Microsoft CEO Steve Ballmer has seen the future of the software giant he leads, and it doesn’t involve software at all—at least, not in a traditional sense. No, Ballmer says Microsoft’s future is in devices and services.
Put cynically, Microsoft is apparently copying Apple again. But this letter only formalizes a transition the company has been making for years. And unlike Apple, Microsoft will continue to partner with hardware companies more often than making its own devices. As with its core new product, Windows 8, Microsoft is in that way a hybrid, one that serves a more diverse audience than does Apple.
“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,” Mr. Ballmer writes in a letter to shareholders, customers, partners, and employees. “This is a significant shift, both in what we do and how we see ourselves—as a devices and services company. 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.”
Microsoft had previously and subtly suggested this move when it changed the header on its website home page, which has identified itself as “Microsoft | Devices and Services” for a few weeks now.
This shift, from a maker of traditional software platforms to a firm that delivers devices and services, is not subtle in some ways. Yes, Microsoft will continue to make “software” and platforms that drive the sale of “devices,” as it has done for years with Windows, Windows Server, and Office. But increasingly, its software will be delivered only as services. And unlike in the past, the company will be making more devices itself, rather than relying on partners that often muck up the user experience and evaporate Microsoft’s carefully cultivated brands. In this way, yes, Microsoft is becoming more like Apple.
Ballmer claims that Microsoft will continue to work with partners as it has in the past, because “there is no way one size suits over 1.3 billion Windows users around the world.” But one has to wonder whether that situation is evolving, and whether its success with an increasing portfolio of hardware devices will eventually put its partnering efforts in the background.
Not yet, Ballmer says.
“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 explained. “We will focus relentlessly on delivering delightful, seamless experiences across hardware, software, and services.”
Some have claimed that this letter hints that Microsoft will build its own Windows Phone handset, as has been widely rumored in recent weeks, despite an inspirational new generation of Windows Phone 8 hardware coming from partners HTC, Nokia, and Samsung. No such hint exists in this letter. In fact, Ballmer simply reiterates that the firm will continue to develop “great new Windows devices” with its partners.
“It truly is a new era at Microsoft—an era of incredible opportunity for us, for the 8 million developers building apps for our devices, for the more than 640,000 partners worldwide and, most important, for the people and businesses using our products to reach their full potential,” Ballmer notes.
I’ve been warning of this shift at the software giant for several months, and as recently as yesterday I published an editorial—"Windows 8, Metro, and Mobile Apps"—in which I tried to explain, again, how the biggest innovations in a recent Microsoft product bear little relation to its past. Similar changes are coming in Office 2013, which will be primarily delivered as a service, unlike previous versions.