Steve Ballmer Reiterates the Obvious


In case it wasn't obvious quite yet, Steve Ballmer is hammering it home: Microsoft (NAS: MSFT) will make more hardware. Here's what he told the BBC: "Is it fair to say we're going to do more hardware? Obviously we are... Where we see important opportunities to set a new standard, yeah we'll dive in."

This comes as Microsoft has just launched Windows 8 and its Surface RT tablet, two major product launches that the company needs in order to revive growth. The Surface saw strong demand from the get-go, with pre-orders of the device selling out relatively quickly on Microsoft's web site. Perhaps more interestingly, early reviews of the new tablet show that the hardware is actually betterthan the software, particularly ironic since Microsoft is a software company first and an Apple (NAS: AAPL) wannabe second.

Obviously, those are pretty loaded words, because there are "important opportunities to set a new standard" in several of Microsoft's businesses. Tablets are just the beginning, but clearly Windows Phone's performance in the smartphone market leaves a little to be desired, with a slice just over 3%. Primary hardware partner Nokia (NYS: NOK) continues to ramp up its Lumia lineup while winding down the rest of its smartphone offerings, but that hasn't been enough to overtake Research In Motion (NAS: RIMM) for the No. 3 spot in the market.

Ballmer's words make it pretty clear that a Surface Phone is coming, and interestingly Nokia CEO Stephen Elop doesn't see that as a major competitive threat but instead thinks it would be a "stimulant to the ecosystem." I don't see any way around it. If Surface sees a modicum of success, expect a Surface Phone in the not-too-distant future.

Taking it a step further, we could even be talking about Microsoft getting into traditional PC form factors like desktops and laptops, challenging longtime hardware buddies like Hewlett-Packard (NYS: HPQ) and Dell (NAS: DELL) . The upcoming Surface with Windows 8 Pro is a convertible device, so a bona fide desktop or laptop is just a hop, skip, and a jump away.

After all, making more devices certainly makes sense, as Microsoft now sees itself as a "devices and services company." Obviously.

It's been a frustrating path for Microsoft investors, who've watched the company fail to capitalize on the incredible growth in mobile over the past decade. However, with the release of its own tablet, along with the widely anticipated Windows 8 operating system, the company is looking to make a splash in this booming market. In this brand-new premium report on Microsoft, our analyst explains that while the opportunity is huge, the challenges are many. He's also providing regular updates as key events occur, so make sure to claim a copy of this report now by clicking here.

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Evan Niu, CFA, owns shares of Apple. The Motley Fool owns shares of Apple and Microsoft. Motley Fool newsletter services recommend Apple, Dell, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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