Who Knew? Hardware Is the New Software

It wasn't long ago that Microsoft supporters and fans would laugh at Apple and Steve Jobs, saying that as wonderful as he was believed to be, he never had the kind of money that Bill Gates did. At the end of the day, those people would argue, it was software that sold products and actually mattered; not hardware.

For a long time, that was true. Dell and HP might have made their cash on hardware, but if it weren't for Windows, who would have bought the PCs? And Microsoft was able to build an entire business on the idea that delivering software was preferable to delivering hardware. Even now, Microsoft is generating billions of dollars every quarter by following that plan.

But things are starting to change. The world is becoming increasingly focused on hardware to the detriment of software. And in far more cases than ever, the number of companies that are benefiting from their hardware is on the rise. In other words, hardware is starting to drive much of what consumers and even enterprise users think about certain products.

Nowhere is that more apparent than in the case of Apple. There was a time when Microsoft was the industry's biggest company, due mainly to its software strategy. But for the last few years, Apple has reigned supreme. And although it generates significant cash from software through its App Store, it's the company's hardware that has driven its profits. Without the stellar hardware, Apple wouldn't be Apple.

[aquote]Without the stellar hardware, Apple wouldn't be Apple.[/aquote]

A similar scenario plays out when one examines Samsung Electronics. That company is using the same Android that's available in countless other devices. But what's drawing customers to its products is the hardware. To not acknowledge that would be a huge mistake.

Which, of course, brings us to Microsoft. As I've mentioned, Microsoft was always the benchmark by which all other companies were judged. And when arguments were made that software was better than hardware, Microsoft was the trump card all debaters would use. And why not? With billions of dollars in profits each quarter, it was an easy play.

But recently, Microsoft changed everything when it announced that it was initiating a massive restructure that would focus the company not so much on software, but on hardware. What's more, Steve Ballmer said that as time goes on, Microsoft will become even more hardware-friendly than it has in the past.

[aquote]Hardware has become the new software. And even Microsoft knows it.[/aquote]

Microsoft's announcement represented a seismic shift in the technology industry. The one company that, years ago, drove the idea that software development was best, is now the firm that believes the future is in hardware. In an odd turn of events, hardware has become the new software. And even Microsoft knows it.

So, what does the future look like for companies that are focused on software? Not too bad. Software is still a highly profitable and important part of the industry. But to not acknowledge that hardware is the best way to attract customers nowadays would be a huge mistake.

Just ask BlackBerry.