Steve Ballmer Reiterates the Obvious

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In case it wasn't obvious quite yet, Steve Ballmer is hammering it home: Microsoft (Nasdaq: MSFT  ) will make more hardware. Here's what he told the BBC: "Is it fair to say we're going to do more hardware? Obviously we are... Where we see important opportunities to set a new standard, yeah we'll dive in."

This comes as Microsoft has just launched Windows 8 and its Surface RT tablet, two major product launches that the company needs in order to revive growth. The Surface saw strong demand from the get-go, with pre-orders of the device selling out relatively quickly on Microsoft's web site. Perhaps more interestingly, early reviews of the new tablet show that the hardware is actually better than the software, particularly ironic since Microsoft is a software company first and an Apple (Nasdaq: AAPL  ) wannabe second.

Obviously, those are pretty loaded words, because there are "important opportunities to set a new standard" in several of Microsoft's businesses. Tablets are just the beginning, but clearly Windows Phone's performance in the smartphone market leaves a little to be desired, with a slice just over 3%. Primary hardware partner Nokia (NYSE: NOK  ) continues to ramp up its Lumia lineup while winding down the rest of its smartphone offerings, but that hasn't been enough to overtake Research In Motion (Nasdaq: RIMM  ) for the No. 3 spot in the market.

Ballmer's words make it pretty clear that a Surface Phone is coming, and interestingly Nokia CEO Stephen Elop doesn't see that as a major competitive threat but instead thinks it would be a "stimulant  to the ecosystem." I don't see any way around it. If Surface sees a modicum of success, expect a Surface Phone in the not-too-distant future.

Taking it a step further, we could even be talking about Microsoft getting into traditional PC form factors like desktops and laptops, challenging longtime hardware buddies like Hewlett-Packard (NYSE: HPQ  ) and Dell (Nasdaq: DELL  ) . The upcoming Surface with Windows 8 Pro is a convertible device, so a bona fide desktop or laptop is just a hop, skip, and a jump away.

After all, making more devices certainly makes sense, as Microsoft now sees itself as a "devices and services company." Obviously.

It's been a frustrating path for Microsoft investors, who've watched the company fail to capitalize on the incredible growth in mobile over the past decade. However, with the release of its own tablet, along with the widely anticipated Windows 8 operating system, the company is looking to make a splash in this booming market. In this brand-new premium report on Microsoft, our analyst explains that while the opportunity is huge, the challenges are many. He's also providing regular updates as key events occur, so make sure to claim a copy of this report now by clicking here.

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  • Report this Comment On October 29, 2012, at 12:23 AM, prginww wrote:

    Wasn't Mr. Ballmer stating "this is just a design point" just a few months ago. Of course, that was intended as a reassurance to their hardware "partners". I'm sure their relieved to know that Microsoft is spending over a billion dollars on advertising their "design point" to the exclusion of their "partners'" devices.

    Speaking of design, I still am surprised they went with a kick stand. After all, the purpose of the kick stand is to allow it to be used something like a laptop. Real quick, can you think of any laptop made by anyone that only has one viewing angle? Would you tolerate one that was not at all adjustable? Kudos to Microsoft for the magnetic attachment element that also supplies power but very disappointing that they didn't figure out how to make either the kick stand and/or hinge adjustable and sturdy.

    Then again, according to the numerous reviews I've read, it's not a good or even tolerable laptop. There are far better laptops for about the same price or cheaper, particularly after adding in the keyboard. Nor a even a marginal tablet. And Office. Yay. Yippee. Of course, every person who is excited about the Surface having Office already has Office on their laptop, desktop, or both. And a more advanced version too. So, yay redundancy! You can try playing Office on the Surface's underpowered chipset, laggy OS, inferior screen, and error prone keyboard too. Rejoice!

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