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Microsoft Admits Surface May Alienate Hardware Makers

By - Source: SEC | B 28 comments

How much risk is in Surface?

There are cautionary statements in documents that are filed with the Securities and Exchange Commission, but this particular example is remarkable. The most recent 10-K (annual) filing confirms that Surface tablets will be on sale at the time when Windows 8 will be launched on October 26.

Microsoft's strategy with Surface has largely been speculation with some suggesting that Surface is simply a way for Microsoft to encourage its partners to get their creativity going and leverage what Windows 8 is capable of, while others believe that Microsoft wants to be much more like Apple and sell a product that gives Microsoft control of both hardware and software. While Microsoft was obviously proud and enthusiastic about Surface during its presentation, there has been no true information how committed Microsoft is to Surface, even if we learned that it is important enough for the company to strip the Surface brand from Microsoft touchscreen desks.

The 10-K filing includes the following sentence:

"In addition, our Surface devices will compete with products made by our OEM partners, which may affect their commitment to our platform."

While general, this statement implies that Microsoft sees a calculated risk that some of its partners may not particularly like the idea that they have to compete with a company they rely on as a software supplier. Microsoft does not detail the "platform" that may be affected, but it is reasonable to assume that the company is referring to Windows RT and Android as the alternative. Windows 8 itself should be largely unaffected, even if Surface will test some of Microsoft's best partner relationships.


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  • 12 Hide
    cirdecus , July 30, 2012 8:25 PM
    theconsolegamerMicrosoft is kind of missing the point here. Apple's success is not because it's closed or anything other than Apple's rabid and blind loyalist that will buy ANYTHING with the apple logo on it.


    Actually, if you spend brain power here rather than just rant, you'd realize that Apple has been successful with both the iPad and iPhone by developing both the hardware and the software in-house.

    The real question is whether Microsoft is trying to do this or not. If it is, will it be successful?
  • 10 Hide
    theconsolegamer , July 30, 2012 8:08 PM
    Microsoft is kind of missing the point here. Apple's success is not because it's closed or anything other than Apple's rabid and blind loyalist that will buy ANYTHING with the apple logo on it.
Other Comments
  • 6 Hide
    aftcomet , July 30, 2012 8:03 PM
    In a way, I can sort of see Microsoft taking from Apple's book.
  • 10 Hide
    theconsolegamer , July 30, 2012 8:08 PM
    Microsoft is kind of missing the point here. Apple's success is not because it's closed or anything other than Apple's rabid and blind loyalist that will buy ANYTHING with the apple logo on it.
  • 12 Hide
    cirdecus , July 30, 2012 8:25 PM
    theconsolegamerMicrosoft is kind of missing the point here. Apple's success is not because it's closed or anything other than Apple's rabid and blind loyalist that will buy ANYTHING with the apple logo on it.


    Actually, if you spend brain power here rather than just rant, you'd realize that Apple has been successful with both the iPad and iPhone by developing both the hardware and the software in-house.

    The real question is whether Microsoft is trying to do this or not. If it is, will it be successful?
  • -2 Hide
    DryCreamer , July 30, 2012 8:27 PM
    I don't know if this is good or bad for MS? I just don't know if the surface has the legs to sell well, especially the lucrative $1000+ models... I know that I wouldn't mind having a MS phone, but the hardware on most of the ones on my provider are crap. So a tablet has some value to me, but if they really do this, it will contract the supply of MS tablets to just... MS and the people willing to compete with them... I just don't think there's enough money out there to float it like Apple has done, because they had the benefit of being the first one to introduce a popular product. Rarely does a johnny come lately capture back. the only benefit for MS is the fact that Apple product is maturing and consumers might be looking for something new, but who knows... maybe in the business community were MS products are more structural than Mac?

    Dry
  • 6 Hide
    dalethepcman , July 30, 2012 9:03 PM
    Asus is the only company still inovating in the PC sector. If the other hardware developers hadn't bought all the hardware innovators, then systematically killed their companies off. Or if they hadn't been sitting on their laurels designing lowest dollar crap-ware pc's then Microsoft would never have had to set the bar.

    Hopefully this will put an end to bloatware ridden pc's of the past.
  • 0 Hide
    anti-painkilla , July 30, 2012 9:12 PM
    'Microsoft Admits Win8 May Alienate Hardware Makers' #FIXED
  • 1 Hide
    husker , July 30, 2012 9:16 PM
    As a tablet user of both a Samsung Galaxy 10.1 (personal) and an iPad 3 (work) I feel they both offer a good experience. I think that the tablet interface is better if simplified as much as possible, and I'm not looking for a full Windows OS experience on this type of device. That leaves me with the question: Is Windows 8 going to be oversimplified for a PC OS, or over complicated for a tablet OS, or meet somewhere in the middle and be a little of both? I just don't see it really being a good fit, unless you need something that runs windows apps (most likely in a work-related scenario).
  • 3 Hide
    jahmekan , July 30, 2012 9:20 PM
    Good for MS. Now they should have their Xbox division make a PC to their specifications. I am so tired of the HPs and Dells of the world putting out subpar systems and loading them with crapware. No, I do not know what the surface will be like, but MS has a lot riding on this launch, so as a windows user I am going to take the leap and get an RT surface. I will do my real computing on the desktop.
  • 2 Hide
    teh_chem , July 30, 2012 9:28 PM
    Who cares. If MS can competently make a functional yet integrated tablet product, I'd gladly put my money behind them (regardless of the fact that they probably don't NEED my money). Apple as the "integrated" ipad but it lacks functionality and productivity. Android tablets are quasi-functional, if you ignore the variation of app/general stability across the various platforms. If (and that's a big IF) MS can marry the two into a good product, maybe the OEMs that MS licenses their products to has a legit reason to worry.

    Now, don't get me wrong, I don't expect the world to instantaneously migrate to tablets, but is there anything stopping hardware OEMs from getting behind MS, like they have with laptops and desktops?
  • 0 Hide
    Anonymous , July 30, 2012 9:29 PM
    @husker: two versions of win8 (win8 RT for arm processors & win8 for x86) win 8 RT will be more like ios or android... only app from app store will run... win8 for x86 will run metro & all the apps you run in win 7 now... So win8 RT will be more simple... win8 x86 more complex...
  • 0 Hide
    southernshark , July 30, 2012 9:58 PM
    theconsolegamerMicrosoft is kind of missing the point here. Apple's success is not because it's closed or anything other than Apple's rabid and blind loyalist that will buy ANYTHING with the apple logo on it.


    Apple almost went out of business in the 90s. Its fans like it because they like it. I don't care a lot for Apple myself, but I do see why the fans are there.

    MS pretty much has to do this. If you don't believe that then look at the Android platform and look at all the crap that is being stuck onto the android phones. A lot of the manufacturers are out of touch and out of control.

    I guess MS could have gone the "Nexus" route and found a partner to build a specific device. But I can also understand becoming so frustrated trying to work with them that you just go out and make your own device. I can see a company like Samsung telling MS to take a hike over this though, which is the danger.
  • 1 Hide
    irh_1974 , July 30, 2012 10:09 PM
    We shouldn't be worried about pissing off the hardware manufacturers, they have had years to get a sexy hardware product together and they sat around with their thumbs up their butts. People flocked to the iPad because there was nothing better - and whose fault was that? They all had access to the hardware, Samsung churns out most of it

    This works well for consumers both ways, if Microsoft pushes this thing out then people should buy it as the design is phenomenal, some people that disagree with Windows 8 may well just install Windows 7 or Linux to spite themselves, hell, maybe even find a way to Hackintosh it to run iOS 6 or Jellybean and then you have all the bases covered

    If the OEMs capitulate then they deserve to lose the market, but likely they will stop sulking and release their own better engineered product and they will sell millions

    If the Surface fails however and they also refuse to step up with sexy hardware they are just cutting their nose off to spite their faces as they allow Apple to continue to dominate with the iPad 4, but I doubt it, the OEMs are businesses and the fact there are hundreds of Billions in sales at stake they would be foolish to ignore the first rule of business

    Always give the customer what they want
  • 1 Hide
    Shin-san , July 30, 2012 10:42 PM
    Most "Hardware Makers" are anything but. Just look at most laptops out there. Without the shiny emblem, can you tell a lot of them apart? They just go to Clevo/Quanta/Foxconn and get whatever they offer. Even Apple has used Quanta and Foxconn.

    I do feel that the low-end is still important to have, but I wouldn't blame a company like Microsoft for wanting to be involved making hardware that pushes the envelope, even though Microsoft does rules the desktop. Microsoft needed to do something.
  • 3 Hide
    back_by_demand , July 30, 2012 11:17 PM
    Shin-sanMicrosoft needed to do something.

    Spot on, even if they fail at least they can say they tried - the OEMS are just cowering in the corner
  • 0 Hide
    xerroz , July 30, 2012 11:45 PM
    They had it coming. It was about time someone came up and made a tablet that can be truly called a competitor to the iPad. If they hadn't half ass it the first time they wouldn't be in this position. Android is good but it's not as good and optimized as as the non-fragmented OS that Windows 8 will be.
  • -1 Hide
    killerclick , July 31, 2012 12:19 AM
    Here's why Surface Pro will fail. If a 10" screen is not big enough for you to work on (most people are used to 15"), then it won't replace your laptop, it's going to be your second laptop... at $1000 or more.
    How many people are ready to drop $1000 on a second laptop, plus all the x86 software they supposedly want to run on it, that they run on their current laptops?

    It's the price, stupid. Netbooks sold not because they're portable or because 10" screens are just right, but because they were like $300. Surface Pro is going to cost more than three times as much, and unless it can be the only computer for a lot of people, it's going to be a niche product (and fail).
  • 0 Hide
    Pinhedd , July 31, 2012 2:04 AM
    Good.

    HP, Acer, Toshiba, et al are a blight on the industry.
  • 0 Hide
    belardo , July 31, 2012 2:32 AM
    otacon72You forgot way over priced and underpowered.
    Er, how do you figure? Top end HP, Dell and ThinkPads costs about the same as the MacPro notebooks.

    The iPad 2 and 3 *STILL* have the most powerful GPU of any tablet on the market. The CPUs are roughly the same. The iPad3 has the HIGHEST RESOLUTION over any other tablet on the market. The MS WART is competing against a 2 year old device at the same price or higher and the OEMs, after paying the $80 licence for Win8RT would easily surpass the costs of an iPad.
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