Bill Gates: Cellphone will beat iPod

Microsoft chairman tells German newspaper that Apple's nifty little gizmo can't sustain itself.

May 12, 2005: 11:26 AM EDT


FRANKFURT (Reuters) - Microsoft founder Bill Gates sees mobile phones overtaking MP3s as the top choice of portable music players, and views the raging popularity of Apple's iPod player as unsustainable, he told a German newspaper.

"As good as Apple may be, I don't believe the success of the iPod is sustainable in the long run," he said in an interview published in Thursday's Frankfurter Allgemeine Zeitung.

"You can make parallels with computers: Apple was very strong in this field before, with its Macintosh and its graphics user interface -- like the iPod today -- and then lost its position," Gates said.

Apple (Research) has around two thirds of the global market for MP3 music players, which store thousands of songs on pocket-sized disk drives or smaller flash memory chips, and sold more than 5 million iPods in the last quarter.

But it faces increasing competition not only from the likes of Sony, whose iconic Walkman dominated the personal audio market for two decades, but also from mobile-phone companies integrating MP3 players into handsets.

Partly in response to pressure from Apple, Microsoft (Research) is now positioning itself to be a key player in the growing market for digital movies, pictures and music and grow beyond its core Windows operating system business.

It is working with partners such as Samsung to provide its Windows Mobile smartphone software to 40 handset makers.

"If you were to ask me which mobile device will take top place for listening to music, I'd bet on the mobile phone for sure," Gates told the newspaper.

In the United States, however, Microsoft smartphones have been overshadowed by Research In Motion's BlackBerry wireless e-mail device, which has sold 3 million so far.

Gates said that Microsoft's rival Windows Mobile 5.0 -- which will let e-mails pop up on a user's phone as soon as they arrive, and which is expected to be running phones on the market in the next few months -- would be cheaper.

"The BlackBerry is great but we're bringing a new approach," he said. "With BlackBerry you need to link to a separate server, and that costs extra. With us, the e-mail function will already be part of the server software."

"Therefore I'd venture the prediction that Microsoft will make wireless e-mail ubiquitous."

He admitted, however, that Microsoft had made mistakes in the past, for example with the first version of its XBox games console.

"The consumer is always unpredictable. In principle, you can only throw products onto the market and then learn from your mistakes," he said.

And the 50-year-old Microsoft chairman said he would not remain with the company for ever.

"I think that when someone is 60 years old he should better leave it to someone else to follow trends in technology. But until then there's still a lot to do," he said.