Case Study: Microsoft's Steve Ballmer laughs at iPhone and says Zune can compete with iPod

With rumors increasing that Apple will introduce a tablet computer in the near future, one of my regular sources of tech commentary posted this 2-year-old video of Microsoft CEO Steve Ballmer laughing about the launch of the Apple iPhone and saying how their Zune music player compete with the iPod.

Two years later, the iPhone is a huge success and has much more market share than Microsoft in the smartphone segment. In fact, the iPhone is second only to Research in Motion's Blackberry in overall smartphone market share. Apple has received numerous accolades for the iPhone's game-changing user experience and the seamless App Store that allows user to easily purchase add-on functionality and download it immediately to the phone. The App Store currently has sold over 3 billion apps in 18 months - the rate of sales is increasing - and has a library of tens of thousands of apps.

Similarly, the iPod reigns supreme in portable digital music players and is complemented by the iTunes Music Store, which is the second largest retailer of music - period. The Zune music player and Zune Marketplace are barely a blip on the radar.

I fully recognize that Steve Ballmer isn't going to say Microsoft's products 'suck'. Part of his role is to help market his companies products so of course he should be publicly say they are good. But as CEO of a public company, he probably should have taken a more measured approach in his answers.

The takeaway: Laughing at a strong competitor is usually not a wise move. If you end up being wrong - like Steve Ballmer was - you can look foolish. If you were correct, you can look like a sore winner. Neither scenario builds rapport with customers or boosts credibility.

Ballmer could have taken a more diplomatic tone and said something more along the lines of "We recognize Apple as a strong competitor and industry leader like ourselves. We feel our years of experience in the smartphone industry and strong partnerships will continue to help us deliver great products to our customers and be successful in the industry. Competition is great for everyone and spurs innovation - so we look forward to seeing how Apple does. But I think we're well positioned for the future."

No laughing necessary.