After Re-Org, Will Microsoft Expand Hardware Lineup Beyond Xbox, Surface?


Microsoft CEO Steve Ballmer, as part of a massive company re-org announced Thursday, may have dropped a hint about future Microsoft-built hardware.

"Our family will include a full spectrum of both partner and first-party devices," Ballmer said in a 3,100 word memo outlining the rationale behind the re-org.

"First-party devices" could be a roundabout reference to Microsoft's current hardware lineup of the Xbox, Surface RT and Surface Pro. But given the importance Microsoft is now placing on devices, and the size of the market it envisions, additional Microsoft hardware is at least a possibility.

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"Microsoft has the clear opportunity to offer consumers a unified experience across all aspects of their life, whether the screen is a small wearable, a phone, a tablet, an 85-inch display or other screens and devices we have not yet even imagined," Ballmer said in the memo.

A Microsoft spokesperson told CRN "first-party devices" means the Xbox and Surface, but wouldn't say whether it could also mean other types of Microsoft-built hardware.

In recent months, Microsoft has been rumored to be building a touch-enabled smart watch and Xbox Surface, a 7-inch gaming tablet. There has also been talk that Microsoft will make its own smartphone.

Microsoft has been "burned by outsourced manufacturing" in the past, so it wouldn't be surprising to see it build some future devices in-house, one Microsoft partner told CRN, speaking on condition of anonymity.

The big question is how future Microsoft-built devices, if they do become reality, would be sold. Would Microsoft use the Surface model of selling directly and through select retailers and large resellers? Or would future Microsoft hardware be sold through the channel?

Some Microsoft partners believe Surface was merely Microsoft's attempt to pressure OEMs into stepping up their game in hardware design.

"It's clear to me that Surface was meant to get the OEMs into gear and Windows RT was meant to show Intel that it had to do likewise," Andrew Brust, CEO of Microsoft analyst firm Blue Badge Insights, New York, told CRN.

Microsoft COO Kevin Turner, in a keynote speech Wednesday at Microsoft's Worldwide Partner Conference, said Windows 8 is 18 to 24 months ahead of the PC hardware ecosystem. He also described Surface as a "hero" platform, suggesting that current Windows 8 tablets aren't measuring up, Brust said.

Brust expects to see Microsoft continue showing off Surface tablets as an example of how tablet hardware design should be done.

"Surface and Windows RT don't have to be the future, but they have to be good enough such that the OEMs and silicon providers can see that Microsoft isn't bluffing when they say there are consequences to inaction," Brust said.

PUBLISHED JULY 12, 2013