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Ballmer: Hardware Key To Microsoft's Future

Facing tablet pressure, Microsoft CEO tells shareholders that company needs to bring hardware and software together to speed up innovation.

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Surface may be just the beginning. Microsoft CEO Steve Ballmer told investors at the company's annual shareholder meeting that pressure to innovate and get new products to market faster means Microsoft will need to produce more of its own hardware going forward.

Responding to a shareholder who questioned why the company has fallen so far behind in the tablet market, despite the fact that chairman Bill Gates, present but silent throughout the Q&A session, showed off a tablet prototype more than a decade ago, Ballmer said Microsoft may have been too reliant on external hardware makers to develop the product.

"Bill did hold up a tablet a number of years ago," Ballmer said. "And, not that we don't have good hardware partners, but sometimes getting the innovation right across the seam of hardware and software is difficult unless you do both of them," Ballmer said at the meeting, held Wednesday in Bellevue, Wash.

Referring to the company's new strategy of building its own Windows 8 tablets under the Surface brand, Ballmer said "maybe we should have done that earlier, maybe [Gates'] tablet would have shipped sooner."

Ballmer then left little doubt that Microsoft is no longer content to be solely reliant on third-party PC manufacturers for its success. "What we've said to ourselves now is that there is no boundary between hardware and software that we will let build up as a kind of innovation barrier."

[ Windows 8 early sales numbers are weak. Should Microsoft pull a Coke and introduce Windows Classic? ]

Ballmer's comments are sure to add fuel to rumors that the company's next hardware product will be a self-branded smartphone. Digitimes, an overseas publication that tracks Asian component manufacturers, this week published a report that said Microsoft has contracted with iPhone-maker Foxconn to produce a smartphone. Microsoft has not commented on the report.

Another sign that Microsoft is looking to become a major player in hardware is that it's looking to hire individuals with experience in hardware manufacturing and supply-chain management. On Thursday, the Microsoft Careers Twitter feed carried a tweet saying, "At @Microsoft, we're more than just software. Come show us your Hardware Engineering talents." It included a link to Microsoft's hardware engineering jobs page, which listed numerous open positions.

Microsoft's hardware designs could bring it into conflict with PC OEMs, on which it still depends for the bulk of its Windows revenues. Lingxian Lang, China operations manager for Acer, recently said publicly that Redmond's plan to compete with partners would ultimately see it eating "hard rice."

Meanwhile, Microsoft has revealed more details about Surface Pro, the version of Surface that will run full-blown Windows 8 Professional and legacy Windows applications. The notebook-tablet hybrid will hit stores in January, starting at $899 for the 64-GB version and $999 for the 128-GB version.

Microsoft released Surface RT, which runs a pared-down version of Windows 8 called Windows RT, on Oct. 26. Surface RT runs an ARM-based Nvidia Tegra 3 chip that promises low power consumption and long battery life, but it will run only pre-installed Microsoft software and apps downloaded from the Windows Store. Surface RT starts at $499.

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Greg MacSweeney
Greg MacSweeney,
User Rank: Apprentice
12/3/2012 | 2:17:45 PM
re: Ballmer: Hardware Key To Microsoft's Future
"Microsoft CEO tells shareholders that company needs to bring hardware and software together to speed up innovation."

And MSFT is just realizing this in 2012? wow.
User Rank: Ninja
12/1/2012 | 8:26:40 PM
re: Ballmer: Hardware Key To Microsoft's Future
Actually, firing Ballmer is the key to Microsoft's future!
User Rank: Apprentice
11/30/2012 | 9:18:40 PM
re: Ballmer: Hardware Key To Microsoft's Future
Maybe. But this battle is far from over, and Microsoft has the resources, experience and now the necessity to get this right. I believe that they're getting quite a bit right already. I believe THEY believe they are the challenger, even though they still dominate the desktop (a great point of leverage). And I don't really care if they "get it" late, as long as they get it at all (and as long as they don't get it too late). I'm not about to give up my Apple & Google ecosystems (which I currently live in comfortably), but it's now fathomable that one day I might.
User Rank: Ninja
11/30/2012 | 7:03:58 PM
re: Ballmer: Hardware Key To Microsoft's Future
I actually see this as good news, as OEMs now have that much less reason to be loyal to MS. We might end up seeing more naked machines and Linux preloads on the market
User Rank: Apprentice
11/30/2012 | 5:49:09 PM
re: Ballmer: Hardware Key To Microsoft's Future
Blaming your partners for being late to the market is lame. Vendor partnerships, channel partners and retail outlets can get products in front of more customers, faster than any single company. Microsoft was the one unwilling to let go of the past to embrace the new computing models.
User Rank: Apprentice
11/30/2012 | 3:42:04 PM
re: Ballmer: Hardware Key To Microsoft's Future
Ballmer: We need to become Apple to get it right. Then we can share with our partners like Google. We totally dominate.
User Rank: Apprentice
11/30/2012 | 3:33:36 PM
re: Ballmer: Hardware Key To Microsoft's Future
Microsoft's problem as of late seems to be that they're simply not in touch with what the consumer wants. It's true that they showed off a tablet computer years before Apple even started on the iPad, but Microsoft's tablet was just Desktop Windows operated with a pen.

Apple came along and showed that a simplified UI operated by touch is superior on a tablet form factor, and Microsoft's response has been to demote the desktop UI and force a simplified touch based UI on Windows as a whole, despite no one asking for anything of the sort.

They deserve credit for an original approach to a phone UI, but different doesn't always equal better. Live tiles are a nice idea, but what's the point if they show so little information that one needs to launch the full app to accomplish anything anyway? How are they superior to a simple icon, and even more so, how are they superior to widgets like on Android, which can provide most of the functionality of the app right on a home screen? The simple answer is that they're not. Not only is there simply nothing compelling about the Windows Phone platform beyond the live tile UI, but this very UI has been replicated on Android in a simple launcher replacement.

And yet, all the while, Microsoft is boastful about how superior all it's products are and how no one else is building what consumers want. The irony is inescapable when compared to sales numbers of respective products.

It all seems a pretty clear example of the dangers of listening to only those telling you what you want to hear.
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