This is an old clip, but in honor of Apple’s iPhone officially passing Windows Mobile market share I thought it was worth pulling back up Steve Ballmer’s original reaction to the announcement of the iPhone.

This may be one of the worst examples of a CEO talking about a serious competitor that I have seen. The mocking laugh and outright disregard, for what anyone with any foresight could see was going to be a serious competitor, is inexcusable. If I were a shareholder of Microsoft, which I am not, I would be outside Ballmer’s office with torch and pitchfork for forfeiting a 9 year head start in the market to Apple because of lack of vision.

Want to avoid sticking your foot in your mouth? Here are some guidelines for positioning against the competition:

• Understand your market. You ought to have an advantage with a given audience relative to your competition. If you don’t you are in big trouble. Hopefully this advantage can extend to a larger audience over time. Whether your advantage is technological, user experience, cost or another advantage make sure you understand that and communicate that.
• Never underestimate your competition. Don’t believe your own marketing that you have the best solution in the market and that your position is safe. Your competition typically is far more capable that your internal team will give them credit for. Talk to customers where you lost deals to them to get a clearer picture.
• Never belittle your competition. This is the one that I can’t believe that CEO Ballmer never learned. You never win when you do this. Essentially you are saying to undecided customers that they are stupid if they are still considering your competition. Is there any better way to drive away some of the key customers you want to capture?
• Let the market belittle your competition. Looking for the best way to ruin your competition’s reputation? Build a kick ass product. With the advent of social media, crappy products can’t stand the light of day. If you build a far superior product than your competition and engage online with your audience your fans will quickly point out your strengths over the competition without you getting dirty.
• Build a case for the importance of your strengths. If you are competing with a strong competitor, be sure to get out there and champion your strengths as a critical component of a good product in your space and make sure that they really are. Blog, write contributed articles, engage analysts and your prospects in this discussion. Make sure people are looking for products with your strengths.

Competitive positioning is never easy. Be honest, be clear, and be respectful and you will be on your way.