 You already know that Microsoft makes hardware. It makes the Xbox and it makes weird computers. In fact, making computers differently is kind of the whole point. But eventually, Microsoft needs to make other stuff. Now, before we get there, though, we wanted to see how Microsoft makes hardware to see if there are hints about what's coming next. So we came here to Microsoft's Design Lab and their machine shop to look at everything that they do to make hardware. We've talked to engineers and designers to figure out what Microsoft's philosophy is for creating products. The occasion for our visit was the design story behind the Microsoft Surface Book 2. Weirdly enough, a lot of the design stories at these labs ends up boiling down to hinges. Yes, hinges. Those little bend points are the things that distinguish Microsoft's hardware from everybody else's. They make these computers the transformers that keep Windows relevant when everything else is basically a phone now. So Ralph Green, the head of industrial design at Microsoft, spends a lot of time on hinges. What you see here, it's a neat table because it kind of is a great snapshot of how we work. The ideas travel through these three states from primitive. You come up with an idea, you glue a kickstand on a tablet, and you think, oh, that's it, let's go. You think you're almost done. And then when you go further, you figure out how hard it is to make it, right? Surface Book, we detach it. It is, in the end, seamless. You go into what we call clipboard mode. And if you ever get close to product development process, you will find out that a bunch of ideas, most of the ideas don't end up being the final product. And understanding why not and moving on to the next idea is essential in order to make progress. Hanging out at Microsoft's lab, I got the real sense that the company has a pretty set system down now. Here's the obvious question. Why do they even need that system in the first place? Well, Microsoft wants to sell you stuff. But it also has to make hardware to keep improving its software. Microsoft can't make Windows better unless it understands how it works on actual machines. Basically, if Microsoft doesn't push the envelope on Windows hardware, nobody else will. Here's how Panos Panay, the head of Microsoft's Surface division, puts it. You think about Windows and how we're thinking about writing to the steel, how we drive ourselves to increase performance, push battery life. I think that's what matters because it pushes our innovation story forward. But it helps our customer do anything they want. And that's where we kind of put our energy. And I think that's where we start seeing the fruits of it all because people are creating such magnificent things off these devices. We have customers that are going to be able to move in and out of their mixed reality world, move in and out of OneNote with a pen. And then when they sit back down, jump into Office, jump into machine learning, jump into Visual Studio. Like, push yourself where you want to push it. I think understanding where the customer is going to take it is important. Did you hear what he just said? Microsoft has to understand where the customer is going to take it. And we all know where the customers already are. They're taking everything on their phones now. Android is the most used operating system on the planet. And the best apps usually come to the iPhone first. The folks at Microsoft aren't really willing to talk about making phones again, not yet. But they are thinking a lot about where computing is going. We think about how computing evolves. And it evolves with someone like Satya setting us into a direction. And so there's the aspects of being mobile, where you want to be in your profession and you choose where that is. You don't want to go to your computer. Your computer should be with you. And devices connected across. Your assets not living on one thing that's spinning, but your assets living in the cloud accessible to wherever you go. Being able to participate. Your assets are your colleagues, your conversations. And so this whole world of moving from things in a box to providing things that are around you in a very digital, seamless way, I think that's what gets us inspired for these. It's not about making pretty shells. It's about connecting people. And so that's something. That sounds like you should make a phone. Ha ha. Who knows? Now, yeah, that is really all Microsoft can say about phones right now. But there are rumors that something new is coming. Sure, they might make a phone again. And hell, it might even run Android. But there's also rumors that Microsoft might be working on something completely new. And I'm not talking about the HoloLens. I'm talking about a dual screen tablet that's similar to that courier concept that got killed off a few years ago. Can they do it? Well, the hardware division certainly can. Microsoft has already shown that it can make Windows work on a gaming console and on all sorts of different computer shapes. But they couldn't make it work on phones. Whatever Microsoft does next, it's really got to be something totally weirdly new. The company has learned how to make computers in all sorts of different shapes. But if Microsoft really has a courier sitting somewhere inside its hardware labs, I know for a fact that a lot is going to hinge on its hinges. We'll start an index process later to create the shape, the structure of the unit. Please calculate. It's going to each one to select the hardware. Nice.