Microsoft CEO Ballmer suggests more hardware coming
Microsoft Corp's chief executive said his company would look at more opportunities to build its own devices, after the launch of its Surface tablet last month, potentially bringing the software giant into competition with its hardware partners …
Context & Ripple Effects
Microsoft entered the Windows tablet market directly with Surface RT following the October 26 Windows 8 and Windows RT launches. Its July plan to sell a few million Surface PCs had already made the company more than a software supplier to PC makers.
That shift had exposed tension with the partner ecosystem before Surface reached customers: Lenovo publicly argued it would provide better hardware than Surface. Ballmer's comments make that competitive overlap a strategic issue rather than a one-product exception.
First-order effects
- Microsoft's hardware partners must plan for the possibility that the Windows platform owner will also compete for device sales, beginning with Surface.
- Microsoft gains latitude to use its own devices to showcase Windows 8 and Windows RT, rather than relying entirely on partner hardware to define the customer experience.
Second-order effects
- PC makers such as Lenovo face greater pressure to distinguish their Windows devices on hardware quality and design when Microsoft is selling a reference product alongside them.
- Surface volume ambitions make channel alignment more sensitive: partners must weigh Microsoft's platform support against competition for the same tablet and PC buyers.
Third-order effects
- If Microsoft extends its in-house device effort beyond Surface, the traditional division between a Windows software supplier and its OEM customers weakens, concentrating more control of product design and distribution at Microsoft.
- The episode belongs to a broader contest over whether platform companies can pair software control with first-party hardware without eroding the partner ecosystem that distributes their platforms.
The trend: Microsoft's Surface strategy points toward platform owners taking a more direct role in hardware when they want tighter control over the end-user experience.