Why Microsoft Is Doubling Down on the Hardware Business

 
 
By Don Reisinger  |  Posted 2015-10-16
 
 
 
 
 
 
 
 
 
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    Why Microsoft Is Doubling Down on the Hardware Business
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    Why Microsoft Is Doubling Down on the Hardware Business

    The recent unveiling of the Surface Pro 4 tablet, the Surface Book hybrid and new smartphones shows Microsoft means business in hardware.
  • Previous
    The PC Market Is Shrinking
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    The PC Market Is Shrinking

    The PC market is in some trouble. According to research firm IDC, the worldwide PC market is expected to see shipments fall 8.7 percent year-over-year in 2015, with no sign of relief in sight. Microsoft is clearly seeing that, and realizing that PC vendors are losing their luster with consumers and enterprise users. By delivering new hardware, Microsoft is hoping to jump-start what is a troubled market.
  • Previous
    Microsoft Is Watching Apple Succeed in Hardware
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    Microsoft Is Watching Apple Succeed in Hardware

    Although Microsoft has taken a softer stance in its ongoing competition with Apple, the company can't be happy that the Mac maker is generating billions of dollars each quarter on sales of its computers. Microsoft would undoubtedly like to generate serious cash on its own, and one of the best ways to do that is to deliver high-quality hardware that drives adoption of its software and services.
  • Previous
    Google Is a Threat in Hardware, Software
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    Google Is a Threat in Hardware, Software

    Google is a real threat in the computer marketplace. The company's Chrome OS has proved popular in the education sector, and there's a possibility that Chromebooks will gain some ground in the enterprise, according to market researchers. Unable to trust that PC vendors will pick up the slack, Microsoft seems poised to respond by delivering its own hardware and giving customers a credible alternative to the increasingly popular Chromebooks.
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    Microsoft Hardware Shores Up Windows 10 Adoption
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    Microsoft Hardware Shores Up Windows 10 Adoption

    One of the benefits of selling compelling hardware is that more people are using Windows 10. Microsoft may be most concerned about the cloud and mobile, but Windows is still the gateway to Microsoft's core services. Selling hardware means increasing Windows 10 adoption, which is critical to Microsoft's future plans.
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    It Builds Up Cloud Services
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    It Builds Up Cloud Services

    Microsoft has shown a clear correlation between the number of people who buy its hardware and couple that with adoption of its cloud services. It's perhaps no surprise, then, that Microsoft wants to increase the number of hardware products it sells so it can boost cloud services adoption. After all, if Microsoft hardware buyers are using its cloud services a large percentage of the time, why not build more devices?
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    Microsoft Has Lost Trust of Vendors
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    Microsoft Has Lost Trust of Vendors

    Let's face it. Microsoft and PC makers are no longer the best of friends. Sure, Microsoft still relies on Dell and HP to drive Windows 10 adoption, but PC vendors are also exploring other operating systems, like Chrome OS and even Linux. Microsoft and PC makers are having a tough time competing with Apple. If Microsoft could trust the strategy and the loyalty of its PC vendors, perhaps it would back off hardware. But because it cannot, Microsoft is taking matters into its own hands.
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    Hybrid PCs Are Taking Off
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    Hybrid PCs Are Taking Off

    Microsoft's announcement of the Surface Book is the culmination of the company's realization that hybrids appeal to consumers and enterprise customers and represent a market opportunity. In fact, some researchers suggest that 2-in-1 hybrid shipments this year will explode and help buoy an otherwise troubled tablet market. Microsoft sees that and is looking to capitalize.
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    The Enterprise Wants Wearable Hardware
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    The Enterprise Wants Wearable Hardware

    Microsoft's plan to price HoloLens at $3,000 when it's available in development kit form early next year is telling. Microsoft has no intention in the near term of making the wearable a consumer-focused product, but rather an enterprise-focused device. The idea is a sound one. According to nearly all market research, wearables are going to take off in the enterprise in the coming years. Providing a holographic device that will allow enterprise developers to create applications and enhance functionality in the workplace is a smart idea, and one that could pay dividends well into the future.
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    Microsoft's Mobile Platform Needs More Devices
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    Microsoft's Mobile Platform Needs More Devices

    Microsoft is struggling in the mobile market. The company's Windows operating system is far behind Android and iOS, and there are no signs of third-party vendors having an interest in delivering new Windows mobile products. By building its own smartphones, like the Lumia 950 line, Microsoft can address that and hopefully build more interest in its operating system. More interest in the operating system will result in more market share, which will then lead to more vendors. The Lumia line is critical to Microsoft's future mobile ambitions.
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    Satya Nadella Is at the Helm
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    Satya Nadella Is at the Helm

    Why is hardware suddenly so important to Microsoft? Blame it on Satya Nadella. Under the former executive team led by Steve Ballmer, Microsoft was a software company with ambitions of returning to past glory. Under Nadella, Microsoft has recognized it can't rely on software alone to drive future growth. So it is investing heavily in cloud computing, mobile technology and hardware. Nadella has a vision for where Microsoft is headed, and it's focused in part on hardware.
 

If there's anything that came out of Microsoft's recent announcement of a new Surface Pro 4 tablet, a hybrid called the Surface Book and new smartphones, it's that the company is now as much about hardware as software. Microsoft CEO Satya Nadella argues that his company needs to be "cloud-first" and "mobile-first." But it appears that another component in that strategy is to make Microsoft a successful hardware maker. There was a time not too long ago when Microsoft did little more than stamp its name on computer accessories such as mice and keyboards. Now the company is firmly fully committed to marketing a wide range of computing and mobile devices, including smartphones, tablets, 2-in-1 hybrids, game consoles and even wearables. It appears that this is no short-term experiment. Microsoft is investing big money on hardware design, production and sales. This slide show looks at why Microsoft is determined to build a hardware business capable of competing not only with Apple, but also PC makers that it has long relied on to sell Windows and its many application software products.

 
 
 
 
 
Don Reisinger is a freelance technology columnist. He started writing about technology for Ziff-Davis' Gearlog.com. Since then, he has written extremely popular columns for CNET.com, Computerworld, InformationWeek, and others. He has appeared numerous times on national television to share his expertise with viewers. You can follow his every move at http://twitter.com/donreisinger.
 
 
 
 
 
 

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