Why Steve Ballmer ‘drifted apart’ from Bill Gates

Differences over the smartphone and tablet business strained his relationship with Bill Gates, Microsoft's former CEO Steve Ballmer recounted in an interview to Bloomberg this week.

If he could do it all again, Ballmer said he would have entered the mobile device market even earlier. When he finally did, Microsoft co-founder Gates and other members of the board disagreed, he said.

Ballmer, now owner of the NBA's Los Angeles Clippers, revealed that "there was a fundamental disagreement" about his decision to push Microsoft into the hardware business and that he "drifted apart" from Gates partly due to a disagreement over whether Microsoft should make its own handsets and tablets.

"I had pushed Surface. The board had been a little -- little reluctant in supporting it. And then things came to a climax around what to do about the phone business," he said noting that it was a mistake to get into handsets and tablets too late.

Microsoft entered the market in 2012 with the Surface RT, a tablet that sold poorly and required Microsoft to take a $900 million charge to write down the value of inventory. Now, the rejigged Surface business is profitable and generated more than $4 billion in sales for the most recent year, Bloomberg reported.

"I would have moved into the hardware business faster," he said.

Responding to the famous quote where he said iPhones would never sell because it cost too much, Ballmer said,"You know, people like to point to this quote where I said iPhones will never sell, because the price at $600 or $700 was too high. And there was business model innovation by Apple to get it essentially built into the monthly cell phone bill."