Microsoft Chief Executive Officer Steve Ballmer, who will be retiring within a year, says the company is still working to make sure that the personal computer remains relevant as “the device of choice.”
He made his comment as Windows now makes up 25 percent of revenue. The operating system slipped to become Microsoft’s third-largest business after Office, which generated 32 percent of sales, and Server and Tools, which garnered 26 percent for the latest fiscal year through June.
Ballmer’s remarks were being closely watched as he shakes up the world’s largest software maker amid a shift by consumers toward smartphones and tablets and away from PCs running Windows. The CEO overhauled Microsoft’s management and strategy to accelerate development of hardware and services, agreeing this month to buy Nokia Oyj’s handset unit for $7.2 billion.
“We must do the work to ensure that the PC stays the device of choice when they’re trying to be productive in life,” Ballmer said at a meeting for analysts and institutional shareholders Thursday, the first in two years. The company will have to work hard to keep the industry “north of 300 million” units, he said.
PC shipments will decline 9.7 percent this year to 315.4 million and won’t ever return to the peak levels it reached in 2011, according to researcher IDC. The market will shrink until 2015, it said.
Windows accounted for 3.7 percent of smartphone operating-system shipments in the second quarter, according to IDC. In the tablet market, that figure was 4.5 percent, IDC said. Microsoft’s first-ever computer hardware, the Surface tablet, sold so poorly the company had to write down $900 million of unsold inventory. “The challenges are fairly obvious and the questions are about how to execute,” said Sid Parakh, an analyst at McAdams Wright Ragen in Seattle.
“They’ve laid out a strategy of being more of a devices- and services-focused company, and started to execute on that. Nokia is part of that.”
Chief Financial Officer Amy Hood said she’ll give more detailed information on the company’s new financial-reporting structure Thursday in a conference call with analysts.