Microsoft eyes hardware, online services as future
October 11, 2012, Thursday
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Print Edition
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MICROSOFT Corp Chief Executive Steve Ballmer has signaled a new direction for the world's largest software company, pointing to hardware and online services as its future, taking a page from long-time rival Apple Inc.
Ballmer's comments in his annual letter to shareholders published on Tuesday suggested that Microsoft may eventually make its own phones to build on its forthcoming own-brand Surface tablet PC and market-leading Xbox gaming console.
"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 wrote.
The new approach mimics Apple Inc, whose massively successful iPhone and iPad demonstrated tight integration of high-quality software and hardware and made Windows devices feel clunky in comparison.
Ballmer, who took over as CEO from co-founder Bill Gates in 2000, said the company would continue to work with its traditional hardware partners, such as Dell Inc, Samsung and HTC, but he made it clear that Microsoft's role in the so-called "ecosystem" was changing.
"It impacts how we run the company, how we develop new experiences, and how we take products to market for consumers and businesses," he wrote.
Microsoft already makes money from providing services online, such as access to servers to enable "cloud computing," or web versions of its Office applications, but Ballmer's new emphasis suggests an acceleration away from its traditional business model of selling installed software.
"This is a significant shift, both in what we do and how we see ourselves - as a devices and services company," he added.
Alongside the shareholders' letter, Microsoft's annual proxy filing, which deals with the shareholders' meeting and other governance issues, showed that Ballmer, 56, got a lower bonus than he did last year, partly for flat sales of Windows and his failure to ensure the company provided a choice of browser to some European customers.
He earned a bonus of US$620,000 for Microsoft's 2012 fiscal year, which ended in June, down 9 percent from the year before, according to documents filed with the US Securities and Exchange Commission. His salary, low by US standards for CEOs, was flat at US$685,000.
Ballmer's comments in his annual letter to shareholders published on Tuesday suggested that Microsoft may eventually make its own phones to build on its forthcoming own-brand Surface tablet PC and market-leading Xbox gaming console.
"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 wrote.
The new approach mimics Apple Inc, whose massively successful iPhone and iPad demonstrated tight integration of high-quality software and hardware and made Windows devices feel clunky in comparison.
Ballmer, who took over as CEO from co-founder Bill Gates in 2000, said the company would continue to work with its traditional hardware partners, such as Dell Inc, Samsung and HTC, but he made it clear that Microsoft's role in the so-called "ecosystem" was changing.
"It impacts how we run the company, how we develop new experiences, and how we take products to market for consumers and businesses," he wrote.
Microsoft already makes money from providing services online, such as access to servers to enable "cloud computing," or web versions of its Office applications, but Ballmer's new emphasis suggests an acceleration away from its traditional business model of selling installed software.
"This is a significant shift, both in what we do and how we see ourselves - as a devices and services company," he added.
Alongside the shareholders' letter, Microsoft's annual proxy filing, which deals with the shareholders' meeting and other governance issues, showed that Ballmer, 56, got a lower bonus than he did last year, partly for flat sales of Windows and his failure to ensure the company provided a choice of browser to some European customers.
He earned a bonus of US$620,000 for Microsoft's 2012 fiscal year, which ended in June, down 9 percent from the year before, according to documents filed with the US Securities and Exchange Commission. His salary, low by US standards for CEOs, was flat at US$685,000.
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