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Ballmer from half a decade ago.

http://www.youtube.com/watch?v=eywi0h_Y5_U

He was laughing at the $500 on-contract iPhone that quickly had its price lowered.

In other words, he was unable to anticipate that Apple would be able reduce the price of the iPhone, like they did with the iPod?

Apple miscalculated the optimal price initially and then changed it a few months later. No, obviously he couldn't anticipate that.

Microsoft squandered their lead in smartphones, you can blame them and Ballmer for that, but the particular video people love to continuously bring up has nothing to do with where MS made mistakes.

I would on the contrary take it as obvious that any CEO of a competing company would take the iPhone as a threat, and anticipate and plan for any possibility, just from having looked at history and seen where Apple went with for instance the iPod.

I think this video very clearly shows how Ballmer managed to not take the iPhone seriously, and that has everything to do with why Microsoft made mistakes and were slow to respond from 2007 onwards. The same thing happened with the iPad as well. From everyting he said, you could see that he regarded them as toys.

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