This week Microsoft displayed its hardware side at a media event that showed off a notebook computer, the Holo Lens augmented-reality device, and new Surface tablets and smartphones.
In particular, the Surface Book, the company’s first entry into the notebook market, was praised by some tech analysts as strong competition to Apple’s MacBooks.
Microsoft has been known for its software side since Bill Gates and Paul Allen started the company in the 1970s. The Windows operating system, the Office suite of products, and server software helped make Gates the richest man in the world.
But hardware, with products like the Xbox game console, a line of smartphones, and the Surface tablet, accounts for a growing share of Microsoft’s revenue.
In 2014 hardware products generated about 20% of the company’s revenue with $17.7 billion in sales. Hardware’s share of revenue in 2013 was just 12% on about $11 billion in sales. That was a 60% increase in hardware revenue year-to-year.
Microsoft’s move into notebooks is, indeed, notable.
For one thing, Microsoft is treading onto the territory of some of its biggest customers: Lenovo, Dell, Hewlett-Packard, Acer, and Asus, the top sellers of personal computers. Those companies license Microsoft’s Windows OS for most of the PCs they make.
Dell and HP welcomed the Surface Book to the market, saying that the computer would help build awareness of Windows 10, which was released in July, according to tech publication CRN. Lenovo, the biggest PC maker, responded by highlighting the merits of its machines.
Furthermore, the PC market — desktops and laptops — has weakened for several years, a trend that continued into 2015. PC shipments worldwide declined 9.5% in the 2015 second quarter compared to the 2014 second quarter, according to Gartner Group.
The Surface Book could make a splash, however, if businesses and consumers react to it the way reviewers did. The computer, which has a detachable screen that becomes a tablet, starts at $1,499. The company even came up with cool terms for the parts that attach and detach: the Muscle Wire lock and the Dynamic Fulcrum hinge.
Perhaps the best thing about the event was that Microsoft showed it still has game. Under the leadership of CEO Satya Nadella and his “mobile first” strategy, the company has introduced a spate of new products and well-regarded upgrades of older products. It’s ventured into new areas such as augmented reality. It even allowed users to upgrade to Windows 10 for no charge.
Microsoft’s hardware made a big splash. But can it keep the wave of innovation going?
It will have to in order to compete with rivals that include Apple, Google, Amazon, and the raft of computer makers.
Tim Green has covered business, technology, and science at newspapers and in higher education. At Hoover’s he covers computers and telecommunications. Follow him on Twitter.
Photo courtesy of Microsoft.