With reorg, Microsoft bets big on home-grown hardware
New group dedicated to devices means a head-to-head battle with OEMs, analysts argue
Computerworld - Microsoft's reorganization is the biggest shot yet fired against the company's core partners, the computer makers who have made the software developer a technology giant, analysts said today.
"There were clear lines of demarcation where Microsoft's efforts ended and OEMs' started, but this could challenge OEMs down the road," said Patrick Moorhead, principal analyst at Moor Insights & Strategy, in an interview Thursday.
Moorhead was referring to the corporate reshuffling announced earlier today by CEO Steve Ballmer -- specifically the creation of a hardware group within the company.
The Devices and Studios Engineering Group will be led by Julie Larson-Green, who will oversee all hardware development, from the Xbox and Surface to mice and keyboards. In his memo to employees today, Ballmer said that she would also assume responsibility for the "supply chain, from the smallest to the largest devices we build."
Larson-Green, a former lieutenant to Steven Sinofsky, who until he was ousted last fall ran the Windows division, was most recently head of Windows engineering, and shared responsibilities for desktop and tablet OS team with Tami Reller, former Windows CFO.
Because Devices and Studio Engineering will be one of just four engineering groups -- the others focus on operating systems, applications and services, and cloud and enterprise -- and because Microsoft has never had a unit at that level dedicated to devices, Moorhead interpreted the reorg results as a major change in direction for Redmond.
"This is the first time they have ever had a division called 'Devices,'" said Moorhead. "To me, that means Microsoft is very, very serious about hardware, as serious as Apple is about tablets."
Unless Larson-Green's fiefdom ends up smaller than the weight the new structure seems to assign it, and unless Ballmer's mantra of "devices and services" is a smokescreen, the company must expand its hardware offerings.
Moorhead certainly expects that to happen. "One of the first things they'll do is a Surface notebook," Moorhead predicted. "Second, they'll do a smart watch or some kind of wearable [computer]."
And because turning a profit on hardware, PCs included, requires a large-scale commitment -- necessary to purchase components at reasonable prices -- Microsoft will, in effect, become a direct competitor with its OEM (original equipment manufacturing) partners, the Dells, the HPs, the Lenovos of the world.
"PCs require scale, and are just not suitable to niches," said Moorhead, a former executive with AMD, the chip-making rival to Intel. "They were acting this way before [with the Surface tablets] but this is whole new level. This is such a big change that I'd argue it's a reinvention of Microsoft."
Another analyst agreed.
"Microsoft doesn't have an incredible track record on hardware," said Bob O'Donnell of IDC. "Surface isn't exactly tearing up the charts. For [hardware] to become a core focus, I just don't know, it seems odd to me. But they will expand their hardware. I expect a Surface phone, more Surface tablets, including a smaller tablet, and more.
"Microsoft has taken shots at OEMs before," O'Donnell added, referring to the surprise debut a year ago of the Surface tablet line. "But the [Devices and Studio Engineering] group reinforces that. This is another shot at the OEMs, no question."
- Microsoft launches toolset for capturing 'ambient intelligence'
- Microsoft kicks off sales of lower-priced Office subscription in bid for iPad dollars
- At Build, mobility gets a boost with universal Windows apps
- Microsoft gets strategic with its Enterprise Mobility Suite
- Microsoft sketches out final Windows XP security updates for next week
- Microsoft teases touch-first Office for Windows
- Cortana's voice is synthesized in part from an AI character in Halo
- Hell freezes over: Microsoft makes Windows free for some devices
- Windows Phone 8.1 confirmed, with Cortana digital assistant
- Ex-Microsoft employee pleads guilty to trade secret theft
- Study: Total Economic Impact of Google Apps Employees can work faster and IT spending can decrease when companies switch to Google Apps, says a commissioned study by Forrester Consulting. Going...
- Protecting Digitalized Assets in Healthcare Healthcare providers face an urgent, internal battle every day: security and compliance versus productivity and service. For most healthcare organizations, the fight is...
- Is a SaaS Deployment Right for You? Find out the answer and as well as the other deployment options.
- Discover How Mail Express Solves 2 of Your Biggest IT Headaches Email. It can be the source of some of IT's biggest headaches. As it eats up storage and bandwidth, it also opens up...
- Increasing the Value of Your Reports and Dashboards Learn how incorporating other analytical capabilities such as predictive modeling and visualization can increase the value of your reports and dashboards by providing...
- Video surveillance for IT: maximum image quality, minimum bandwidth Join us on Thursday, May 8th at 1 p.m. EST when Willem Ryan, Senior Product Marketing Manager at Avigilon, will discuss how IT... All Management White Papers | Webcasts