Of course, the marketing budget will always be there for Microsoft, and the hardware could become a bit more interesting once the Nokia deal closes, which is expected within the next month. But, not all of the hardware questions will be answered with that acquisition. To a certain extent, the acquisition will create more questions. Some have likened this deal to Google buying Motorola, but that's not quite the right comparison. The general idea between both was that the purchase would give each too much power in the market, but really that would have only been true if Google had purchased Samsung. Motorola had the brand name recognition, but not the consumer attraction. On the other hand, Nokia is responsible for upwards of 90% of all Windows Phone handset sales, so the purchase has a huge impact on the platform as a whole.
Microsoft's hardware brand
Theoretically, a good amount of those sales will transfer over to Microsoft once the deal is complete. Microsoft is getting the Luma brand name in the deal, which may help mitigate the fact that the devices won't be carrying the Nokia branding anymore. But, that Nokia branding has a lot more value in a lot more regions than the Microsoft brand does. Microsoft has spent the past fifteen years or so making decisions that have eroded the value of the Microsoft brand. And, Microsoft has never really had much cachet in the world of hardware, because the company has never really built much in terms of hardware, it has mostly been a software and services company. The most successful piece of hardware built by Microsoft (perhaps tellingly) doesn't even carry the company's name, it is simply known as the Xbox (original, 360, or One).
If you're looking for hardware that carried the Microsoft brand, there were the ill-fated Kin smartphones, various keyboards and mice, and there was the Microsoft Zune. The Zune which did nothing to help the company's image as offering solid hardware, because while there were multiple models released from 2006 to 2009, it was never a real competitor to the iPod.
The Microsoft Surface tablets haven't had the most impressive design. They have been nice enough, if a bit utilitarian. Though, it's unclear how much Nokia's team will help to change that. Nokia devices have iconic designs, that much can't be argued; and, Nokia designs tend to be better than Microsoft, but they aren't always top of the line. Nokia makes great hardware, but it tends to be on the chunky side, but that may just be to fit in with Nokia's history of building brick-like handsets that are as tough as they feel (which is getting harder and harder as screens get bigger and bigger.) Still, building tough hardware is something that fits with what Microsoft has done with the Surface.
It does seem like a fairly reasonable assumption to assume that Nokia's recent foray into Android devices won't last too long, once Microsoft takes over. It is hard to believe that Microsoft would want to keep Android products in its arsenal (it would rather make money from Android via patent licensing to Android makers), especially since the new features of Windows Phone 8.1 are aiming to make the Nokia X lineup unnecessary. But, just because we know what will see its existence end in terms of Nokia hardware doesn't mean that we know what there will be from Microsoft.
The general consensus is that wearables are going to be the big thing in terms of hardware this year, but there has been very little in terms of rumors as to what Microsoft is planning for this shift. Microsoft is still trying to shore up the Windows foundation right now, which makes it understandable that it might not be putting too much attention towards the coming wearable wave. But, Microsoft was already caught behind the curve when it came to the smartphone revolution and has been trying to play catch-up, and it would seem to make sense that Microsoft doesn't want to get caught behind again.
As we've mentioned before, voice command systems are a key to wearable devices; but, as we have also mentioned, Microsoft's Cortana virtual assistant is just on the way soon with Windows Phone 8.1. While the early speculation is putting high hopes into the features that Cortana will offer, we don't actually know that Microsoft's voice recognition software will be up to par. Voice command in desktop Windows works fairly well, but that is usually tested in a relatively quiet environment with a dedicated headset. This is very different from the world of mobile devices, which often have to contend with very noisy environments in the outdoors.
Even assuming Cortana is up to the task in terms of voice recognition, the other trouble is that the smartwatches being developed by Nokia may not actually be part of the acquisition deal. There have been rumors that the Nokia smartwatch (not pictured above), which is said to be on its way later this year, is being developed by a team that will stay with the Finnish company, which also means that there is no guarantee that it will run a version of Windows. There have been a couple rumors pointing to Microsoft building its own wearable devices, including a smartwatch (also not pictured above) and an eyeglass wearable, but there had been nothing yet to give us the idea that any of these devices will be ready for wider release this year, until a few days ago when it was reported that Microsoft had purchased a wearable tech company for as much as $150 million.
Microsoft still has a lot to do just to get Windows Phone and Windows RT on par with the competition in the mobile ecosystem, but a fair bit of that work could be settled if Cortana can come through on its promises, and quite a bit more may come from Satya Nadella's expertise in cloud services. Windows Phone has momentum in the low-end, which can eventually translate to the high-end market, as Android has proven, but that can be a slow process. Still, the combination of Windows Phone 8.1, Microsoft's nearly-closed acquisition of Nokia, and a new CEO make this a very interesting point in time for the Windows platform.
Windows Pro tablets and desktops may continue to struggle to win over the hardcore PC crowd, although it seems as though Microsoft may be willing to give in to the demands of that population, rather than push forwards with its own plans. That may help in the short term, but it likely won't help the platform make the transition to mobile; and, given that mobile is where the entire industry is going, that could prove to be a very dangerous move by Microsoft.
However, it is still possible that we could see a ground-up movement with Microsoft's platform, which would be quite the opposite of what Microsoft expected itself. Microsoft hoped that its dominance in desktops would help to drive users towards mobile, but it may actually turn out that Microsoft's growth in mobile helps to buoy the sinking desktop segment. Windows Phone is doing relatively well, all things considered. And, while it may not be going to challenge Android or iOS in the near future, it could keep up its momentum and begin to challenge iOS eventually (at least in terms of market share, since profits are a very different beast). The Windows Phone 8.1 update could very well lead to some very important help in kickstarting the Windows RT app ecosystem. This could then mean that Windows Phone users could start shifting up into the Windows tablet space, which could then change the perception of Windows 8 tablets and PCs. It's a very long road, and certainly not the most likely scenario, but it is possible. Possible may not be the same as likely, but it's also not the same as unlikely.
Microsoft has a way to go, and a lot of work to be done. It will need a little luck and some very good decisions by new CEO Satya Nadella, but there are plenty of signs to give the Windows faithful hope for the platform. As we have said for a long time, it is never a good idea to count out a company as large as Microsoft, and with the various events unfolding this year, it is definitely possible that we will look back on 2014 as the year Microsoft started its comeback.