Why Microsoft could not improve its hardware capabilities under Steve Ballmer

During Ballmer's period, Microsoft had introduced the Windows Phone.

Steve Ballmer talks about Microsoft's hardware capabilitiesGetty Images/Justin Sullivan

Former Microsoft CEO Steve Ballmer on Tuesday (30 May) said that under his leadership the company did not do enough to develop new hardware capabilities. He however, admitted the company had improved its capabilities in hardware since Satya Nadella replaced him as the CEO in 2014.

Although Microsoft's cloud service flourished during Ballmer's period, but the company could not report similar progress when it came to hardware.

Ballmer was at Recode's Code Conference in Rancho Palos Verdes, California, on Tuesday, where he said: "Companies get successful with an idea, with talent around the idea and with capability as a company to execute on the idea. It turns out if you want to have a second idea that is different than the first, you may need new talent, but you also need new capability. And you don't get new capability overnight."

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"But I think I was too slow, in cases, to recognise the need for new capability. And particularly in hardware. I wish we'd built the capability to be a world-class hardware company, because one of the new expressions of software is essentially the hardware, and I think we came to that later than I think the company should have built that under my leadership should have built that capability earlier than we did."

During Ballmer's period, Microsoft introduced Windows Phone. It even bought Nokia's Device & Services business, license Nokia's patents and use mapping services with Ballmer saying the effort was to accelerate the growth of Microsoft's profit in mobile devices.

The company unveiled the Surface tablet and in 2013 it made $900m (£700m) write-down for the Surface RT. Besides, the enterprise business flourished to about $20bn in revenue per year during Ballmer's time.

Meanwhile the mobile market was dominated by tech giants such as Apple, Google and others.

Ballmer said, "The thing I would say we missed with Phone is we tried to use the old techniques -- software licensing and blah, blah, blah," Ballmer said. "We tried to use all the same techniques, and the same techniques were never going to get us there. We had the wrong monetization model, we had the wrong delivery model -- all of that, and it's because we didn't build new capability."

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