Microsoft CEO Ballmer suggests more hardware coming

Microsoft CEO Steve Ballmer talks about Microsoft's ''Schlaumaeuse'' (Clever Mice) education software as it is being introduced on the Windows 8 operating system in Berlin November 8, 2012.

SANTA CLARA, California (Reuters) - Microsoft Corp's chief executive said his company would look at more opportunities to build its own devices, after the launch of its Surface tablet last month, potentially bringing the software giant into competition with its hardware partners and opening the door to a Microsoft-branded phone.

"Do I anticipate that partners of ours will build the lion's share of all Windows devices over the next five years? The answer is, absolutely," Steve Ballmer said at a tech industry event in Santa Clara, California, on Wednesday.

"With that said, it is absolutely clear that there is an innovation opportunity on the scene between hardware and software and that is a scene that must not go unexploited at all by Microsoft," he said.

With the Xbox game console and now the Surface tablet -- designed to take on Apple Inc's iPad -- Ballmer has been moving Microsoft toward being a "devices and services" company that would develop its own hardware where it made sense.

Reports surfaced two weeks ago that Microsoft was already testing a design for its own phone, but the company has not confirmed anything.

Microsoft's new Surface tablet is the company's first foray into building its own PCs and has raised questions in the tech industry about how aggressively it plans to move into marketing more of its own personal computing devices.

Looking to Apple's success with its iPads and iPhones, Microsoft believes tightly controlling the design of both hardware and software can lead to superior consumer products.

But building its own tablets and "hybrid" PCs puts Microsoft into direct competition against manufacturers like Hewlett-Packard (HPQ.N), Acer (2353.TW) and Lenovo (0992.HK), who for years have been customers of Microsoft's Windows operating system.

(Reporting By Noel Randewich; Additional reporting by Bill Rigby in Seattle; Editing by Chris Gallagher)