Microsoft may make its own phones

SEATTLE, USA: Microsoft Corp chief executive Steve Ballmer has signaled a new direction for the world's largest software company, pointing to hardware and online services as its future, taking a page from long-time rival Apple Inc.

Ballmer's comments in his annual letter to shareholders published on Tuesday suggested that Microsoft may eventually make its own phones to build on its forthcoming own-brand Surface tablet PC and market-leading Xbox gaming console.

"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.

The new approach mimics Apple Inc, whose massively successful iPhone and iPad demonstrated tight integration of high-quality software and hardware and made Windows devices feel clunky in comparison.

Ballmer, who took over as CEO from co-founder Bill Gates in 2000, said the company would continue to work with its traditional hardware partners, such as Dell Inc, Samsung and HTC, but he made it clear that Microsoft's role in the so-called 'ecosystem' was changing.

 

"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.

Microsoft already makes money from providing services online, such as access to servers to enable 'cloud computing', or Web versions of its Office applications, but Ballmer's new emphasis suggests an acceleration away from its traditional business model of selling installed software.

"This is a significant shift, both in what we do and how we see ourselves - as a devices and services company," he added.