Capacitive touch is not affordable for Microsoft

Microsoft CEO Steve Ballmer has been talking with Stephen Adler from BusinessWeek, and All Things Digital’s Peter Kafka was a fly on the wall for the event. He paraphrased the chat, which we have below and has answered the big capacitive screen question and a few others. What he has to say is rather surprising and not the answer I wanted to hear, quality and usability should be the driving force not cheap products.

Stephen Adler: Do you care about “touch” on phones? The blogs say you are.

Steve Balmer: Windows Mobile 6.5 has touch on it. The way Apple does touch drives cost. The way they do it on the iPhone is not an inexpensive component. We’ll do it in a way that you can afford to do it on most phones.

Steve Balmer: Smartphones will go from 10% to 70 or 80% of market next few years. So what will people want? Good experience built in, w/out downloading stuff. You want good price range. iPhone is very expensive phone, without a keyboard. Some people can’t afford them. Sweet spot is phones that cost $150 to $200 to make — forget retail price. iPhone is about $500. We want to provide vendors with ability to make Windows phones up and down the price scale.

Unless you assume Apple and BlackBerry are going to sell the lion’s share of most phones, which I don’t, I think the play for us is to provide broad innovation at many price points.

A $500 phone is not going to work for everybody in every market. The most popular phones in China and India cost about $25 to build. We can’t get our software on that.

via All Things Digital and WMExperts