There's this quote by super mad genius computer scientist Alan Kay that people come back to a lot: "People who are really serious about software should make their own hardware."
For a long time, that's meant Apple. Apple designs and creates hardware, along with the software that runs on it. And in a way that's been even more true over time — in the last few years, Apple's bought chip companies so it can design the brains of its iOS devices in house. The theory is that it simply works better that way, because it all works together. The software is perfectly tailored for the hardware — the chips inside, the buttons, the screen — and the hardware is crafted with the software in mind. Apple even constructed its own distribution system, with the Apple Store. Kind of like the old vertically integrated Hollywood studio system. It controls every aspect of the experience (unless you go to a Best Buy, but even they're required to raise an Apple obelisk in the store, like a portal into another world, Apple World).
Microsoft, the biggest software company in the world, has done the opposite for the last couple of decades: It makes software and sells it to a hardware company like HP or Dell or Samsung. They turn around and sell you a computer or phone with Microsoft's software installed on it. This has worked pretty well by at least one measure: volume. Windows was on over 90 percent of the world's computers for nearly two decades, and is still on the totally overwhelming majority of them.
But something's changed. Microsoft's most beloved product is the Xbox 360 and Kinect, which Microsoft constructed atoms to bits. It's now designing, building and selling its own tablet, Surface, to be a "stage for Windows." It did this in secret, without telling the companies that've been making Windows PCs for years. Surface's killer feature is probably a piece of hardware. From a "software company." When it launched Windows Phone in Fall 2010, it architected the hardware for partners like Samsung to follow. Then it went ahead and more or less bought its own phone company anyway, in a multi-billion dollar deal with Nokia. (The trick is that Microsoft got most of the benefits of buying Nokia without any of the downsides.) Oh, and it's building out Microsoft Stores like crazy, in which it'll exclusively sell Surface tablets.
In a sentence, Microsoft, the world's biggest and most important software company, is now effectively designing and building the hardware for the three products most critical to its future: Windows, Xbox and Phone. And building its own distribution system for them. Because it got really serious about its software.
Phones and computers and TV boxes are not single-celled organisms floating in a primordial sea of electricity anymore. They're parts of complex organisms. Hardware is the skeleton and guts; the internet and wireless connectivty is sinew; software is the meat. It's what people ultimately touch and experience when they use technology. It's not surprising Microsoft announced yesterday that Windows Phone 8 is going to run the same Windows core as Windows 8 itself — and I suspect the next Xbox will run it as well.
It's not a neat trick that a Windows 8 tablet can seamlessly connect to an Xbox 360 or a Windows Phone — and all of those things back to each other — any more than it's a neat trick you can touch your nose. They're both complicated, coordinated actions, in a way. But it's just how things are supposed to work. What we've seen and experienced over the past few years is that the only way to orchestrate those simple-but-complex actions is to control the entire system. Bones, muscles, nerves. Otherwise you end up poking yourself in the eye a lot.
There's a very good money reason for Microsoft to start selling complete pieces of technology, designed end-to-end. But I think it just wants to be able to scratch its nose.
Even Google, whose eventual endgame is having you live your life in a browser, designs a Nexus phone every year, the pinnacle of Android, that it collaborates super tightly with a manufacturer to produce, which it originally intended to distribute itself. This year, it's probably putting out a Nexus tablet, too.
And what of the "hardware companies"? Well, they're making more and more of their own software. Samsung's software already smothers Google's Android, and it's building its own phone OS from the ground up. HTC's talked about buying its own mobile OS. The whole HP-Palm debacle was because HP wanted its own platform that would run on everything from PCs to phones to tablets to...printers.
What this means for you is that there's going to be a day, very, very, very soon — pretty much now — where it's going to be dumb to buy a phone or computer that wasn't built — hardware-software-services — by Microsoft or Apple or Google, the three companies whose platforms you're going to be using for the foreseeable future. Not quite as soon, but eventually, you might not even have a choice. Well your choice will be very simple: Apple, Google or Microsoft. It'll be better that way, probably. People don't like choices very much anyway.