Ballmer: iPhone has "momentum," Zune not the future

Relatively new competitors now have the advantage in the smartphone business, Microsoft chief Steve Ballmer said late yesterday to the Financial Times (registration required). Although the executive was well-known for believing in early 2007 that the iPhone wouldn't get market share, he now says that both Apple and BlackBerry creator RIM have "clear market momentum" and that the two are part of an industry likely to survive the poor world economy.

During Microsoft's CES keynote speech, Ballmer was nonetheless confident of Windows Mobile and observed that about 20 million devices using the operating system have sold in the past 12 months, 11 of which sold over a million each. The HTC Touch Diamond is one of these and is known to have managed at least 3 million units in the second half of the year.

The early Microsoft official is nonetheless less confident about the Zune and deemphasizes the importance of the music player hardware and insisting that the industry push is now towards software. Ballmer sees media-only devices like the Zune gradually being phased out and that more generalized hardware like smartphones will dominate the field.

He also supports the formal Microsoft position that there will be no Zune phone and that the brand is most likely to survive as a feature of Windows Mobile rather than in Microsoft-desgned hardware.