In his annual letter to shareholders, published on Tuesday, Microsoft CEO Steve Ballmer indicated that hardware and online services will be the company's primary focus after the launch of Windows 8. The message naturally brought comparisons to Apple, and even rekindled the rumor surrounding the company's internally-developed Surface-branded Windows 8 Phone device supposedly launching next year.
"There will be times when we build specific devices for specific purposes, as we have chosen to do with Xbox and the recently announced Microsoft Surface," wrote Ballmer. This is where the Apple reference kicked in, as Microsoft's new approach takes note of the way the fruity rival focuses on an intertwined hardware and software package like the iPhone and iPad.
Microsoft's move to a more closed approach has ruffled the feathers of many consumers, developers and analysts. The Windows platform has always been known to be open to some degree, but the recent inclusion of the company's own storefront within Windows 8 has led many to believe Microsoft may be more controlling as to what is introduced to the new platform, much like the way it regulates Xbox Live.
But Apple's success in the smartphone and tablet market has seemingly pushed Microsoft into taking the same closed path, thus tightening not only security, but the overall quality of the Windows brand. Yet that doesn't mean Microsoft is abandoning its partners – the company will still work with the likes of Dell, Samsung, HP and so on.
However Microsoft's role in the "ecosystem" is changing, Ballmer indicated, and it appears that the company may be moving away from the traditional model of selling installed software. "It impacts how we run the company, how we develop new experiences, and how we take products to market for both consumers and businesses," he wrote. "This is a significant shift, both in what we do and how we see ourselves — as a devices and services company."
Some of the services Microsoft is "selling" to customers includes the Xbox Live network, web versions of its Office applications, access to servers for cloud computing, and more. Surprisingly, Microsoft isn't forcing consumers to pay for its Microsoft Security Essentials suite which currently offers anti-virus, anti-malware and other security features for free to legitimate Windows-based platforms.
In addition to the letter to shareholders, Microsoft's annual proxy filing revealed that Ballmer received a bonus lower than what he received in fiscal 2011. This was partially due to flat sales of Windows, and his inability to ensure European customers that Microsoft offers a choice of browsers other than Internet Explorer.
His bonus was $620K in fiscal 2012, down 9-percent from the year before.