Steve Ballmer hints Microsoft plans to build more hardware

Ballmer's comments, as quoted by Reuters, have helped to fuel speculation that Microsoft could build its own smartphone hardware to promote its Windows Phone platform and better compete with Apple's iPhone. Recent reports have claimed that Microsoft is exploring the possibility of designing and selling its own handset with a screen size between four and five inches.

Ballmer, speaking at a tech industry event in Santa Clara, Calif., this week, said he anticipates that Microsoft's partners will "build the lion's share of Windows devices over the next five years." But he also believes his company will build more devices like the Surface.

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

Microsoft has built its own Xbox game consoles and the Zune media player, but the Surface tablet released last month represents Microsoft's first attempt at building its own hardware designed for the personal computing market. It's also a direct response to Apple's iPad, which has eaten away at sales of Windows PCs.

Meanwhile, Microsoft's Windows Phone platform has floundered against Apple's iPhone and devices running Google Android. The idea is a Microsoft-built handset running Windows Phone 8 could help to spur sales and give the company a greater share of the booming smartphone market.