Microsoft Corp chief executive Steve Ballmer, who will be retiring within a year, said the company is still working to make sure that the PC remains relevant as “the device of choice.”
He made his comment as Windows, which dominated computing for more than two decades, now makes up 25 percent of the firm’s 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.
Microsoft agreed earlier this month to buy Nokia Oyj’s handset unit for US$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 institutional shareholders and analysts on Thursday, the first in two years.
Ballmer said the company will have to work hard to keep the industry “north of 300 million” units.
PC shipments are set to decline 9.7 percent this year to 315.4 million and will not ever return to the peak levels reached in 2011, according to researcher IDC. The market will shrink until 2015, it said.
The slumping popularity of the devices is coming as consumers increasingly turn to smartphones and tablets, two markets where Microsoft and the PC industry have lagged.
Ballmer said his biggest regret is missing the boat on smartphones, but he said the software giant should not admit defeat just yet.
“I regret that there was a period in the early 2000s when we were so focused on what we had to do around Windows that we weren’t able to redeploy talent to the new device called the phone,” Ballmer said.
“That is [the] thing I regret the most,” he repeated. “It would have been better for Windows and our success in other foreign factors.”
The smartphone and tablet market is currently dominated by Apple Inc’s iPhone and iPad, and by devices powered by Google Inc’s Android operating system.
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 US$900 million of unsold inventory.
Ballmer told analysts that the company would perform better in the future by having its business, consumer, software and device units work together.
“Hardware and software will kind of need to evolve together,” Ballmer said.
There are only a few companies making the investments in data centers and technology needed to provide future devices and services that consumers and companies will demand, Ballmer said.
Microsoft will continue to challenge Google, which has secured pole position in Internet search and is one of the few companies with the breadth to take on Microsoft, Ballmer said.
Regulators should look at what he called Google’s “monopoly” in search, he said.
Microsoft said it is still seeking a new chief executive and did not offer any updates on the process.
“The board continues on the process that we laid out in late August,” chief financial officer Amy Hood said at the conference. “We’ll update you when appropriate.”
Hood said she would give more detailed information on the company’s new financial-reporting structure in a conference call with analysts on Thursday.