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Ballmer to Microsoft shareholders: 'a fundamental shift [is] underway in our business'

Ballmer to Microsoft shareholders: 'a fundamental shift [is] underway in our business'

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In his annual letter, CEO Steve Ballmer says Microsoft's future is a tight combination of hardware and software

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Microsoft CEO Steve Ballmer has hinted at Microsoft's shift towards a devices and services company previously, but this year's letter to shareholders spells it out very clearly. Microsoft is only days away from releasing a major hardware product, the Surface RT tablet, to consumers — alongside a new touch-centric Windows 8 operating system. "This is a significant shift," says Ballmer. "It impacts how we run the company, how we develop new experiences, and how we take products to market for both consumers and businesses."

"There will be times when we build specific devices for specific purposes."

Although Ballmer says Microsoft will continue to work with its loyal partners on Windows PCs, tablets, and phones, the software maker is clearly positioning itself as one that can also deliver premium hardware experiences of its own. "There will be times when we build specific devices for specific purposes," explains Ballmer. "In all our work with partners and on our own devices, we will focus relentlessly on delivering delightful, seamless experiences across hardware, software and services."

Ballmer points to Xbox and Surface as times when Microsoft builds hardware for a specific purpose, with a view to continuing these efforts in future. It's clear that Surface isn't a hobby for Microsoft, you only have to glance at the hundreds of Surface ads at subway stations in major US cities to see that. While Ballmer doesn't say whether Microsoft is looking to expand Surface hardware beyond the tablet, it's a safe assumption that if the brand is successful then it will continue to fuel additional devices in future.

"Firmly establishing one platform, Windows..."

Looking to the future, Ballmer says Microsoft is focused on developing new form factors "that have increasingly natural ways to use them including touch, gestures and speech." Microsoft has been invested in these areas previously, and Kinect is a good example of how a research project can turn into a popular consumer device. There doesn't appear to be less of a focus on Windows either. Ballmer says Microsoft will "firmly establish one platform" around Windows across the PC, tablet, phone, server, and cloud. It's clear that Windows is, and always has been, the heart of Microsoft and that Ballmer will continue this approach.

"It truly is a new era at Microsoft."

"It truly is a new era at Microsoft," says Ballmer. "We see an unprecedented amount of opportunity for both this year and the long term…I couldn’t be more excited and optimistic." Microsoft's efforts to provide a common user interface across its products and services will be tested broadly with consumers from October 26th, when Windows 8 is generally available. Microsoft clearly has a lot work ahead of it to encourage developer interest for Windows and Windows Phone, but a focus on devices and services is only the beginning.