Knowledge@Wharton writes about Microsoft’s vertically integarted approach:
Microsoft, well known as a software giant, is increasingly dabbling in hardware and playing a bigger role in product design. The big question is: Why? While some analysts dismiss Microsoft’s efforts as Apple envy, experts at Wharton say there is a bigger picture. Microsoft wants more control over integrating its software with the gadgets that could open new markets. Its real mission: Find new vertical markets to dominate so it can continue to grow even if its Windows monopoly erodes.
Among the signs Microsoft is changing:
* It’s increasingly focused on hardware and software integration with efforts like Zune;
* It doesn’t try to fit full-blown Windows into every device. For instance, the Xbox doesn’t use Windows software;
* It’s increasingly focused on web services through initiatives like Windows Live.