Microsoft is taking a leaf from Apple’s playbook and re-organizing its major online services division to create a tighter link between hardware and software.
Microsoft has reorganized it’s Platforms and Services Division, responsible for products like online search and Internet Explorer, to more closely follow Apple’s “whole widget” approach of closely tying hardware to software and online services.
In a memo to employees, Microsoft CEO Steve Ballmer explains:
“In the competition between PCs and Macs, we outsell Apple 30-to-1. But there is no doubt that Apple is thriving. Why? Because they are good at providing an experience that is narrow but complete, while our commitment to choice often comes with some compromises to the end-to-end experience. Today, we’re changing the way we work with hardware vendors to ensure that we can provide complete experiences with absolutely no compromises. We’ll do the same with phones–providing choice as we work to create great end-to-end experiences.”
It sounds like Microsoft is going to try and replicate what it’s done with the XBox and the Zune — exert more control over hardware, software and cloud services.
For decades, Microsoft has thrived by selling its software to third-party vendors who build with commodity components and compete fiercly on price. This model works well when selling to businesses, whichare concerned with price and interopability, but increasingly, ordinary consumers are the grwoth market for the PC industry, and consumers care more about ease-of-use, reliability and good design. These of course, are Apple’s strengths.
Ballmer doesn’t seem to be suggesting that Microsoft bring hardware in-house, but rather initiate a tighter pairing between Microsoft’s software and the company’s third-party hardware partners. Examples of this kind of hardware/software alliance include Real Networks and Sandisk, which have teamed to make MP3 players; and Netflix and LG, which are collaborating on an online movie service integrated into LG’s TVs.
Ballmer specifically mentions phones, which are increasingly becoming mobile computing devices that could threaten Microsoft. Microsoft is rumored to be working on a Zune phone to rival the iPhone (and soon, Google’s Android).