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Tuesday 16 September 2014

Ballmer steers Microsoft in new direction to challenge Apple

Bill Rigby

Published 11/10/2012 | 05:00

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Steve Ballmer, Microsoft's chief executive. Photo: Getty Images

MICROSOFT chief executive Steve Ballmer has signalled 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.

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Mr Ballmer's comments in his annual letter to shareholders 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 Mr Ballmer.

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

Mr 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, 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.

Services

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 in the letter which was published on Tuesday.

Alongside the shareholders' letter, Microsoft's annual proxy filing, which deals with the shareholders' meeting and other governance issues, showed that Mr Ballmer (56) got a lower bonus than he did last year, partly for flat sales of Windows and his failure to ensure that the company provided a choice of browser to some European customers.

Bonus

He earned a bonus of $620,000 (€480,000) for the 2012 fiscal year, which ended in June, down 9pc from the year before.

His salary, which is low by US standards for chief executives, remained essentially flat at $685,000.

It is the third year in a row that Ballmer has not earned his maximum bonus, set at twice his salary.

Microsoft's recent financial year was scarred by a $6.2bn (€4.8bn) write-down for a failed acquisition and lower profit from its flagship Windows system as computer sales stood still. (Reuters)

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