The announcement of Steve Ballmer's impending retirement from Microsoft cast a spotlight on the company's transition to becoming a devices and services company. While it's unclear how progress toward this goal will be measured, the success model for the "devices" part of its quest is Apple. (Indeed, Apple, leading with iCloud, is seeking to diversify into more of a "devices and services" company itself.)
Apple's current revenue champions -- the iPhone and iPad -- are in categories that Microsoft recognized the potential of long before Apple's market entry. When the US smartphone market consisted of Microsoft, Palm and RIM, Windows Mobile had been powering smartphones -- and doing respectably in terms of US market share -- for years before Apple changed the game. Now, Windows Phone scrapes by with a few percentage points of the market. And the Tablet PCs that ran Windows a decade ago were introduced as the future of the notebook. While today's Windows tablets and convertibles are much thinner and lighter than they were back then, it's amazing to see how recalcitrant PC vendors have been in their design, with few pursuing pure slates and some using twist-hinges similar to those used in Tablet PCs.
Why is this? In both cases, by the time Microsoft responded, Apple had already established a huge beachhead. Devices using Microsoft products had to either risk appearing as copies or be pushed to more of a niche focus (41-megapixel cameras, anyone?) in the name of differentiation.
A head of speculation now points to a watch as the next target of Apple's ecosystem expansion.
A head of speculation now points to a watch as the next target of Apple's ecosystem expansion. As Google understands well with Google Glass, wearables represent perhaps the last opportunity short of implantables (or perhaps "tattoos" like the kind MC10 is creating) to intercept the smartphone as a ubiquitous personal digital presence.
Here, too, Microsoft was an early believer. Its MSN Direct / SPOT watches combined wireless connectivity and glanceable information in an era before today's high-speed wireless data, high smartphone penetration, low-powered Bluetooth and sunlight-optimized displays that characterize the current crop of smartwatches.
There have been occasional whispers that Microsoft is indeed working on a modern smartwatch, but to get it out a year or two after an Apple watch hits will be too late. Clearly, whatever Apple's working on must be a significant departure from the focus of the dozen or so smartwatches that many Engadget readers have surely helped fund on Kickstarter and Indiegogo.
While products such as the Zune HD and Surface may have flopped commercially, they represented solid -- certainly thoughtful -- designs.
While products such as the Zune HD and Surface may have flopped commercially, they represented solid -- certainly thoughtful -- designs. Microsoft needs to drive that level of design into a watch or other wearable that plants the seeds of what it can claim is the post-smartphone era. It doesn't even have to be much more complex than something that would display select Live Tiles from a Windows Phone. Microsoft could release apps to make it compatible with iOS and Android, but of course it would work best with Windows Phones and PCs. A successful smartwatch would certainly have a halo effect on smartphones.
In corporate software, Microsoft was once the master of leveraging one product to sell another. Office helped sell Windows and Windows clients paved the way for Windows servers. But for the last decade in consumer hardware, it's been Apple that's executed well in that respect. The iPod helped sell Macs and the iPhone paved the way for the iPad. If it doesn't establish a wearable now, the SPOT watch may join the Tablet PC and Windows Mobile phones as categories where Microsoft got to the dock early, but ultimately missed the boat.
Ross Rubin is principal analyst at Reticle Research, a research and advisory firm focusing on consumer technology adoption. He shares commentary at Techspressive and on Twitter at @rossrubin.