To most tech watchers, Microsoft is a giant software maker.
But that's not how Microsoft sees itself anymore. For the past several months, Microsoft chief executive Steve Ballmer has repeated as often as he possibly can that the tech behemoth is now a devices and services company. He was a plain as he could be in the annual letter he wrote to shareholders in October.
"This is a significant shift, both in what we do and how we see ourselves -- as a devices and services company." Ballmer wrote. "It impacts how we run the company, how we develop new experiences, and how we take products to market for both consumers and businesses."
Microsoft pushed down that path in 2012 with its new Windows 8 operating system, which provides a platform for a bevy of Web-connected services it hopes consumers will use. And it rolled out its Surface RT tablet computer, a slick-looking slate-and-keypad combination designed to grab share in the market that Apple's iPad now dominates. There's little doubt that more devices and services will debut in the coming months.
Here are five things to look for from Microsoft in 2013:
The first tablets from Microsoft and its partners used a variant of Windows 8, called Windows RT, designed specifically for devices running the ARM system-on-a-chip architecture that keeps gadgets thin and extends battery life. Next year, beefier -- and more expensive -- tablets will emerge that run the full version of Windows 8.
It's a bit confusing for consumers. But the Windows 8 tablets will be able to do a few things the Windows RT ones can't; most notably, they'll run legacy Windows applications in the familiar desktop mode. That could have some appeal for corporate customers, who are likely to be slow to adopt the new tile-based interface on Windows RT devices.
The big test will be how bulky Windows 8 tablets are. If they're too unwieldy, consumers won't want to use them to read books and watch movies. The results will be known soon enough. Microsoft plans to roll out its Surface Pro, which runs Windows 8, in January, starting at $899.
2. Kin THREE?
Okay, not the Kin THREE. But there are signs that Microsoft could try its hand at making a mobile phone. After all, the company rolled out the Surface, competing directly with hardware makers, to showcase Windows 8 on tablets. It's not too much of a reach to believe that the company might make a mobile phone to put its Windows Phone 8 operating system in the best light.
In fact, when CRN asked Ballmer directly about it, he never quite answered the question. He pointed to a few of Microsoft's partners, then said "We'll see what happens." What's happened is that Microsoft's OS runs on less than 3 percent of all smartphones worldwide, according to IDC. So far, partners haven't created Windows Phones that have really sparked a consumer clamor. Microsoft may well think it can.
The future of Microsoft
Of course, Microsoft made mobile phones once before. The short-lived Kin ONE and Kin TWO were yanked from the market less than two months after their debut. That disaster notwithstanding, if Microsoft is really going to be a devices and services company, making its own phone seems like a possible next step.
3. Xbox Next
There's little doubt that Microsoft is already a device company. Just look no farther than its Xbox video game console. The first Xbox debuted in 2001. Its successor, the Xbox 360, hit shelves in 2005. It's remarkable that the Xbox 360 continues to sell well, even outselling Nintendo's brand new Wii U console in November, according to NPD.
But that's not stopping Microsoft from working on a follow-up console. Engineers, designers and product managers have been plugging away at a gadget, dubbed by some as Xbox Next or Xbox 720. It's likely that Microsoft will announce plans for its next console, perhaps at the Electronic Entertainment Expo in Los Angeles next June, for a 2013 holiday season debut.
It would be wrong, though, to think of the next Xbox as merely a video game console. Microsoft has been increasingly morphing the device into an entertainment system complete with movie, cable and music services. Count on the next Xbox to push even farther in that direction.
4. Skype is Microsoft's verb
Microsoft has offered plenty of services over the years, everything from Xbox Live to its Skydrive Web storage offering. But Microsoft never had a product that users invoked as a verb -- think "Googling" to search the Web -- until it bought Skype in 2011.
Skype may well be a prototypical service for Microsoft's future offerings. More than a quarter billion users tap into Skype on their PCs, tablets and smartphones. That's not enough for Microsoft, though. It's putting Skype at the heart of all its communications offerings. Starting early next year, Skype will replace Microsoft's instant messaging service, Windows Live Messenger. Microsoft's business instant messaging product, Lync, will likely also get Skypified.
And users should expect Skype to find its way into Microsoft devices too. There is already a version of Skype for Windows 8, complete with the tile-based interface that's at the core of the new operating system. Skype engineers are working on a Windows Phone application. It's not too hard to imagine that Microsoft will offer a version of Skype for the Xbox as well, letting consumers video conference using their Kinect controller, which has a camera and microphone in it.
5. Office 15
The biggest product launch for 2013 will be Office 15. There won't be many surprises in the latest installment of the largest of Microsoft products, as the company has already disclosed much of what will be in the new productivity suite, due to launch in the first quarter.
Microsoft has built in plenty of new touch-computing features for folks who use tablets or touch-enabled PCs running Windows 8. In touch mode, the new Office offers numerous small tweaks, such as spread-out icons that fingers can hit without error. And Microsoft has added thumb controls so that users holding a tablet with both hands can more easily take actions like deleting or replying to emails.
The company has also baked in deeper connections to its SkyDrive Web-based storage. It will be easy, for example, for users to move from one device to another as they create and edit documents. And SkyDrive makes it easy to share those documents with colleagues.
Rivals, such as Google Apps, allow many of the same features. Yet Microsoft dominates the world of productivity applications. It's only moved toward tablets and cloud services as the threats from others have grown. Microsoft is betting that its new offerings will be enough to keep those rivals at bay.