Preston Gralla

Steve Ballmer admits Microsoft is "number five" in the mobile race

June 03, 2010 3:00 PM EDT
Microsoft CEO Steve Ballmer appears to know full well just how far behind his company is in the mobile market. At the All Things Digital D8 conference this morning, he admitted that Microsoft is number 5 in the mobile race, with a long way to go to catch the leaders.

Ballmer and Microsoft Chief Software Architect Ray Ozzie were interviewed onstage by Wall Street columnist Walt Mossberg. At one point the wide-ranging interview, Mossberg asked Ballmer about Microsoft's current state of mobile development.

Microsoft has recently shaken up its Windows Phone 7 team, with Robbie Bach, president of Microsoft Entertainment and Devices division, retiring, and no one replacing him. That means Ballmer is now in direct control of Windows Phone 7, clearly a sign that he recognizes something is amiss.

But Ballmer at first refused to admit Bach was gone because of problems with Windows Phone 7, saying, according to the All Things Digital blog:

"We had a good longtime employee who wanted to retire and he's going to do so. And it doesn't make sense to replace him."
Ballmer then makes this admission about Microsoft and mobile:
"We were ahead of this game and now we find ourselves No. 5 in the market...We missed a whole cycle. I've been quite public about the fact that I've made some changes in leadership around our Windows Phone software."
Ballmer is certainly right that Windows is far behind competitors, notably the surging Android OS. As to Microsoft at one time being "ahead of this game," I certainly can't recall a time when that was true.

And notice that he now admits that he made changes to the Windows Phone 7 leadership, even though moments previously he said that Bach retired simply because he wanted to.

I'm not sure that Microsoft will be able to compete effectively in mobile. Android shows signs of becoming the dominant smartphone OS, and Apple won't be going away any time soon, either. Microsoft may be able to move up a notch or two from number 5, but I can't see it heading all the way to the top.