Microsoft Surface For Windows 8 – is it a good idea?

Some quick and initial thoughts on MS releasing their own Surface tablets:

Q. Did I expect this?

A. A week ago, no.  A day ago, I thought it was a possibility, based on the ideas below.  I still thought that an ARM tablet for developers to have early access to was more likely.

Q. Will their OEM partners mind?

A. Yes.  Yes they will.  And they may well bitch and moan a bit.  But let me ask you a few more questions:

Assuming Microsoft really are betting the consumer shop on windows 8 (and it seems they are), do they actually have to compete with anyone other than Apple?

If Microsoft are competing with Apple, will they (based on previous experience of the OEMs) have a better chance if they make design decisions about hardware?

Would their OEM partners mind if today MS announced that they could license XBox?

Q. Will OEM partners keep on manufacturing tablets?

A. Yes.  Probably.  If I told you you could go out and sell your own ipad compatible device, do you think you might consider it.  If MS is clever they will design one device (well, two – one for ARM, one for Intel) and put it at the sweet spot, price wise, for the home user.  Other OEMs can fill the niches on price, power or features.  My bet is that they will.  A bigger question is:  if MS are successful, how long will they feel the need to support their OEMs as much as they do today in the consumer segment?

Q. Can MS function as a hardware company?

A. They don’t have to.  They are no more a hardware company than Apple.  Or indeed than Dell.  All their hardware is going to be built by the Foxcons and DNIs of the world.  What MS are is a brand label, a design house, a venture capitalist, an advertising agency and end user support.

Q. Can MS keep prices low?

A. They would be stupid not to. Each tablet sold is the loss of one windows licence fee.  So thats how much profit they need to make on the tablets.  Meanwhile, by keeping quality high, and prices low, they will be telling their OEM partners the prices they need to aim for.  There was no other way MS would be able to ensure that the pricing of windows tablets would be competitive with the iPad.

Q. Overall?

A. MS are adapting to a new marketplace. And are doing it rather slowly, but more skillfully than I would have expected a year ago.  They really do seem to be betting their consumer shop – but they are trying their best to stack the deck in their favour.  Will it work?  I think there is a good chance they will carve out a strong postion, albeit not the market leading position they used to have.  With this new hardware strategy, they are playing an interesting game : will licensing their OS to other manufacturers be a bigger win, than the amount it costs to support said manufacturers.  Interestingly Apple played this game once and that gamble didn’t pay off.

Oh, and I don’t think this affects the corporate / enterprise space at all (at this point).

Q. Will MS’s history mean they only repeat the bits of Apple’s history that they want?

A. Watch this space.


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