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Steve Ballmer: We're a Devices and Services Company
Nerval's Lobster writes "According to Microsoft CEO Steve Ballmer's latest shareholder letter (not exactly a gripping read), Microsoft sees itself as a 'devices and services company.' The subsequent 1,200-odd words hammer that point, mentioning software such as Office and Windows 8 largely in the context of tablets and other hardware — and while Ballmer acknowledges the 'vast ecosystem of partners' building a 'broad spectrum of Windows PCs, tablets and phones,' he leaves the door wide open to Microsoft building its own toys in-house. If one takes Ballmer's words at face value, it seems that Surface, the tablet Microsoft's building in-house and promoting as a 'flagship' Windows 8 device, isn't so much a lark but the harbinger of the company's future direction. Whether Microsoft's decision to build its own devices affects its long-term relationship with Dell, Hewlett-Packard and other manufacturing titans remains to be seen. Perhaps Ballmer can take some comfort from Apple, which profited enormously by pursuing the 'we build everything in-house' route. But it's indisputable that a devices-centric approach is new ground for Microsoft."
Microsoft is a software development and licensing company.
At least that's where all the money comes from. The Devices and Services aspects are huge money losing hobbies they've started.
I hope this means the end is near.
Mod me down, my New Earth Global Warmingist friends!
It's not going to be a smooth ride. Microsoft will have to keep an eye on software updates to existing products as it attempts to shift it's position
Other than Xbox MS is largely unproven on the devices front. Surface could be a winner like Xbox or it could be a complete disaster like the Kin.
Windows 8 OS will either be a success or annoy users completely. It seems there's little to no middle ground. If you're gonna have to learn a new OS why does it have to windows?.
They're probably gonna piss off some OEMs as well. In the short term if they're lucky, long term if they're not.
Ballmer's track record is not great. Ballmer completely missed the way things were going with mobile and search. Sure, MS now has competitive products and services (some yet to launched (Surface), some not finished (updates to Windows after it was RTM)), but its behind Google on search and mobile. MS never misses and opportunity to miss an opportunity.
Now we're supposed to believe that Ballmer knows devices and services as well? They're at least three years behind Apple and Google. If they had been on the ball they could have predicted trends and even set trends, they could have had huge profits like apple and market share like google. There's only one reason they haven't. Ballmer.
Even the board knows it, this years bonus for him was 9% less than last year. That's three years in the trot he hasn't made his maximum bonus. Some of that is due to the economy, some of it is because he's simply missed opportunities to create or expand markets.
Watch those corners
Microsoft's mice and keyboards have always been really good - or a better way to put that would be - the old ones I bought years ago are really good. Still using them! I don't know about modern ones. My point? I like their peripherals so there is a chance the tech they make will be good. Software ... another matter.
Microsoft seemed to be heading in this direction, with Microsoft keyboards and mice on the shelves and rumors of a "Microsoft PC," when they were rudely interrupted by the anti-trust suit (which lore attributes to federal judges really detesting IE4).
Now they have resumed this path.
It might work for Apple; will it work for Microsoft? Possibly, especially if their model is licensing their OS and software as a precursor to hooking us up with smart homes and persistent, cloud-based data (or buzzwords of the day).
The signal here is that Microsoft may no longer see the OS as a huge moneymaker, as people shift away from PCs to tablets and the like, and they may also have doubts that people outside business will keep buying Office and other software. I'm skeptical on this; I don't think tablets will replace PCs or that people will stop buying software (usually for the support contracts).
One thing that history seems to make clear: the bigger a company is, the more likely it is that it will become unresponsive to market forces, and drop like Goliath with a head wound.
I don't see Microsoft dying off quite yet. They still rake in an obscene amount of money from the enterprise half of the tech world, and that's where all the money is. After all, what's $50/seat for a consumer OS license when they're raking in $5,000 or more for each Enterprise-tagged SKU?
I can however see them losing the consumer side, and hard. That in turn will start creeping into the Enterprise side of things - first as a trickle (iPhones at work, anyone?) then as a flood.
It'll take about 10 years, but by then I think that unless Microsoft does something drastic and effective, they will be reduced to selling Exchange servers/services/licenses, and that's about it (unless GMail takes over even that...)
Quo usque tandem abutere, Nimbus, patientia nostra?
Microsoft is a monopolistic public utility that sells Windows and Office the way Consolidated Edison sells electricity. Everybody buys it, but nobody particularly likes it.
IBM is not a technology company; it's a multilevel sales organization.
Apple is not a hardware company; it's a software company that bundles its software with large, sleek, phone-shaped license-enforcement dongles.
Google is not an Internet services company; it's an advertising and market research company. So is Facebook.
HP is a printer ink company that's desperately trying to be something else. Anything else.
Oracle is not actually a company; it's actually a newly discovered type of supermassive singularity with a gravitational pull that only affects corporate accounts.
Not everything they choose to do is successful so suddenly they're not a successful company? What kind of logic is that?
My reading of this thread suggests that the GP's logic is more that Ballmer has zeroed in on an area where Microsoft has made considerably less money, and has lost considerably more money, than in the company's core business of software.
From the things I've read as a casual follower of MS's progress, the Zune lost a ton of money, Windows Phone hasn't done all that well (the Kin vanished after months of hype, for instance), and I don't think the XBox has broken even when viewed over the whole history of the console rather than just in any one fiscal year.
Meanwhile, the Windows OS and Microsoft Office software businesses have been moneymakers for decades now.
So the logic appears to be not that "some of Microsoft's operations aren't successful, ergo the company as a whole is unsuccessful" -- instead, it's that "Microsoft is focusing more and more on its lossmaking operations, ergo the company as a whole will be increasingly unsuccessful."
Considering that this move directly threatens partners such as HP and Dell, we could wind up seeing more support from such companies for Linux as they seek to hedge their bets against Microsoft's incursion into the hardware market. I think the software and computer industry could be on the verge of becoming much more interesting.
Cheers,
"What in the name of Fats Waller is that?"
"A four-foot prune."