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Report: Microsoft Tablet Is The Result of Partner Failures

By - Source: The New York Times | B 51 comments

As previously indicated, Microsoft didn't trust its partners to launch a successful Windows 8 tablet without leading the way with its own device.

The New York Times has an interesting article about why Microsoft chose to tackle the tablet market with its own branded hardware.

The article opens with a scene described by a unnamed Microsoft employee who said the company was shocked at how far Apple would go to gain an edge for its products. Microsoft reportedly learned from sources that Apple bought large quantities of high-quality aluminum from a mine in Australia specifically for the iPad's case.

Thus, Apple not only created a new market using those supplies, branching away from the thicker, bulkier "slate" sector, but cornered this new market. That led to worries within Microsoft that its own PC partners would not make the same kind of bets.

This incident, according to the source, is one of many that pushed Microsoft into creating the Surface tablet. The move is also seen as "the most striking evidence yet" of the friction between Microsoft and its hardware partners, and will reportedly be the first time in Microsoft's near forty-year reign that it will actually compete directly with those partners -- those who are also Microsoft's biggest customers. But perhaps Microsoft is the reason why they aren't making the same kinds of bets as Apple.

"You’ve got this sclerotic partnership structure where the partners don’t have any oxygen to be innovative," said Lou Mazzucchelli, an entrepreneur in residence for a venture capital fund backed by the state of Rhode Island and a former technology analyst. "I believe Microsoft was painted into a corner. If they didn’t move soon, Apple would have so much of a lead, it would be almost impossible to catch them."

Along with Intel, Microsoft extracts its hefty licensing fees from PC manufacturers, thus leaving leaving slim profits and very little room to experiment. That's one of the reasons why Android is so popular -- it's open source and served up free by Google, allowing companies to be a little more innovative. Yet Apple has also shown the fruits of developing hardware and software together -- having separate hardware and software companies leads to a less unified product.

One lesson Microsoft learned was by way of its collaboration with HP. Prior to the iPad, Bill Gates introduced the Tablet PC a decade earlier, but it was too clunky and didn't catch on with consumers. When Microsoft learned of Apple's upcoming device, it turned to HP to create a prototype later called the PC Slate 500. Initially the designed impressed execs at both companies, but eventually the product was "completely ruined" by hardware changes made by HP, leaving the OS sluggish and unusable.

"It would be like driving a car, and the car not turning when you turn the wheel," a former HP executive told The New York Times.

HP lashed out at Microsoft for not adding better touch-based capabilities in Windows 7. Microsoft instead moved on to work with other manufacturers but eventually hit a brick wall regarding designs and prices. Thus, Microsoft went back to the drawing board and began to create the touch-based Windows 8 slated to arrive this fall. Meanwhile, HP purchased Palm and released its own touch-based webOS tablet with disastrous results.

Last week Microsoft finally revealed its Surface tablet. As if nodding to Apple's initial bold move in securing aluminum from Australia specifically for the one-of-a-kind iPad, the company focused most of the big Surface reveal on the tablet's magnesium case.

"The case is one-of-a-kind," said Steven Sinofsky, president of Microsoft’s Windows division.

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  • 18 Hide
    back_by_demand , June 26, 2012 3:31 PM
    Pretty much what I said in another post yesterday
    ...
    If you want something done properly you have to do it yourself
  • 18 Hide
    damianrobertjones , June 26, 2012 3:33 PM
    Consider Vista... It features new bits and bobs along with a nice new service called Superfetch which tried to cache events into memory for fast execution. What did the oems do? They released Laptops/Desktops with 256Mb/512Mb ram. Who got the blame for that? MS.

    Either way they would have done the same again with the same said tired excuses for hardware and 1366x768 screens on EVERYTHING! They then have the BALLS to complain that MS is being strict! I do hope that a few of them fold due to MS making their own hardware but I doubt it.

    OEMS.... STOP being lazy and produce good kit. Here's looking at you Samsung! (Yeah, I won't forget the screen issue with the Samsung 7 slate. A $1k+ device with a screen that wasn't bonded to the chassis properly)
  • 15 Hide
    damianrobertjones , June 26, 2012 3:52 PM
    Yeah, Vista wasn't perfect, but that low memory and confusion over superfetch really nailed vista. here's to Windows 8 working well
Other Comments
  • 18 Hide
    back_by_demand , June 26, 2012 3:31 PM
    Pretty much what I said in another post yesterday
    ...
    If you want something done properly you have to do it yourself
  • 18 Hide
    damianrobertjones , June 26, 2012 3:33 PM
    Consider Vista... It features new bits and bobs along with a nice new service called Superfetch which tried to cache events into memory for fast execution. What did the oems do? They released Laptops/Desktops with 256Mb/512Mb ram. Who got the blame for that? MS.

    Either way they would have done the same again with the same said tired excuses for hardware and 1366x768 screens on EVERYTHING! They then have the BALLS to complain that MS is being strict! I do hope that a few of them fold due to MS making their own hardware but I doubt it.

    OEMS.... STOP being lazy and produce good kit. Here's looking at you Samsung! (Yeah, I won't forget the screen issue with the Samsung 7 slate. A $1k+ device with a screen that wasn't bonded to the chassis properly)
  • -1 Hide
    jabliese , June 26, 2012 3:47 PM
    This highlights an often overlooked aspect of the iPad. Before it's introduction, you could not touch a decent pad/tablet computer for under $1500. Apple managed to become a price leader, possibly for the first time ever.
  • -9 Hide
    jabliese , June 26, 2012 3:50 PM
    damianrobertjones, you might want to also look at Vista's stupid use of memory with multiple windows, documented here at Tom's. MS deserves it's share of the blame.
  • 15 Hide
    damianrobertjones , June 26, 2012 3:52 PM
    Yeah, Vista wasn't perfect, but that low memory and confusion over superfetch really nailed vista. here's to Windows 8 working well
  • 3 Hide
    DRosencraft , June 26, 2012 3:52 PM
    I remember being interested in the original tablet idea MSFT had. it was really a traditional laptop but you could swivel the screen around and lay it down flat. I would sooner buy something designed like that than an iPad styled tablet.

    As I've said before, this is a sound move by MSFT. It is a bit of a kick in the gut for the OEMs, but really the OEMs are beholden to MSFT. MSFT makes the software, they compete with one another over hardware. I don't see this as that huge a deal. Intel makes processors, chipsets, and motherboards, yet all the other MB makers don't seem to care that they have to compete with Intel. It's new for the computer builders, but they'll find a way to deal with it.
  • -3 Hide
    john15v16 , June 26, 2012 3:55 PM
    @MS, 2 years too late...
  • 5 Hide
    damianrobertjones , June 26, 2012 3:57 PM
    @DRosencraft: Someone actually made it: Toshiba Libretto W100

    @john15v16: Nah! People eventually start to get bored of their once shiny slice of kit and after two years we're ready for something new. I hope
  • 8 Hide
    southernshark , June 26, 2012 4:03 PM
    In this case I agree with MS. Dell and HP have both proven themselves to be essentially useless in terms of creativity and product creation. Both companies are ok at copying other people and firing people to reduce costs, but when it comes to actually investing in technology and producing new exciting products, both companies are an absolute disaster. They are so focused on cutting costs that they just don't have the vision to improve their technology. To them a dime spent on innovation is a dime wasted. The only reason they spend any money on R&D is for tax purposes. If it wasn't for the tax incentive they would be happy to produce Windows 95 PCs forever.
  • -9 Hide
    Anonymous , June 26, 2012 4:04 PM
    "... the partner's (PC OEMs) don't have any Oxygen ..."

    Why?

    "Microsoft extracts its hefty licensing fees from PC manufacturers..."

    The reason couldn't be more clear.

    To add to their plight, the OEM's profit margins were SO SLIM that Microsoft's ad rebates usually made the difference. If an OEM or vendor tried another OS they found their ad rebates from MS cut off, or they were threatened with increases in their per unit license fees. Either threat could prove fatal. It reminds one of the old "Company Stores" in the West Virginia coal mines. The miners always owed the company more for rent, food and services than what their wages could pay. To keep them in the mines the companies would put fences around the "towns" and company "police officers" would patrol the streets and business making sure "illegal assemblies" didn't occur. The miners were nothing less than slave labor, the same kind manning Apple's assembly lines in China.

    Now that Microsoft has released a tablet which THEY are manufacturing we start hearing stories we've never heard before, like "the OEM's were lazy", or, "they didn't make good hardware, so Microsoft has no choice but to dump them". These are obviously planted MS PR stories repeated by fanboys and James Plamondon's notorious "Technical Evangelists". They are strange assertions considering that it was MICROSOFT that established hardware certification standards, the UEFI certification being just another example, and Microsoft forced the OEMs to meet the certifications or they couldn't sell Windows. Now, Microsoft and its lawn jockeys blame the OEMs because Windows powered tablets (and phones) aren't selling?
  • 4 Hide
    southernshark , June 26, 2012 4:08 PM
    I remember back in the 90s, people said the USA would always have the edge because we are better at innovating and Apple, Google, Intel and to some extent MS have kept that tradition true. But when you look at strict OEMs Samsung, Sony and Lenova are all more creative and innovative than Dell, HP, Gateway or any of that useless crowd. And both Samsung and Lenova are making real strides to be even better.

    Not a good sign for the future of the USA.
  • 13 Hide
    southernshark , June 26, 2012 4:11 PM
    GreyGeek"... the partner's (PC OEMs) don't have any Oxygen ..."Why?"Microsoft extracts its hefty licensing fees from PC manufacturers..."The reason couldn't be more clear. To add to their plight, the OEM's profit margins were SO SLIM that Microsoft's ad rebates usually made the difference



    No excuse. Despite slim margins HP and Dell were making tens of billions of dollars in the 90s and all the up to 2008 or so. They made a decision to get fat on all that instead of re-investing into their product. It does not matter if you only make 20 bucks on a product as long as you sell a billion of them.
  • -2 Hide
    slabbo , June 26, 2012 4:22 PM
    just because the partners didn't wanna pay x amount for their licensing fees doesn't necessarily make it a partner failure.
  • 9 Hide
    daglesj , June 26, 2012 4:49 PM
    It's about time MS made its own hardware. They spend a fortune developing great reliable operating systems that work on such a huge range of hardware.

    It's truly a huge achievement.

    Then it gets handed over to the clowns at Dell/HP/Acer/Toshiba/Asus etc. and they just ruin it buy installing crappy builds full of buggy noisy crapware/bloatware. Just ruins all the good work. Really shoddy.

    I can imagine MS looks at these machines and things "WTF have they done????!!!!"

    I'd love to be able to buy a MS branded and made laptop with just Windows/Office and a few specific approved apps on it. Would be cool.

    Then MS could also say "it just works out of the box!" too.
  • 5 Hide
    waethorn , June 26, 2012 4:52 PM
    Microsoft already competed against hardware companies and won: namely Logitech. Logitech doesn't sell nearly the quantities of keyboards, mice, and webcams that they used to. Microsoft is making a killing in that market because of cheaper prices and superior products (battery use on cheap Logitech wireless keyboards gives you maybe 45 days of use, while Microsoft's battery consumption on even their low-end desktops sets gives you 6 months MINIMUM). Logitech closed their Canadian HQ because of declining sales while Microsoft is still a channel king.
  • 6 Hide
    xerroz , June 26, 2012 5:03 PM
    Bloatware from OEM is cancer. The fact that MS are making their own hardware is a relief that I probably won't have to spend at least an hour trying to completely get rid of crap I didn't want in the first place. It's even worst on Android where you can't get rid of any of it unless you root.
  • 4 Hide
    willard , June 26, 2012 5:04 PM
    damianrobertjonesWhat did the oems do? They released Laptops/Desktops with 256Mb/512Mb ram.

    To be fair, they only did that so they could gouge their customers with $200 memory upgrades.

    "Yes, we know we only put half as much memory in the system as we should. But here, you can have a reasonable amount for only 400% of the cost of the modules!"
  • 0 Hide
    willard , June 26, 2012 5:11 PM
    waethornMicrosoft already competed against hardware companies and won: namely Logitech. Logitech doesn't sell nearly the quantities of keyboards, mice, and webcams that they used to.

    Unrelated. The article is referring to companies that make computers. Microsoft has been in the hardware business for a very long time. The difference is that hardware has never been in competition with those who license Windows, until now.
  • 6 Hide
    waethorn , June 26, 2012 5:13 PM
    willardTo be fair, they only did that so they could gouge their customers with $200 memory upgrades."Yes, we know we only put half as much memory in the system as we should. But here, you can have a reasonable amount for only 400% of the cost of the modules!"


    You mean like Apple?
  • 1 Hide
    waethorn , June 26, 2012 5:19 PM
    willardUnrelated. The article is referring to companies that make computers. Microsoft has been in the hardware business for a very long time. The difference is that hardware has never been in competition with those who license Windows, until now.


    Well, they make hardware specifically for Windows, and they make Windows too. And they are killing a partner who had similarly followed their design recommendations for compatible hardware. It's VERY relevant IMO.
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