Microsoft is on the verge of a major change. The traditional software company is now focusing more on hardware and online services.
In a letter to shareholders, Microsoft’s CEO, Steve Ballmer, reviews the current strengths of the company and draws the challenges of the future with “excitement and enthusiasm.” Microsoft is ready to return to bet on its entry into the mobile sector as a manufacturer of smartphones. Despite its disastrous experience with Kim smartphones in 2010, the company has shown its intention to launch a new phone through its CEO.
“Over time, the full value of our software will be seen and felt in how people use devices and services at work and in their personal lives. This is a significant shift, both in what we do and how we see ourselves — as a devices and services company,” he said.
“It impacts how we run the company, how we develop new experiences, and how we take products to market for both consumers and businesses. The work we have accomplished in the past year and the roadmap in front of us brings this to life.”
Own Hardware
The annual letter to shareholders by Ballmer has served to confirm the interest of the company to launch its own smartphone. The company has seen great results with Xbox, which looks great, and it is willing to bet heavily on the launch of new hardware devices.
The next to hit the market is the Surface tablet. With it, the Redmond company is seeking to enter a market by taking its first steps since Apple launched iPad back in April 2010. The development of Windows 8 operating system will complete the bet of Microsoft in this sector.
Obviously, Microsoft does not get completely off on the old policy. The letter emphasizes Ballmer regular role of hardware partners, but also states: “There will be times when we have specific devices for specific purposes. … just like we did with the Xbox and Surface.”
“There will be times when we build specific devices for specific purposes, as we have chosen to do with Xbox and the recently announced Microsoft Surface,” Ballmer wrote. “In all our work with partners and on our own devices, we will focus relentlessly on delivering delightful, seamless experiences across hardware, software and services. This means as we, with our partners, develop new Windows devices, we’ll build in services people want.”
“We will continue to work with a vast ecosystem of partners to deliver a broad spectrum of Windows PCs, tablets and phones,” he wrote. “We do this because our customers want great choices, and we believe there is no way one size suits over 1.3 billion Windows users around the world.”
With this step, Microsoft would come to resemble more like Apple, whose wildly successful iPhone and iPad showed that accurate integration of quality software and hardware just works.
Cloud
Ballmer says that the company just continues to work together with hardware partners such as Dell, Samsung and HTC, but he made it equally clear that the role of Microsoft in the so-called ‘ecosystem’ is changing.
The letter mentions Ballmer, who has run the company since 2000, but also the importance of the cloud: “Helping businesses to move to the cloud is one of our greatest opportunities.” With cloud computing, files and programs can be available online, and there would be no more need to store it locally on a PC.
The company already earns money by offering online services, such as access to servers for deploying cloud computing or Web versions of the office suite. Ballmer’s new approach clearly shows that they distance themselves from the traditional business model, that of selling (installed) software.
Microsoft’s plans for the future are ambitious. Elsewhere in the letter, Ballmer says his goal is to unite the various services and devices around a single platform, Windows 8, so as to ensure a unified experience to its audience. The next steps for the company’s innovation investments consist of more gestural controls, voice and touch.