Microsoft CEO Ballmer suggests more hardware coming

SANTA CLARA, California Thu Nov 15, 2012 12:37am EST

SANTA CLARA, California Nov 14 (Reuters) - 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 and opening the door to a Microsoft-branded phone.

"Do I anticipate that partners of ours will build the lion's share of all Windows devices over the next five years? The answer is, absolutely," Steve Ballmer said at a tech industry event in Santa Clara, California, on Wednesday.

"With that said, it is absolutely clear that there is an innovation opportunity on the scene between hardware and software and that is a scene that must not go unexploited at all by Microsoft," he said.

With the Xbox game console and now the Surface tablet -- designed to take on Apple Inc's iPad -- Ballmer has been moving Microsoft toward being a "devices and services" company that would develop its own hardware where it made sense.

Reports surfaced two weeks ago that Microsoft was already testing a design for its own phone, but the company has not confirmed anything.

Microsoft's new Surface tablet is the company's first foray into building its own PCs and has raised questions in the tech industry about how aggressively it plans to move into marketing more of its own personal computing devices.

Looking to Apple's success with its iPads and iPhones, Microsoft believes tightly controlling the design of both hardware and software can lead to superior consumer products.

But building its own tablets and "hybrid" PCs puts Microsoft into direct competition against manufacturers like Hewlett-Packard, Acer and Lenovo, who for years have been customers of Microsoft's Windows operating system.

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California state worker Albert Jagow (L) goes over his retirement options with Calpers Retirement Program Specialist JeanAnn Kirkpatrick at the Calpers regional office in Sacramento, California October 21, 2009. Calpers, the largest U.S. public pension fund, manages retirement benefits for more than 1.6 million people, with assets comparable in value to the entire GDP of Israel. The Calpers investment portfolio had a historic drop in value, going from a peak of $250 billion in the fall of 2007 to $167 billion in March 2009, a loss of about a third during that period. It is now around $200 billion. REUTERS/Max Whittaker   (UNITED STATES) - RTXPWOZ

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