The tech industry has always been obsessed with Apple’s massive treasure chest of cash. However, Microsoft has its own cash vault to deal with: it’s sitting on about $60bn of money that it is just waiting to spend.
Tech experts are saying that Microsoft might use its cash to change its entire business model. After Microsoft announced the new Surface tablet several weeks ago (the company’s first major hardware project since the Xbox 360), many have been wondering what lies next for the world’s largest software company.
According to those close to Microsoft, Steve Ballmer and his company are willing to do “whatever it takes to achieve success” and that could include blowing up “the partner network Microsoft helped create”.
What is CNET referring to with those quotes? Well, Microsoft has always created the software while letting other companies – like HP and Asus – to develop the hardware. These are the ‘partners’. But judging by the announcement of the Surface and Windows Phone 8, Microsoft might not trust its partners to develop the top-quality computing experiences that it needs in order to compete with Apple.
Focusing on more hardware development would allow Microsoft to go head to head against its biggest competitor – Apple. Apple has had great success by creating fantastic hardware products and pairing those products with its own operating systems. Instead of making the majority of its money off of software products (like Microsoft), the majority of Apple’s cash has come from hardware sales.
With piracy running rampant, it’s becoming more and more difficult to create long-term success in the software industry. With free operating systems like Linux and Linux-based Android being sold for free to hardware manufacturers, it’s tough for Windows tablets and Windows hardware to compete – particularly with the $70 or $80 OEM price tag that Microsoft attaches to its operating system sales.
The next few years will be interesting for Microsoft. If they handle the launch of the Surface properly, the company will have the confidence – and the cash – to continue creating ambitious hardware projects. With $60bn of cash ready to be deployed, who knows which market Microsoft could tackle next?