Ballmer says Microsoft is now a "devices and services company"

With Windows 8 now two and a half weeks away from its launch, Microsoft is prepping its shareholders for what sounds like a fundamental change in the company's businesses.

The company launched its annual report for its current fiscal year today and part of that report was Microsoft CEO Steve Ballmer's annual letter to the company's shareholders. In the letter Ballmer wrote:

Last year in this letter I said that 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. 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.

Ballmer added Microsoft will still work with a variety of hardware companies to create PCs, tablets and smartphones that will run Microsoft-created software such as Windows 8, Windows RT and Windows Phone. However, it will also continue to launch specific hardware on its own such as its Xbox game console and the Surface tablet.

The launch of Windows 8 will be crucial to Microsoft's goal of becoming an all encompassing devices and services company, linking a number of hardware and software products together. In his letter, Ballmer said:

Windows 8 unites the light, thin and fun aspects of a tablet with the power of a PC. It's beautiful, it's functional, and it's perfect for both personal and professional use. Xbox Music, Video, Games and SmartGlass apps make it possible to select a movie from a PC, start playing it on the TV, and finish watching it on a phone. SkyDrive, our cloud storage solution, effortlessly connects content across a user's devices. Bing's powerful search technologies in Windows 8 will help customers get more done. Skype has a beautiful new Windows 8 app and connects directly into the new Office.

The letter also mentioned the upcoming launch of the new version of Microsoft Office as well as Microsoft's many services for business users such as Microsoft Dynamics, Exchange, SharePoint, Lync, and more.

For the future, Ballmer wrote that Microsoft will continue to develop "new form factors that have increasingly natural ways to use them including touch, gestures and speech" along with increasing their efforts in cloud-based services, and having its Windows platform be available on as many hardware and software platforms as possible to "unify the cross-device user experience"

Source: Microsoft Annual Report | Image via Microsoft

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12 Comments

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This has the potential of either being a very good thing or going very bad for MS.

1) They start working with hardware developers and start controlling pricing on their devices and they are then hit with some Antitrust complaints
2) The continue down the consumer path and they leave their core business, the enterprise, in the crapper.

If they keep dumbing down the OS and keep pushing towards this new consumer friendly 'cartoonish' styling enterprise customers are going to look for something else. How many offices out there want their users to use something like W8? I'm guessing almost none! Just like the ribbon menus we are seeing with Office. Most people I talk to in the office environments hate them

Richeemxx said,
If they keep dumbing down the OS and keep pushing towards this new consumer friendly 'cartoonish' styling enterprise customers are going to look for something else. How many offices out there want their users to use something like W8? I'm guessing almost none! Just like the ribbon menus we are seeing with Office. Most people I talk to in the office environments hate them

God forbid that offices are anything other than colorless, lifeless hellholes.

Richeemxx said,

2) The continue down the consumer path and they leave their core business, the enterprise, in the crapper.

Yeah cuz MS will leave their most profitable part of the company behind...

Windows as a business tool isn't going anywhere...

[quote=...styling enterprise customers are going to look for something else.[/quote]
Yeah, what are they going to move to? Chrome OS? Linux? OS X? lol
Most enterprises move along with Microsoft. They're too locked in and to be honest, there's no other company that does enterprise better than Microsoft.
Windows 8 is a new phase and I can tell you that most enterprises will eventually move into it even if they do not want to.

Richeemxx said,
If they keep dumbing down the OS and keep pushing towards this new consumer friendly 'cartoonish' styling enterprise customers are going to look for something else.

Yeah, what are they going to move to? Chrome OS? Linux? OS X? lol
Most enterprises move along with Microsoft. They're too locked in and to be honest, there's no other company that does enterprise better than Microsoft.
Windows 8 is a new phase and I can tell you that most enterprises will eventually move into it even if they do not want to.

Pam14160 said,
It would appear that MS is taking a page out of Apple's playbook. Just might work.

Considering that this was MS intention for Windows XP, I don't see how they are taking the page from Apple. Now changing their focus as a device and service company allows them to focus more on the customer experience and ease of use, which is a good thing for MS and for us. Now as long as they keep the ability for use not to be dependent on them as a full time service company I am all good.

This is a little bit disingenuous. Hardware is never going to be a major portion of their profitability. They are really a platform and services company. A devices and services company suggests an exclusive platform with devices like Zune/Kin/Xbox. But Microsoft is only developing devices for platforms that they share with OEMs. So their main goal is to create a successful platform rather than a profitable device like Apple or Nintendo. Surface is just there to "prime the pump" not to dominate the market.

Pam14160 said,
It would appear that MS is taking a page out of Apple's playbook. Just might work.

Well Apple isn't much of a services company. Their presence on the web and in corporate America is pathetic. Also their Ping and MobileMe failures and maps fiasco shows how bad their services can be.

Companies like Samsung and Asus are increasingly striving to become service companies as well.

Edited by Avatar Roku, Oct 10 2012, 2:35am :

The benefit of making their own hardware is that it'll be bloatware free, and they can make sure there's a few good models with no nagging hardware problems. Everyone else will have to build to those standards.