Dive Brief:

• Former Microsoft CEO Steve Ballmer said he and Bill Gates disagreed years ago about whether Microsoft should make its own hardware.

• "There was a fundamental disagreement about how important it was to be in the hardware business," Ballmer said, according to a Bloomberg report. "I had pushed Surface. The board had been a little — little reluctant in supporting it. And then things came to a climax around what to do about the phone business."

• The dispute ultimately damaged their relationship, though they had a "brotherly relationship in the good parts and the bad parts," Ballmer said. He had served as CEO at Microsoft for 14 years.

Dive Insight:

Ballmer said his only regret was not entering the mobile device market years earlier. "I would have moved into the hardware business faster and recognized that what we had in the PC, where there was a separation of chips, systems and software, wasn't largely gonna reproduce itself in the mobile world," Ballmer said. 

By the time Microsoft did, it had already missed the boat in several areas. As a more recent result, the company has announced broad layoffs as it shifts almost entirely away from the phone business. 

Microsoft, under Ballmer, was a much different company than it is today. Under his leadership, the stock price had stagnated. Now the company’s latest earnings were better-than-expected, boosted by a strong showing in its cloud business. Revenue from the company's Azure cloud offering grew 116% year-over-year for the quarter. The company’s entire cloud segment brought in $6.38 billion for the period, proving Microsoft has learned to adapt to a changing tech landscape, with or without hardware.

Under current CEO Satya Nadella's leadership, Microsoft has looked for "natural" points of integration in its offerings, which led the company to acquire LinkedIn.