Microsoft has drawn a line in the sand, so to speak, and has told its fans, its shareholders and, perhaps most importantly, its OEM partners, that its business is dramatically shifting to that of a devices and services company.
Though the Xbox and its myriad accessories, as well as various mice and keyboards over the years, indicate to us that Microsoft is fully capable of designing and executing excellent products. But with the Surface tablet, which gets released on October 26th, the company has rededicated itself to making mass-market computing products that put it in direct competition with many of its licensing partners such as Lenovo, Acer and HP.
In a letter to shareholders, Microsoft’s CEO, Steve Ballmer, spoke frankly about the future of the company. “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.” Citing a need to build beautiful hardware to marry with Windows 8 and Microsoft’s upcoming cloud service options, including Office 365 and SkyDrive, there will be plenty of opportunity to see whether Microsoft’s often-disparate and overreaching product ethos can be organically and intelligently unified into a single Windows-branded ecosystem that actually works. Apple has attempted to do this with iOS and OS X, but hasn’t found equilibrium just yet, despite releasing OS X Mountain Lion as a bridge between the two worlds.
Ballmer cites 1.3 billion Windows users across the world, though many of them are using PCs running Windows XP. The big test will be whether Microsoft can turn those legacy users — of which it wants to rid themselves of the support costs — into Windows 8 users, running the OS on smaller, lighter hybrid PCs or slates. The Surface tablet, in its RT or Pro form, will see Microsoft creating both the hardware and the software of a PC for the first time in its history.
He ends the letter by thinking of the future, and thinking big: “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.”
Read the full shareholder letter at Microsoft.