How Microsoft will change forever and thrive again

As PC prospects decline, the tech giant moves toward a hybrid, cross-platform future with opportunities in the server closet and the cloud

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Worse, sometimes Microsoft's hardware specs work against the partnership. According to a report by Bloomberg.com, HTC had to dump plans for a large-screen Windows Phone 8 device due to the OS's current technical limitations on displays larger than 5 inches diagonally.

What's more, Windows Phone 8 can implement only a very small subset of the WinRT API. Not a major shock to seasoned application developers, but it's a sign of the gap between Microsoft's intentions for "one platform to rule them all" and the actual practice. Complaints about the complexity of the development kit, which requires a SLAT-capable processor to run the phone emulator, complicate the issue further.

These obstacles are at least as rocky as the ones Android surmounted to become a major smartphone player. But the motives are different. Google pushed Android to market to drive traffic and customers toward its ad business; if it failed, it wouldn't have hurt the company's core competence. Windows Phone 8 and Windows 8 are strongly complementary; if one fails, Microsoft's larger cross-platform, WinRT-centric strategy will be damaged.

Chris Sells, vice president of the tools division at Telerik (and himself a Microsoft veteran, as a principal program manager for the developer division working on Visual Studio), thinks the volatility of the mobile market -- the very thing that put such a dent in Microsoft's sway in the consumer market -- can work in Microsoft's favor here.

"The key to remember is that consumers switch platforms fast," says Sells. "So long as they can bring their email, contacts, appointments, pictures, and music between platforms, there's no reason in the world for them to be loyal when the next cool thing comes out."

Forrester's Rymer and Hammond agree: "Only some consumers are strongly loyal to smartphone brands, and tablets may follow the same pattern. If Microsoft and its partners can create amazing new offerings at attractive prices, enough consumers may switch back."

Blue Badge Insights' Brust feels that Windows 8 and Windows Phone 8 can and should prop each other up -- "get a virtuous cycle going," as he puts it. But Microsoft needs more apps in both stores to get there, Brust says -- possible only when a developer culture sees Windows 8, and Windows Phone 8, as worthwhile targets to begin with.

Under the Surface

Microsoft may have partnered with others to create Windows Phone devices, but what about the Surface, which sports the Microsoft brand and no one else's? Is the Surface a sign that Microsoft is becoming a hardware company and shirking its software-and-services roots?

Probably not -- for one, the Surface was developed mostly as a showcase for Windows 8, in both its x86 and ARM incarnations. It wasn't as if other Windows 8 machines with touch weren't coming to market; the Dell XPS 12, the Lenovo Yoga, and many others come to mind. But Microsoft wanted at least one machine to serve as a guiding light for what is possible, both for consumers and other manufacturers.

Surface attracted at least as much criticism as admiration, and it made others wonder if Microsoft was going to rebrand itself as a PC hardware company -- again, along the lines of Apple. It's a tempting view to take, but an incomplete one.

Forrester's Rymer says it's best not to "read too much into Microsoft's hardware ventures."

"Microsoft is simply trying to stimulate innovation in what had become a static ecosystem," Rymer says. "Close collaboration with hardware providers is one way to prompt greater innovation. Creation of new devices is another way."

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