Microsoft (NASDAQ:MSFT) wants to be the next Apple (NASDAQ:AAPL), according to CEO Steve Ballmer, who signaled in his annual letter to shareholders a new direction for the software company: hardware and online services.
While not explicitly mentioning Apple, Ballmer certainly takes his cue from the Cupertino-based tech giant, suggesting that Microsoft may eventually make its own phones to build on its forthcoming Surface tablet and Xbox gaming console.
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“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,” wrote Ballmer.
Apple’s tight integration of software and hardware has proven successful — from its iMac and MacBooks, which run on Mac OS X, to its iPhones, iPads, and iPod touches, which run on a mobile platform called iOS. Meanwhile, Microsoft has had to rely on companies like Dell (NASDAQ:DELL) and Hewlett-Packard (NYSE:HPQ) to design desktops and laptops running on Windows software, and has had difficulty finding partners to build Windows Phone smartphones.
Ballmer said the company would continue to work with its traditional hardware partners, but made clear that Microsoft’s role in the “ecosystem” was changing. Though Microsoft already has its hand in online services, including access to servers to enable cloud computing and web versions of its Office applications, Ballmer is signaling a significant shift away from Microsoft’s traditional business model of selling installed software.
“A great example of this shift is Windows 8,” said Ballmer, who in his letter details how the company’s many services and products will become more fully integrated:
“Windows 8 will come to market Oct. 26, 2012, with beautiful hardware that will light up with our consumer cloud services. Windows 8 unites the light, thin and fun aspects of a tablet with the power of a PC. It’s beautiful, it’s functional, and it’s perfect for both personal and professional use. Xbox Music, Video, Games and SmartGlass apps make it possible to select a movie from a PC, start playing it on the TV, and finish watching it on a phone. SkyDrive, our cloud storage solution, effortlessly connects content across a user’s devices. Bing’s powerful search technologies in Windows 8 will help customers get more done. Skype has a beautiful new Windows 8 app and connects directly into the new Office.”
The new Office will also be better designed to take “advantage of new mobile form factors with touch and pen capabilities,” as well as integrating social, a move that Apple got right with iOS 6, which for the first time integrated Facebook (NASDAQ:FB) sharing into its many Apple-built apps.
Enterprise services will also take on a new level of importance at Microsoft, said Ballmer, “given the increasing influence employees have in the technology they use at work.” That technology includes applications like Microsoft Dynamics, Office, Exchange, SharePoint, and Lync, but also, increasingly, the cloud. As Apple begins to connect its many products and services through the cloud, so too will Microsoft look to the ‘new frontier,’ particularly as it regards enterprise customers.
As outlined in his letter Tuesday, Ballmer’s key points of focus going forward include, “firmly establishing one platform, Windows, across the PC, tablet, phone, server and cloud to drive a thriving ecosystem of developers, unify the cross-device user experience, and increase agility when bringing new advancements to market,” as well as “developing new form factors that have increasingly natural ways to use them including touch, gestures and speech” — strategies that have helped Apple become the most valuable company in the world, and Microsoft’s biggest competition in numerous arenas.
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