Apple's recently debuted iPhone is pricey and doesn't appeal to business customers, Microsoft CEO Steve Ballmer tells CNBC.
Asked for his first impression of the wireless, touchscreen-controlled gadget that Apple introduced this month, Ballmer focused on the phone's $500 price tag.
"Five hundred dollars? Fully subsidized with a plan?" Ballmer told CNBC's Scott Wapner. "That is the most expensive phone in the world. And it doesn't appeal to business customers because it doesn't have a keyboard, which makes it not a very good e-mail machine."
Microsoft's Zune music player, the company's competitor to Apple's iPod digital media device, has been the target of criticism in recent months. Microsoft also had to overcome repeated delays before finally releasing its new Vista operating system. But Microsoft shares have experienced a stealth rally over the last six months, advancing almost 50% from just more than $22 in the middle of July to better than $31 in recent trading.
Ballmer spoke at Rockefeller Center in New York to discuss a joint venture between Microsoft and Nortel under which the companies are introducing a raft of products and services aimed at delivering business communications over software and Internet networks.
Nortel, the biggest maker of telephone equipment in North America, and software giant Microsoft said their partnership has yielded "dozens" of customer deals thus far, with hundreds more in the works.
The two companies first announced their alliance, aimed at running business phone systems on software platforms, in July.
Nortel said it would reap about $1 billion in new revenue over the life of the four-year agreement.
"We are executing forcefully on the vision of this alliance and have made tremendous progress," Nortel chief executive Mike Zafirovski said in a statement. "We completed the planning stages and are now delivering unified communications solutions to businesses around the world."
The two are working on integrating business communications such as e-mail, phone and instant messaging on Internet networks. They say their technology will improve productivity and reduce costs to their customers.
Microsoft and Nortel also said Royal Dutch Shell is among the customers that plan to move their networks onto a software-based communications system they are building.
On Wednesday, they announced 11 new services and three new products co-developed as part of their alliance. The two companies also announced the opening of more than 20 showrooms for their technologies around the world and plan to add about 100 more by the middle of the year.