Microsoft CEO Steve Ballmer commented on Apple’s upcoming iPhone and Microsoft’s take on mobile in an on-stage interview with David Lieberman in Seattle; the edited transcript is in today’s USAT.

On iPhone and Windows Mobile: “There’s no chance that the iPhone is going to get any significant market share. No chance. It’s a $500 subsidized item. They may make a lot of money. But if you actually take a look at the 1.3 billion phones that get sold, I’d prefer to have our software in 60 percent or 70 percent or 80 percent of them, than I would to have 2 percent or 3 percent, which is what Apple might get.”

No Zune phone: “It’s not a concept you’ll ever get from us. We’re in the Windows Mobile business. We wouldn’t define our phone experience just by music.”