feature article
Subscribe Now

The Microsoft-alypse

Surface Tablets Spell Doom for the Redmond Giant

It was the Surface announcement that finally did it for me.

A few weeks ago, Microsoft announced its intention to make cool new tablet computers, called Surface. CEO Steve Ballmer and other senior executives held up two shiny new tablets, a big one and a small one, and demonstrated all the slick new things they could do. The announcement made the front page of the Wall Street Journal as well as newspapers and tech blogs around the world. “Game on!” everyone said. “Now Apple has a credible competitor to the iPad.” Counting Google (not to mention Kindle Fire and similar mini-tabs), it’s shaping up to be a three-horse race.

Predictably, the Apple aficionados and Mac bigots in the audience made fun of Ballmer’s on-stage presence. The guy is no Steve Jobs, that’s for sure. Ballmer stumbled a bit in his presentation, even stopping in mid-sentence, as if rethinking what he wanted to say. Almost as if… as if the entire event had been thrown together at the last minute. Hmmm….

I’m not usually given to apocalyptic prognostications, but I think Microsoft has finally jumped the shark. The Surface announcement was the turning point, and the company is now edging toward the abyss. You’ll be able to tell your kids about when Microsoft used to be the dominant software company in the world, right up until it tried making tablets.

Let me explain. It’s got nothing to do with Ballmer’s presentation skills – it would be pretty shallow to judge a company’s prospects by its CEO’s stagecraft – but more with the way Microsoft handled Surface in general. For starters, it came as a total surprise to Microsoft’s “partners,” the companies like Dell, HP, Lenovo, and others around the world that make PCs. These are the firms that have paid Microsoft’s rent for 25 years, and they were totally blindsided, some of them learning about Surface when they read it in the newspaper. At a stroke, Microsoft went from being their software supplier to being their competitor. Most, if not all, of those PC makers were already working on their own tablet designs, aided and abetted by Microsoft. Indeed, Microsoft reportedly stepped in and helped guide the OEMs’ hardware designs so that the tablets would work well when Windows 8 was released. Then – surprise! – Microsoft announces it’s making its own tablets to compete with the ones it just watched its partners design.

The fallout was immediate. Microsoft’s senior vice president in charge of all OEM relationships worldwide was abruptly reassigned and went on sabbatical the week after the Surface announcement. Could it be that he was blindsided, too? Or did Dell, HP, and the other hardware vendors ask for his head on a pike for poleaxing them in such a public manner? 

Back to Ballmer’s presentation. Apart from announcing that Microsoft will make tablets, there was no useful information about them. How much will they cost? When will they be available? What apps will they run? What stores will carry them? On all these points Microsoft was silent. It was the worst possible kind of announcement. It had just enough information to antagonize the other tablet makers, but too little information to be of any use to consumers. Should they hold off purchasing an iPad and wait for Surface instead? Can they get one before back-to-school season? How much will it cost? From a marketing perspective, it was a mess.

Competing with your hardware vendors is one thing. Competing on uneven terms just adds insult to injury. Tablet makers reportedly have to pay a $90 licensing fee for Windows RT (the version of Windows 8 for ARM processors). Microsoft pays itself no such fee, of course, which means it has a built-in $90 cost advantage over its partners/competitors. For a hypothetical $500 tablet, that’s an 18% difference – probably more than the entire profit margin of the tablet. How are HP and the others supposed to compete when they’re starting out 18% in the hole?

Microsoft also mandates that all tablet apps must be sold exclusively through its online Marketplace app store (just like Apple’s App Store), where it takes a 30% cut of all sales (again, just like Apple). And like Apple, Microsoft has veto power over which apps can be sold. If the company doesn’t like the look of your app, it can’t be sold, period. All of which means loyal OEMs can’t create or sell whatever apps they want; they have to get Microsoft’s approval. And pay for the privilege. They can’t even load third-party crapware onto their tablets, as they do with PCs, to offset the cost or eke out some profit. 

Just days after the Surface announcement, HP made a public show of canceling its Windows RT tablet. (The company still plans to go ahead with an x86-based tablet.) The HP design was just weeks away from completion, too. This was a project that was far along, presumably with Microsoft looking over HP’s shoulder the entire time to make sure the hardware and software played well together. Too bad the companies don’t play so well together. The world’s biggest software company just made an enemy of world’s biggest PC maker. Not a conventional strategy.

It bears repeating that Windows RT systems won’t run existing Windows applications or drivers. It’s not even clear that x86-based Windows 8 systems will run older Windows software, but ARM-based machines definitely won’t. And without the big catalog of applications, consumers won’t be interested in Windows RT. It looks like Windows, it acts like Windows, but it doesn’t run my old programs like Windows. What was the point again?

The one application we do know will run on Windows RT is Office (i.e., Microsoft Word, Excel, and PowerPoint). That’s because Office comes bundled with Windows RT; you can’t get one without the other. That may explain why RT’s licensing fee is so high. Tablet makers get an application suite with their operating system whether they like it or not. Presumably, they could remove Office from their tablets and replace it with something else, but why bother if you’re already paying for it? Or Office might be tightly integrated with RT the way Internet Explorer was bundled with Windows 98, a practice the Department of Justice found legally suspect. 

There’s yet another version of Windows 8, of course, and that’s Windows Phone 8 (WP8). Once-mighty cellphone maker Nokia bet its entire smartphone product line on Windows Phone 7 – right up until Microsoft surprised Nokia and its customers by announcing that phones running WP7 can’t be upgraded to WP8. The sudden drop in Nokia’s smartphone sales and stock price could be heard all the way from Finland.

Two weeks later, Nokia’s Chairman appeared on television to say he has “a backup plan” in case Windows Phone fails. Take that, Redmond.

Taken all together, I see this as the beginning of the end for Microsoft. I’m no Microsoft basher (that’s too easy), nor am I an Android apologist, Linux weenie, or Steve Jobs hagiographer. I use Microsoft (and Apple, and Linux…) products all the time; probably more than is good for me. Although Microsoft’s products have their many faults, they’ve powered an unprecedented boom in the computer industry. That’s got to mean something.

Still, I can’t help thinking that the magic fairy dust surrounding Redmond has finally dissipated. In a sense, Microsoft never really had to compete in the market. Almost from the beginning, MS-DOS and Windows were the de facto standards for an entire industry, with no serious challengers. Sure, Microsoft improved (or at least, altered) its products regularly, but not necessarily in ways that aligned with customers’ wishes or moved the industry forward. The company’s long dominance led to a kind of sloth and lethargy. Being a monopoly means never having to say you’re sorry.

And few customers really like Windows all that much, anyway. Just like Intel’s processor chips, we choose it not because we prefer it but because it’s the only way to get at our favorite applications. Windows is an enabler: a delivery mechanism for our favorite drug. Windows itself is uninteresting to most people. It’s simply the bridge we cross to get to the other side. And the toll has made Microsoft one of the world’s biggest corporations.

On a harsher note, we could say that Microsoft was never really a very good or a very smart company, just one with a lot of money and clout in the industry. It wasn’t even Microsoft’s products that led to its success; it was the applications it hosted. Now that the app landscape has changed, the delivery mechanism is no longer as addictive. Windows itself is losing whatever moderately attractive features it once had, and the company is left to scramble for relevance. Like a cornered animal, it has now turned on its keepers, biting the hand that feeds it. Windows tablets, and Surface in particular, will prove the company’s undoing. For all its clout and influence, Microsoft doesn’t have a good brand reputation with consumers. Annoying your customer base for twenty-odd years will do that. Apple, Sony, Amazon, Samsung, LG, Google (perhaps), and a few others are more consumer-oriented and customer-friendly. One of them is likely to lead us into the next generation of computing dominance. So long, Microsoft. I can’t say I’ll really miss you. 

10 thoughts on “The Microsoft-alypse”

  1. I did have to chuckle at a Failblog photo montage I saw a few weeks ago. It showed:

    – Bill Gates announcing a tablet-like machine a long time ago – and no one noticed. (Perhaps it was their Newton moment.)
    – Then Steve Jobs announces one many years later, and the fanboys faint in their tracks.
    – Then Steve Ballmer announces Microsoft’s second one, and everyone accuses them of copying Apple.

  2. Remember the Convergent Technologies WorkSlate? No? Another early tablet design that went approximately nowhere.

    It’s easy to think up a tablet computer. What’s hard is making one that works well enough for people to want it. I’m sure someone beat Convergent Technologies to the punch, too. That’s just the earliest one I can remember. Jules Verne probably thought of something similar.

    I think “Microsoft copied Apple” is just a lot of peoples’ default response. It’s probably mapped to the splat-F key on their Macs.

  3. When I heard about the Surface tablet, I thought “Hadn’t we seen this before?”

    I seem to recall that a few years ago, Microsoft was showing off a coffee-table-sized contraption that was the Future of Computing, with a cool 2D/3D user interface. It was called Surface. The press oohed and aahed for a few weeks, and then it vanished.

  4. It didn’t vanish; it got smaller. It’s not by accident that the new tablets are called Surface, too. MS was testing and demo’ing its touch interface.

  5. Microsoft’s own success has been a huge problem, being number one for so long is not easy because every direction is down.

    Scott McNealy laughed when Microsoft came out with GUI’s and servers and then Big Scott rode his vision of the PC right into the toilet, too bad for the shareholders whose equity was evaporated. His write once, and debug perpetually Java failure was a big disaster. Oracle bought into it and it cratered their profits.

    Larry Ellison laughed when Microsoft came out with SQL Server, the sales of which forced Ellison and Oracle into being a software services company becuase Oracle loses money on their relational database.

    All the Unix God’s of the 90’s had Windows Server eat their lunch, bang their wives, and steal their future. SGI, Integraph and DEC are the reference standards here. Anyone out their still program Vaxes or big Unix iron? Not many.

    Ballmer is a disaster Microsoft and missed the tablet market, but they also missed the Internet and turned it around. Ballmer needs to be canned he’s a sales manager and a cheerleader not a CEO. Bill Gates will come out of retirement and get the vision thing back online. Steve Jobs sells cool and he got his customers to pay too much for too little for too long. He’s dead, his company will be as well. What is cool about middle age? Ozzy? Apple’s are toys. How many finite element, financial analysis, or CAD tools run on Apple?Does anyone think Toys R Us rules the world? Apple will be $20/share again.

    Like GM Microsoft makes too many products that compete with one another. They should slash money losers and build a version of Windows that runs on Apple hardware. The boldest move of all would be to take things like BizTalk, Sharepoint, and SQL Server and open source them, BSD not GPL! The money saved can be plowed into handheld, visual (glasses, HUD’s and transdaprent flexible surfaces and wearable computing. They should get serious about an Electronic Medical Record application technology using what they have opened sourced and let others maintain the low tech things like servers!

    All the heavyweights Microsoft, Google, HP and Oracle have their eyes on Apple handheld leadership. Apple success is creating markets no one else is in. They are not successful competing as broad scale applicaiton enabler. How many software millionaire’s from Apple? A hundred, Microsoft made more than 5,000. Google is catching up. That is a measure of innovation the valkue it creates. iPods will eventually like long distance phone carriers, boring, unprofitable.

    It will be easy picking becuase Apple is a sales organization not a business workflow engeering organization, and that is where the consistent mnoney is.

    New iPods do little more than Old IPods and people will eventually stop buying them.

  6. Jim, While I emotionally agree with you, my gut feel suggests that with the full blown Surface running standard Windows 8, Microsoft have at least a short term winner. Virually every CIO is going to say to people that if they want a tablet to connect to the enterprise network it has to be Microsoft. And for the users it will be the same software wherever they are and whatever they are doing. If it will be a long term success, I don’t know, but then, prediction is always fdifficult, especially the future.

  7. Dick, I agree completely that an x86-based Surface tablet will be much more agreeable to corporate CIOs than an ARM-based Surface tablet. The former is just Windows 8 in another form; the latter is an alien object with a Microsoft logo and no apps.

  8. Evidently Surface tablets go on sale October 26.

    What flabbergasts me is that this tidbit of information leaked out in a 10-K financial filing. Not a press event; not a TV commercial; not a print advertisement. No public comment from the maker of Surface at all, just a footnote in a report.

    And still no word on pricing, retail channels, or software availability.

    If Microsoft is so serious about Surface tablets that it’s willing to throw its PC partners under the bus, don’t you think they’d make just a *bit* of a splash ahead of the release of the product?

Leave a Reply

featured blogs
Mar 29, 2024
By Mark Williams, Sr Software Engineering Group Director Translator: Masaru Yasukawa 差動アンプはã1つの入力信号ではなく2つの入力信号間の差にゲインをé...
Mar 26, 2024
Learn how GPU acceleration impacts digital chip design implementation, expanding beyond chip simulation to fulfill compute demands of the RTL-to-GDSII process.The post Can GPUs Accelerate Digital Design Implementation? appeared first on Chip Design....
Mar 21, 2024
The awesome thing about these machines is that you are limited only by your imagination, and I've got a GREAT imagination....

featured video

We are Altera. We are for the innovators.

Sponsored by Intel

Today we embark on an exciting journey as we transition to Altera, an Intel Company. In a world of endless opportunities and challenges, we are here to provide the flexibility needed by our ecosystem of customers and partners to pioneer and accelerate innovation. As we leap into the future, we are committed to providing easy-to-design and deploy leadership programmable solutions to innovators to unlock extraordinary possibilities for everyone on the planet.

To learn more about Altera visit: http://intel.com/altera

featured chalk talk

One Year of Synopsys Cloud: Adoption, Enhancements and Evolution
Sponsored by Synopsys
The adoption of the cloud in the design automation industry has encouraged innovation across the entire semiconductor lifecycle. In this episode of Chalk Talk, Amelia Dalton chats with Vikram Bhatia from Synopsys about how Synopsys is redefining EDA in the Cloud with the industry’s first complete browser-based EDA-as-a-Service cloud platform. They explore the benefits that this on-demand pay-per use, web-based portal can bring to your next design. 
Jul 11, 2023
29,990 views