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Microsoft shouldn't try to be a hardware company

Deb Shinder would prefer to see Microsoft focus on making better software and letting companies with more experience worry about the hardware.

Microsoft was long known as "the world's largest software company." Its very name (established in the pre-PC era when personal-sized systems were called microcomputers) stands for "Microcomputer Software." Even though I don't like the idea, as I wrote in a previous installation of this column, after thinking about it, I think Microsoft pulling out of CES makes sense.

If you look at the list of exhibitors, you can't help noticing that most of the big guys -- Samsung, Intel, Sony, Panasonic, and others with the gigantic booths -- are hardware companies. After all, the show is about the devices and gadgets, the TVs and computers and phones and even cars, that run the software. That's what people are really there to see.

Microsoft grew into the behemoth it is today by making and selling software, starting with MS-DOS and expanding from operating systems into office productivity software, server software (SQL, Exchange, SharePoint, et al.), software-based security products (ISA/TMG, UAG, Windows Defender, Security Essentials), IT management software (SMS, MOM, SCCM), developer tools (Visual Studio), PC games (Flight Simulator, Halo, Age of Empires), and, at one time or another, just about every category of software (accounting software, reference works, mapping software, mail client, web browser, music player, and on and on and on).

Moving into hardware

Even though software has been the company's core competency, and Windows and Office have dominated their product categories, Microsoft has been gradually expanding into the hardware side of the business. Their mice, keyboards, and joysticks have been very popular and very profitable, leading some to suggest, over a decade ago, that they become more of a hardware company.

And since then, they've done just that. With the release of the Xbox in November 2001, the company made the leap from just making small computer peripherals to offering a major stand-alone hardware device. And it has proven to be a big seller, slowly but surely outpacing the competition (Sony Playstation and Nintendo Wii) to capture the top spot in market share for gaming consoles in 2010 and 2011.

Not all of Microsoft's hardware ventures have done as well, though. The Zune music player, which was released in 2006 as Microsoft's response to Apple's iPod, never got much sales traction despite good reviews. In 2011, it was no big surprise when Bloomberg reported that Microsoft was discontinuing production of the Zune and would instead be putting the Zune software into their mobile phones.

Making PCs and phones?

Now some are calling for Microsoft to get "all in" with the hardware business and start making their own phones, a la Apple -- or even make PCs. I'm not excited by the idea. There have been a number of reports floating around the Internet over the past week, saying that Microsoft is in talks to buy Nokia's smartphone division.

Others say "no way," with Nokia's office in the U.K. denying the rumors. Nokia has just acquired Smarterphone, a company that makes a feature phone OS, which could be taken either as a sign that the company is committed to making phones and not interested in selling its phone business or that it plans to make only feature phones and sell the smartphone part of the business to Microsoft.

Even if the Nokia acquisition rumors were true, would that necessarily mean Microsoft plans to build their own phones, or would they simply be buying Nokia for its patent portfolio (rumored to be the primary motivation behind Google's purchase of Motorola Mobility)?

As if the idea of Microsoft making phones wasn't enough, now Nicole Kobie over at PC Pro is suggesting that Microsoft should get into the PC business, too -- perhaps by convincing HP to change its mind (again) and sell out. Her argument, of course, centers on emulating Apple's success by doing what they do.

Why it's a bad idea

I've already stated my case, in several different contexts, for why Microsoft shouldn't try to be an Apple copycat. As I wrote back in November, I don't even think Microsoft should be trying to control the hardware vendors to the extent they do with Windows Phone, much less take over the building of the hardware completely. I think it would be bad for Microsoft, for all the reasons I've already discussed. I also think it would be bad for consumers and for the industry in general.

Imagine for a moment how different the tech industry would be today if Microsoft had taken the Apple approach from the beginning and made its own hardware, refusing to license the software to other hardware vendors. The huge economic ecosystem that grew up around Microsoft's software wouldn't exist. Many of the industry's largest companies, such as Dell, HP, Acer, Intel, etc., either wouldn't exist or would be much smaller.

It's popular in today's political climate to talk about "jobs creators." But Microsoft is not just a jobs creator (although it's certainly that, with more than 90,000 employees on the payroll and thousands more independent contractors to whom they pay millions every year for services). The company is also a "jobs creator creator" -- that is, all the small and large companies that make hardware to run Microsoft software employ countless additional people.

Choices

Thank goodness Microsoft took the other route, partnering with hardware vendors instead of taking the DIY approach. But what would happen if they decided to change that now? Those partners wouldn't be very happy. Neither would customers who want to run Microsoft's software but don't want to be locked in to just a few hardware choices.

Of course, there is a "middle-of-the-road" alternative. Microsoft could make their own phones and/or PCs but also continue to allow other vendors to do so. But do they really want to compete with their own partners in that way? Sure, Google has its "own" Nexus Android phones, but they're made by one of the major hardware vendors (HTC, Samsung), not by Google itself (and it will be interesting to see whether that changes now that Google has purchased Motorola Mobility). And a Nexus was not among the top 10 best-selling Android phones of 2011, although the Nexus One was one of the top phones of 2010.

I know the idea of having total control of the hardware must look pretty good to Microsoft, given the way it's worked for Apple. But I still say what works for Apple won't necessarily work for Microsoft and could instead lead to more trouble than it's worth, in terms of partner relationships, customer relations, and cost. I'd prefer to see Microsoft focus on making the software better and letting companies with far more experience worry about the phone and PC hardware.

Also read:

About

Debra Littlejohn Shinder, MCSE, MVP is a technology consultant, trainer, and writer who has authored a number of books on computer operating systems, networking, and security. Deb is a tech editor, developmental editor, and contributor to over 20 add...

21 comments
Aaron A Baker
Aaron A Baker

Haven't they screwed up enough programs and cost us thousands? Now they plan to do the same to the Hardware Business?? There's an old saying. "Stick to what you do best and if that ain't good enough, DO IT RIGHT" Regards Aaron

sarai1313
sarai1313

at lest they are trying not like some who just steal it and then sue other's saying it their's.

mcquade181
mcquade181

What a load of rubbish, in my experience Microsoft's hardware is first class. Their mice are still the best, and no one has come close to their MCE remote - pity they don't make it anymore.

Cynyster
Cynyster

I don't know about the rest, but my experiences with certain Microsoft brand hardware have been excellent. Microsoft's "Arc" Keyboard which is what I am typing this on has been absolutely awesome. A small format keyboard for limited desktop space. X-Box controller for the PC has been solid for years and keyboard & mice combos take a serious beating and just work work work. You may not like the company as a whole (and I believe their software is unbelievably priced) but you can not argue with the quality. As far as windows mobile ... well you have a case there. I have always had issues with the mobile platform working with the latest release of even M$ own stuff. If Microsoft decided to put its high quality standards behind its hardware then they can be a serious contender.

thusoma
thusoma

Would be good for Microsoft to now do hardware. These hardware companies are just putting a bad name to the stable Windows Operating System. 99.999% of the time your operating system crashes it because of these hardware drivers. The .dmp file will show it all.

Lucky2BHere
Lucky2BHere

To suggest it is possible to tell Microsoft what works for them at a particular time in a particular market is ignorant. Each decision they make is undoubtedly weighed by a number of factors. The Xbox was necessary, though it's clear the person in charge of manufacturing is focused solely on absolute lowest cost, not service life and customer satisfaction. The problem here is not they decided to do it, but how they are doing it. Sometimes it works, sometimes it doesn't. The other well-regarded products they've peddled for decades make perfect sense and sell because they meet users' requirements. The fundamental goal of any product maker. Nothing wrong with that. Like Google, if they make a hardware product it could be for many reasons, the most logical of which is to spur a market. It was clear from the beginning Google's foray into phones was to bring needed attention to Android. Don't call me an analyst, but I think it worked. I was involved on the periphery with their Surface Computing project, the multi-touch table. I can tell you, unequivocally, they spent many man hours assessing the option of making their own hardware vs. partnering. It was not as clear-cut as the argument is presented here. There are myriad "why" questions related to competition, short and long term business goals, costs, development considerations, resource allocation, ultimate market penetration, etc. So, no, they shouldn't read this conversation and consider our opinions. We are not informed. One last note, Ms. Debra: Microsoft is not Apple, nor Google.

richarderrico
richarderrico

Especially IE. I cannot believe how bad IE has become. Thought I had a virus on my Vista PC since IE was SO slow and jerky and regularly shows "IE is not responding" messages. So decided to see what Chrome did. WOW! Side by side on same web pages Chrome was faster and doesn't lock up. So, yes they should stick to software.

Gisabun
Gisabun

Microsoft has been selling computer accessories [think keyboards, mice, webcams and even networking hardware at one point] and you're suggesting for them to ditch the hardware side [that includes Xbox]?

BALTHOR
BALTHOR

Dell never had a contract with Microsoft.Microsoft ended up being a gift from the gods or Baghdad or something.Anyways,we could probably live just fine with the Microsoft that we already have.

BALTHOR
BALTHOR

Dell tried Linux and it flopped.Big press big flop.So Microsoft has a contract with Dell.Dell would probably say "But you couldn't compete with us".AND MICROSOFT SAID "WE'LL DO WHATEVER WE WANT!!".So Dell fount out that it's impossible to write an operating system and bit the bullet.

radleym
radleym

Look at the history of MS on x86 PC's, and their push to get OEM's to restrict systems to windows 8 on future ARM PC's. They have the muscle to essentially "control" HW from OEM's. They don't need to build their own.

adornoe
adornoe

Microsoft should get into the hardware business, in areas where their "partners" are not willing to produce the products needed to use Microsoft's OSes and other software. A huge problem which Microsoft has had in the last year+ since WP7 was released, is the lack of smartphones being manufactured to support their smartphone OS. Samsung and others have been very busy producing smartphones which use Android, and of course, it's because Android is "free", and the manufacturers and plan providers can configure the OS/software that goes in without having to worry about the OS/software developer being involved. Microsoft could be doing much better if the plan providers and manufacturers were to have produced WP7 smartphones in the same volume as they did for Android smartphones. If left with no other choice, then Microsoft will have to start producing their own hardware to carry their OS, which, according to many informed opinions, is superior to Android. Now, MS doesn't have to start from scratch, since there are smartphone manufacturers that are "struggling" and not being as profitable as they'd wish, and which could be "easily" acquired. So, the problem is not that Microsoft would not be cooperating like the partner that many came to depend on; the problem is that, MS's partners are not cooperating by offering products which could work with MS's offerings. It's a matter of being left with no other choice.

tyyggerr
tyyggerr

Starting with Microsoft BASIC years before MS-DOS.

dcolbert
dcolbert

There is no doubt that Microsoft has overcome tremendous initial push-back in breaking into hardware to become a significant presence in that arena. In fact, they've had demonstrated success in hardware that eclipses every attempt Intel has ever made in becoming a direct-to-consumer business model. I can tell you the point where the worm turned for Microsoft, too. Their original split-keyboard and their first laser-mouse. https://www.google.com/search?q=intellimouse+explorer&hl=en&safe=off&prmd=imvns&source=lnms&tbm=isch&ei=L-IVT-ymCOqvsQL9q8CKBA&sa=X&oi=mode_link&ct=mode&cd=2&sqi=2&ved=0CCwQ_AUoAQ&biw=1680&bih=873#hl=en&safe=off&tbm=isch&sa=1&q=Microsoft+split+keyboard&oq=Microsoft+split+keyboard&aq=f&aqi=g1g-S1&aql=&gs_sm=e&gs_upl=18688l22260l0l22573l24l21l0l9l9l0l255l1795l4.4.4l12l0&bav=on.2,or.r_gc.r_pw.r_cp.,cf.osb&fp=4c691f97d11eff7f&biw=1680&bih=873 https://www.google.com/search?q=intellimouse+explorer&hl=en&safe=off&prmd=imvns&source=lnms&tbm=isch&ei=L-IVT-ymCOqvsQL9q8CKBA&sa=X&oi=mode_link&ct=mode&cd=2&sqi=2&ved=0CCwQ_AUoAQ&biw=1680&bih=873 Prior to that, Microsoft's forays into hardware were mostly derided by technology professionals and pundits. When the Xbox was released on a P3-733 based platform - it was big news for Intel - and I think it was always a little disappointing to Intel that the original Xbox platform remained 2nd fiddle to the PS-2 and a loss-leader for Microsoft. But Microsoft's long term strategy with Xbox was clear - and came to fruition with the Xbox 360. They're not just one of the best executing hardware divisions at Microsoft today, they're probably the best executing division at Microsoft today. They've been mavericks and trail-blazers and had a unified vision that they've stuck with. Currently, the new Xbox 360 dash implements a Metro style GUI that shows that Microsoft has a strong strategy in this area - one where other departments (like the Windows Phone group) are trying to catch up. Hardware control seems to be Microsoft's direction in the future - and what works well for a game console may not translate as well to tablets, PCs and phones. Have you seen the discussion Ed Bott has going on Google+ right now? To me, it indicates another direction on trying to maintain hardware control while still using OEM vendors to create the platforms underneath. Microsoft remains a software vendor as their core competency. With all of that said - I've got a story that relates to this. It is Intel Legend. Intel's core business is manufacturing. Not technology or CPUs or flash ram... their self identity is as a manufacturing company. Widgets. But at one point the widgets that were driving their business model were memory semiconductors. At one point, the Japanese flooded the market with cheap memory and Intel couldn't compete on price. They were struggling. Going out of business. They looked at their core business and said, "we make stuff, and we do it good, but we can't stay in business making what we make". So they took a gamble and they turned their focus to this odd little microprocessor they were making, the 8086 - that IBM had just built a machine off of. Prior to that they thought of the 8086 as a toy, and thought of themselves as the manufacturers of memory semiconductors. It was a major change in their self-vision (and where they decided that they were manufacturers, not manufactures of a particular modular level component). Microsoft grew themselves as an organization synonymous with single user micro-PC OS platforms. Then they had a period where they were really dominant as an Office Suite publisher. Then they defined themselves as a networked OS and back-office platform. In each case, they stole the glory from someone else (CP/M, Wordstar and WordPerfect, and Lotus Notes, Novell and Lantastic). Microsoft has been really good at redefining themselves in response to critical inflection points thrown at them by the industry. This is the first time they've struggled in their core competencies and let other platforms get significant inroads against them. Keep in mind, they're still FAR OUT AND AHEAD in the lead against all the competition that is getting all the attention. Android, iOS, OS X and Linux combined don't have the market share that traditional Windows still enjoys. But it is clear they're at a cross roads, at another critical inflection point. I don't think we'll know for sure for another half decade or more if they've made the right strategic decisions here (and I think Intel's fortunes are closely tied to Microsoft's, still). We're in for an interesting ride.

BlackPearlLee
BlackPearlLee

Or at least i don't think so...maybe they would get a better grasp on keeping their own hardware up to date with their software/OS's. Hardware needs to be compatible with the latest operating systems and not faltering behind as they did with Vista and Win7 (although I had less issue with Win 7 than I did with Vista - grant you, vista was short lived on our machines). On the other hand, I don't think they should do anti virus/malware programs; there are a number of good ones out there already that work better and are more lightweight than what M$ puts out. And that's my .02 cents ;)

Mark W. Kaelin
Mark W. Kaelin

Should Microsoft stick to software, go "all in" for hardware, or do a little of both?

NickNielsen
NickNielsen

It makes them a software company that sells accessories, and high-quality accessories at that. All my home PCs have MS keyboards and mouses. I think Deb's point is that MS shouldn't get -further- into the hardware business or try to take the Apple route.

n4aof
n4aof

Don't forget that the microcomputer version of BASIC was vaporware when Bill Gates sold it to Micro Instrumentation and Telemetry Systems (MITS) to use on their new Altair 8000. At the time of the sale, he didn't have a working BASIC interpreter or even an Altair 8000 to try to run it on.

Trentski
Trentski

The best anti virus program I have come accross was made by Microsoft, better than the symantec and mcafee ones I have come accross at work, its called Microsoft Security Essentials. The free AVG is a resource hog, I have never even noticed security essentials using much memory. I am yet to get a virus/malware on my home machine.

Gisabun
Gisabun

They bought the company to make the endpoint security software [MSE for consumers, Forefront for business] and it is good for any company to be a "one stop shop" so the business only needs to contact one company instead of multiples [and not get the "it's not our problem, it is there's}]. Oh and MSE is quite lightweight and better than crap like Avast.