to go to the computer; with this one they have it with them all the time.

So it's not illogical for them.

My use case is closer to yours (though I have a smart phone as well) but I recognize that other people have different motivations. Even when I don't quite understand them!

[blacksmith_tb]

Conspicuous consumption of all sorts of luxury goods? Who would pay $5000 USD for a Rolex when a $20 Casio tells time more accurately?

[reacweb]

For Rolex, the idea is to be part of the small elite that can afford it. But how do you explain that so many people spend so much money for a recent iphone when a 10$ phone works better for phone calls (more autonomy, stronger, better fit in hand).

[nodamage]

Probably because most people don't use their phones to make phone calls anymore, so other use cases are more important to them? Messaging, Facebook, etc.

[throwawaykf07]

Of course he knew carriers subsidized phones. In fact he called it out in his infamous statement dismissing the iPhone. Here's the exact quote (emphasis mine)

"There's no chance that the iPhone is going to get any significant market share. No chance. It's a $500 subsidized item."

The iPhone was too expensive even when subsidized. I've said this before and will say it again: Jobs' real genius, besides making a smartphone that actually fun to use, was getting carriers to subsidize it to below $200 (up front, of course; they made it up on the mandatory data plans). Turned out that is the price point that people will actually consider buying a smartphone for personal use, and it created a whole new market which had not really existed previously: the consumer smartphone market.

[vlad]

1) You had to pay full price and sign up for a two year contract with AT&T when the iPhone first came out.

2) Another fact that supports Ballmer's point that the phones were too expensive is that Apple dropped the price by several hundred dollars a few months after launching it.

So, yes, there were two year contracts, but no smartphone was $0 down or close to it at the time.

[djrogers]

You could get a Blackberry for $99/$199 on contract at the time, and BB was the dominant smartphone manufacturer of the day. It was obvious to most that the model you outline in #1 could change at any time, and most people figured it had to change...

[marrs]

I wouldn't be surprised if Apple themselves didn't think of it until after they had resolved to manufacture and sell a smartphone. Once you are determined to do something, the act of doing it combined with motivation enables you to identify and solve problems.

[cma]

And it was subsidized on top of the $600 price. I'm sure many of the high-end Windows phones were subsidized too.

[selectodude]

The first iPhone was actually being sold unsubsidized. That's why you could pop in and buy one from the Apple Store in cash. It was one of Apple's concessions to AT&T. iPhone 3G was subsidized and sold for $200.

[altano]

Define subsidized. You had to get a two year contract. You couldn't walk into the Apple Store and buy an unlocked iPhone.

AT&T may not have been handing Apple cash as part of the deal, but the contract made it more expensive than the price of the phone.