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Microsoft may expand hardware lineup, as Ballmer pushes 'family of devices'

Despite disappointing financial results and the Surface RT tablet debacle, Microsoft is moving ahead with plans to dramatically expand its hardware offerings.

August 12, 2013 06:00 AM ET

Computerworld - If words mean anything, Microsoft will soon dramatically expand the number -- and type -- of hardware devices it makes in-house, and one day those devices will all run the same Windows iteration.

In a memo posted last month on Microsoft's website, CEO Steve Ballmer used the phrase "family of devices" 10 times in an update of the company's yearlong "devices and services" strategy.

The memo, which outlined a reshuffling of Microsoft product lines and executives into four new engineering groups and a centralizing of business decisions previously made by separate fiefdoms, dwelled extensively on hardware plans.

"Going forward, our strategy will focus on creating a family of devices and services for individuals and businesses," Ballmer stated in the memo. "We will design, create and deliver through us and through third parties a complete family of Windows-powered devices."

Ballmer told reporters and analysts in a conference call later that the range of in-house and third-party devices will encompass "the very smallest [and] the very largest devices."

The memo was posted just a week before Microsoft reported lower-than-expected fourth-quarter financial results and announced that it is taking a $900 million charge to account for a drop in the inventory value of ARM processor-based Surface RT tablets.

Despite the tablet woes, Microsoft is "firmly a hardware company," said Frank Gillett, an analyst at Forrester Research. "They don't need to play in the entire ecosystem, but they must have so-called hero devices -- ones that show what their software can do."

Gillett saw Microsoft's write-down as just one piece of a larger transition from packaged software to devices and services, with the devices piece exemplified by the Surface product line and the services component epitomized by the company's move toward selling its software as a service.

"Even if Microsoft is making all the right decisions in the transition, it's still a fundamental shift," Gillett said. "No matter what, it's a messy process."

Microsoft will move on, in other words, after the Surface RT flop, seeing it as not a company-killer or even as a reason to change its strategy, but as one of several obstacles it will encounter in the coming years. "This is early in the [Surface] product cycle," Gillett observed. "This is just the beginning of at least a two-year slog."

"What [the Surface RT overstock] really shows is that being an OEM is . . . a lot tougher than Microsoft thought it was," added Patrick Moorhead, an analyst at Moor Insights & Strategy.

Meanwhile, Ballmer's memo also -- indirectly -- indicated that the company's goal is for Windows and Windows Phone to be essentially the same operating system. "Developers must be able to target all our devices with a common programming model," he wrote.

Currently, Windows 8, Windows RT and Windows Phone share a kernel, but they don't share a complete code base; apps written for Windows 8 and Windows RT can't run on Windows Phone 8, and vice versa. A "write once/run many" model would give Microsoft an advantage that even Apple doesn't enjoy: Apple's iOS apps are incompatible with OS X.

"Having all the OSs under one roof was long overdue," said Bob O'Donnell, an analyst at IDC.

This version of this story was originally published in Computerworld's print edition. It was adapted from an article that appeared earlier on Computerworld.com.

Read more about Hardware in Computerworld's Hardware Topic Center.



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