Microsoft CEO: Push Into Tablets Maybe Should Have Happened Sooner - Wall Street Journal (blog)

By Steven D. Jones

With its new Surface tablet and Windows 8 operating system Microsoft is creating products at the "seam" between hardware and software, something that "maybe we should have done" earlier, Chief Executive Steve Ballmer told the company's shareholders at its annual meeting.

Redmond, Wash.-based Microsoft this year launched an ambitious redesign of its software for computers, servers, phones and networks, all aimed at serving a new generation of low-power, touch-friendly mobile devices. The company's first computer, the Surface tablet, and the rest of the products were on display for shareholders gathered Wednesday in Bellevue, Wash.

"We've launched a set of fantastic new products, and I think positioned Microsoft for an incredible future," Mr. Ballmer said in prepared remarks, singling out the Surface as "great for work and play" and noting the Windows Phone 8 mobile operating system is "off to a great start."

Nonetheless, Mr. Ballmer acknowledged to shareholders that if Microsoft had moved quicker into hardware, then the company wouldn't be so far behind Apple's iPad and Android-based tablets from Google .

"Sometimes getting the innovation right across the seam between hardware and software is difficult unless you do both of them," he said.

The acknowledgment came after a provocative question from a shareholder, who remembered then-chief executive Bill Gates showing off a tablet a decade ago and calling it "the future of computing." The shareholder asked how Microsoft intended to more quickly turn its innovations into products in the future.

"Bill did hold up a tablet many years ago," replied Mr. Ballmer, as Mr. Gates, now chairman, sat on the dais beside him.

"Maybe if we had started innovating then, which is what we really did with Surface," Mr. Ballmer said, "maybe we should have done that earlier. Maybe that tablet shift would have been sooner."

Microsoft, which last year generated $73.7 billion in revenue, sits at the top of a long-running collaboration between the world's biggest makers of software, semiconductors and computers. Microsoft's Windows operating system and chips by Intel Corp. shaped personal-computer innovation for two generations. PC makers from Dell Corp. and Hewlett-Packard Co. to Lenovo Group Ltd.  followed suit.

But consumer excitement began shifting years ago to smartphones and later tablet computers that didn't rely on the Windows-Intel technology. While Mr. Gates's declaration a decade ago indicates Microsoft had an accurate vision of the future, Mr. Ballmer suggested Wednesday that the company's manufacturing partners may not have shared that vision.

"But we are building a big business working with those partners and serving a lot of needs," he said. "What we say now is there is no boundary between hardware and software."

The company says it has certified 1,500 devices to use Windows 8, although analysts estimate there now are fewer than 100 in the marketplace. Many devices won't arrive until next year. Regardless, Mr. Ballmer said Microsoft is determined to propel change, even suggesting there could be other Microsoft-branded hardware.

"I feel pretty good our level of innovations would stack up against anybody," he said. "And from a hardware-software perspective, we are really pushing forward aggressively on that boundary."