We derive substantial revenue from licenses of Windows operating systems on personal computers. The proliferation of alternative devices and form factors, in particular mobile devices such as smartphones and tablet computers, creates challenges from competing software platforms.Users may increasingly turn to these devices to perform functions that would have been performed by personal computers in the past. Even if many users view these devices as complementary to a personal computer, the prevalence of these devices may make it more difficult to attract applications developers to our platforms. In addition, our Surface devices will compete with products made by our OEM partners, which may affect their commitment to our platform.
But they don’t have a choice – they need to try new things and new models.
As widely reported, Ballmer said at the 2010 company meeting that they wouldn’t be afraid to make their own hardware. I wonder if this is what he was referring to. I think it’s absolutely the right move. I think the developer story is excellent, and I’m not sure why they’re worried about it.
OS margins/profit dollars on a per/device basis are shrinking and much smaller than apple’s . MSFT should make h/w, they need to develop extensive supply chain control, to drive higher profit dollars/device. time will tell how successfully they can implement hardware/firmware/design. They’ve never really developed an ecosystem, like iTunes, they’ve essentially been selling commodity software ( a decision made long ago in the PC Mesozoic era), the end user sales experience, ecosystem and ‘high touch’ customer retail stores are not instantiated. One wonders ‘if they really get it’.. obviously the profit issue is a pain point, but do they really understand, how difficult it is to compete with the likes of Apple and meanwhile undermine all their OEMs in the process.. it’s gonna be interesting.