Why Steve Ballmer Still Hearts Microsoft’s Hardware Partners

Microsoft is now competing with its own partners in the tablet market, which means the company has to walk a fine line between hawking its own products and supporting its partners’ portfolios.

Why Steve Ballmer Still Hearts Microsoft’s Hardware Partners

Steve Ballmer was barreling down the center aisle at Pier 57, a dilapidated warehouse on the Hudson River. The Microsoft CEO had just wrapped his global launch of the company’s newest flagship product, Windows 8, and he’d let his guard down. After all, hundreds of reporters and attendees had rushed out of the auditorium minutes earlier, having set their sights on free sandwiches and desserts. And as oscillating blue lights bounced off of dozens of rows of empty seats, Ballmer was stomping down the middle row in his dark suit, his head jutting out over his shoulders. He was all momentum and purpose, with a whiff of panic.


“Just tell me where is he!” Ballmer barked at his high-heeled handler, who was trying to keep pace as he reached the aisle’s end and nearly leapt down some steps. Scurrying up the hall, he found who he was looking for: Yang Yuanqing, the CEO of Lenovo, the world’s largest PC maker, whose Windows 8 devices now compete with Microsoft’s own.

In fact, with so much attention paid to Microsoft’s hardware pursuits, it’s easy to forget that software is still the company’s main driver of revenue. And Microsoft’s hardware partners–such as Lenovo, HP, and Dell–are still crucial to its bottom-line. Yet likely because of media hype and consumer anticipation, the majority of attention has gone to Microsoft’s Surface tablet, its first foray into PC hardware, in addition to recent rumors that Redmond could be developing its own Surface smartphone, or even an Xbox tablet, as was reported this week. But with roughly 75% of Windows revenue coming from software purchased by these hardware manufacturers (often called OEMs), the fact is Microsoft depends on these partners now more than ever to make Windows 8 a market success.

That fact was very much on display several weeks ago at the Windows 8 launch event, as Ballmer raced toward Yuanqing and glided into a perfectly firm handshake with the Lenovo chief executive. Grasping his hand and earnestly talking him up, Ballmer looked in his element, a veteran salesman with a beaming smile, laughing and clapping during the several-minute conversation, placing his hand on Yuanqing’s shoulder before embracing his hand once again and departing.

It was clear how much Lenovo’s partnership means to Ballmer. As the two separated, I flagged down Peter Hortensius, president of Lenovo’s global product group and a member of the entourage flanking Yuanqing, and asked why we just saw such an explicit show of affection from the Microsoft CEO. “That’s what they do!” Hortensius responded with a slight grin.

Indeed, as Ballmer had just touted on stage minutes earlier, Windows 8 represents an “unprecedented opportunity” thanks to OEMs like Lenovo. He boasted that there are 670 million potential Windows upgrades in the market, and that the company expects 400 million new Windows PCs sold in the coming year. So while many pundits are pinning the hopes of Windows 8 on the Surface tablet, in reality, it’s Microsoft’s hardware partners which will make the platform a success by driving sales, market share, and developer enthusiasm. They’ll also be responsible for building out Microsoft’s Windows ecosystem across PCs, tablets, and smartphones, giving Microsoft a fighting chance against Apple and Google in mobile.

But Ballmer’s display of affection for Yuanqing also highlights the now-sensitive nature of Microsoft’s relationship with hardware makers. Because Microsoft is now competing with its own partners in the tablet market, the company has to walk a fine line between hawking its own products and supporting its partners’ portfolios. Throughout the Windows 8 launch event, it was apparent just how very careful Microsoft was to give extra attention to the OEMs’ hardware, while slipping in a mention here or there for the Surface tablet, even though it got what sounded like the loudest round of applause from the audience during the event.


I saw a similar sensitivity at the launch of the Surface event in Los Angeles, when Windows president Steven Sinofsky was asked off-stage whether its hardware partners could compete with Microsoft’s tablet. “Not today,” Sinofsky said, trying to brush aside the question before realizing how his comment could be misinterpreted. “Not–I don’t mean … I’m not saying–I mean, today’s not a good day for answering stuff like that,” he said.

Still, all the pressure and posturing has another purpose, at least from Microsoft’s perspective: Its hardware makers have to start making better hardware. As Forrester Research analyst David Johnson once told me, “The Surface is a poke in the eye of the OEM vendors that says, ‘Look guys, you’ve got to stop building junk.’ Microsoft can’t afford any more mistakes.”

[Image: Flickr user Michael O’Donnell]

About the author

Austin Carr writes about design and technology for Fast Company magazine.