Microsoft's Ballmer hints at hardware future

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Microsoft's Surface tablets are more than just an experiment. They're the first sign of a radical pivot for Microsoft, away from software licensing and toward one big ecosystem of hardware and services.

In an annual letter to shareholders, Microsoft CEO Steve Ballmer hinted at major changes for the company, saying that there is a “fundamental shift underway in our business and the areas of technology that we believe will drive the greatest opportunity in the future.”

The company now sees itself as a provider of devices and services, not merely a software company as its name suggests. “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,” Ballmer said.

Ballmer didn't say it, but this strategy is a clear nod to Apple, which has found success by controlling the hardware, software and services for its Mac and iOS products.

Microsoft Surface

Microsoft isn't giving up on software licensing. Ballmer said there's no way that one size fits all for the 1.3 billion Windows users worldwide, so Microsoft will continue to work with its hardware partners on Windows PCs, tablets and phones. But, he said, 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.”

That statement suggests that more hardware is coming, although Ballmer didn't elaborate. There have been rumors of a Microsoft-made Windows Phone, and Microsoft's own job ads have suggested that next-generation Surface tablets are already in development.

Hardware isn't the only piece of the puzzle for Microsoft. The company is also focusing on services that tie all of its devices together. Ballmer pointed to examples like its upcoming Xbox Music and Video services, SmartGlass app, SkyDrive cloud storage, and Office 365 subscription service.

Over time, Ballmer said, Microsoft wants to establish “one platform, Windows, across the PC, tablet, phone, server and cloud to drive a thriving ecosystem of developers, unify the cross-device user experience, and increase agility when bringing new advancements to market.”

In a way, these changes have been a long time coming. Microsoft has talked about the idea of a unified ecosystem for at least a year, and it's all starting to come together with Windows 8 and Windows Phone 8. The most striking part of Ballmer's letter is his commitment to having Microsoft build its own hardware when other device makers can't build what the company has in mind. It's already happened once with Surface, and it's sure to happen many more times down the road. You're witnessing the birth of a very different Microsoft.

This story, "Microsoft's Ballmer hints at hardware future" was originally published by TechHive.

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