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mcjw
Most of you see the Surface as being at odds with the status quo, but a capable ...
mcjw
The OEMs you mentioned cannot generate enough sales even if they had $0 licenses ...
Et tu, Ballmer, or M’soft’s stab at tablets
Rick Merritt
6/19/2012 1:42 AM EDT
SAN JOSE – Shame on you, Steve Ballmer!
Pre-announcing your own Windows 8 tablet a few months before your OEM customers are ready to roll out their own products. That’s not gutsy, it’s just gross.
For years, PC makers have slavishly followed your systems requirements, jumped on your bandwagons (like Windows for Pen Computing), and this is their payment. When you think you have a solid product you rush to get in front of them hoping you can steal their sub-five-percent profit margins.
I suspect few will say anything publicly for fear of hurting their relationships with you, so I will say what they cannot. This is bad business.
You could have taken a lesson from Google. Work closely with one or two OEMs on a killer product that would show off the novel features of your software. Perhaps there really aren’t any novel features to show off.
One source told me he heard Acer engineers describe this as a betrayal. “Microsoft wants to charge $80 to $90 royalty per Windows RT device while bring out this tablet under its own logo—it’s unfair competition which will accelerate more adaption of Android,” he said.
(In my own interviews, I was told the per unit cost of a Windows license for OEMs is about $45.)
He reports an ODM company saying they feel they have “wasted all the investment [on a] promised [Win 8 tablet] business [and] will have to shift focus again.”
If I was a mobile PC maker, I would be on the phone to Google’s Android team seeking a tight partnership.
Taiwan’s PC makers have told me more than once they see Android as a better road to tablets than Windows 8. It’s free and it already has a well-established user base and ecosystem of apps.
The scant information on the Microsoft Surface tablet is unimpressive. It looks very much like a me-too system. I fail to see any compelling differences over the Apple iPad. At least Samsung was quick to market with its iPad-like Galaxy tablet.
Nvida was quick to note its Tegra powers the Surface. Frankly, this is one design win I would try to distance myself from.
I was amazed to read at their hastily called LA press conference, Microsoft did not even answer questions about OEM conflicts. According to the New York Times report:
"When asked whether Surface would damage those ties, Steven Sinofsky, the president of Microsoft’s Windows division, gently pushed a reporter in the direction of a stand of Surface tablets and said, 'Go learn something.'"
Maybe someday Microsoft will reap great profits from a tablet business. But at what cost?
The innovation in the Surface is mainly in its chutzpah.
Pre-announcing your own Windows 8 tablet a few months before your OEM customers are ready to roll out their own products. That’s not gutsy, it’s just gross.
For years, PC makers have slavishly followed your systems requirements, jumped on your bandwagons (like Windows for Pen Computing), and this is their payment. When you think you have a solid product you rush to get in front of them hoping you can steal their sub-five-percent profit margins.
I suspect few will say anything publicly for fear of hurting their relationships with you, so I will say what they cannot. This is bad business.
You could have taken a lesson from Google. Work closely with one or two OEMs on a killer product that would show off the novel features of your software. Perhaps there really aren’t any novel features to show off.
One source told me he heard Acer engineers describe this as a betrayal. “Microsoft wants to charge $80 to $90 royalty per Windows RT device while bring out this tablet under its own logo—it’s unfair competition which will accelerate more adaption of Android,” he said.
(In my own interviews, I was told the per unit cost of a Windows license for OEMs is about $45.)
He reports an ODM company saying they feel they have “wasted all the investment [on a] promised [Win 8 tablet] business [and] will have to shift focus again.”
If I was a mobile PC maker, I would be on the phone to Google’s Android team seeking a tight partnership.
Taiwan’s PC makers have told me more than once they see Android as a better road to tablets than Windows 8. It’s free and it already has a well-established user base and ecosystem of apps.
The scant information on the Microsoft Surface tablet is unimpressive. It looks very much like a me-too system. I fail to see any compelling differences over the Apple iPad. At least Samsung was quick to market with its iPad-like Galaxy tablet.
Nvida was quick to note its Tegra powers the Surface. Frankly, this is one design win I would try to distance myself from.
I was amazed to read at their hastily called LA press conference, Microsoft did not even answer questions about OEM conflicts. According to the New York Times report:
"When asked whether Surface would damage those ties, Steven Sinofsky, the president of Microsoft’s Windows division, gently pushed a reporter in the direction of a stand of Surface tablets and said, 'Go learn something.'"
Maybe someday Microsoft will reap great profits from a tablet business. But at what cost?
The innovation in the Surface is mainly in its chutzpah.
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lapso muler
6/19/2012 2:42 AM EDT
The contradictory arguments in this article made my head explode.
the MS tablet looks like a "me-too" iPad (bad0
the Samsung tablet is "iPad like" (good)
MS makes their own branded tablet (bad)
Apple makes their own branded tablet (good)
MS has worked with developers for decades (bad?)
Google has worked with developers for two years (good)
Everything you say against MS, you find other companies should praised for doing the same thing!!!
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rick.merritt
6/19/2012 4:23 PM EDT
I never promised consistency ;-) but I will say:
Apple has no OEM biz, Msoft does.
Samsung was fast to copy the iPad, Msoft was slooow as a Zune.
Google continues collaborating with OEMs, Msoft has started going it alone on an ad hoc basis.
Is Msoft allowed to change course? You bet.
Are they doing it in a way that burns its OEM customers? Seems like it to me.
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WW Thinker
6/22/2012 7:43 PM EDT
Rick, I am disappointed at your comments. Tell me, which PC OEMs make a lot of money on Androd tablets. I believe that the answer is close to "zero" or not more than two. Even so, the profit level is very low. The only OEMs truly making a lot of money from selling tablets is Apple.
Google simply uses the OEMS to proliferate Android. At the end, who is making handsome profit? It should be Google, not the OEMs.
If the old model no longer works (PC OEMs sell us the ugly thick and heavy notebook PCs of the same size and shape for the past any years! They didn't want to innovate for fear of loosing the bet), it is time to try a new one, or to fine tune the existing model. As you have said well, not much information was given out by Microsoft. So, are you making a pre-mature conclusion?
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iniewski
6/19/2012 8:54 AM EDT
Very puzzling move on Microsoft's part, I just don't get it...why pre-announce months before you can buy it??? Kris
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chanj
6/19/2012 4:08 PM EDT
Does Apple do similar thing? I guess it is the trend of marketing.
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nicolas.mokhoff
6/19/2012 9:39 AM EDT
One report had it right the morning after when an analyst said the difference between Apple's iPad and Microsoft's Surface is that the iPad was designed to be easy to use, the Surface was designed to be all-inclusive so therefore more complicated to use. Microsoft's attempt to make a mark in the mobile space is wrought with half-baked hardware. Maybe they placed the needed ingredients in their latest attempt, but they may also have held it in the oven too long.
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wilber_xbox
6/19/2012 10:34 AM EDT
I am confused with the picture, so Win8 is for the tablets or for PC? Also, is MS manufacturing the tablets or in partnership with hardware company?
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nicolas.mokhoff
6/19/2012 11:40 AM EDT
I believe the RT(RunTime)version of Windows 8 is for tablets, like the Surface.
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rick.merritt
6/19/2012 4:18 PM EDT
Win 8 comes in a version for the x86 for use in everything from tablets to desktops and another version--called Windows RT--for ARM based systems,mainly tablets.
Surface uses Win RT and Nvidia's Tegra ARM SoC.
I have not heard who makes the Surface for Msoft. Has anyone else?
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RGRU
6/19/2012 1:02 PM EDT
These tablets look very impressive. The whining and complaining in the article was a waste of time reading. It seemed quite pointless.
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WW Thinker
6/22/2012 7:53 PM EDT
Totally agreed. Rick is a good technical editor, but not a well known or qualified market analyst. He has stepped outside of his expert area to make these comments!
Win8/RT/WP8 is a series of OSs which, for the first time in history, give end-users an opportunity to do things which were not possible in the past. Rather than look at these from the traditional perspective, we should take the leap of faith, try them, experiment with them. In return, we may experience something, either positively or negatively, which we were not aware of.
In fact, Microsoft is doing something which Apple does not want to get into (for fear of jeopardizing the handsome revenue from iPhone & iPad). I suggest that the editors and analyzers alike should give Win8/RT/WP8 some space to grow, but not to kill this off right away!
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mcjw
6/26/2012 9:52 PM EDT
haha, makers flock back to Android tablets, this is funny. Perhaps Rick's Taiwanese friends can go back to flogging shanzhai quality products to 3rd world countries... oh wait, Lenovo, Huawei, and ZTE can do that, too.
What Acer and Rick have in common besides crying foul is their inability to imagine and create something better than the Surface. I'm sure Acer was planning to sell one of their generic slabs at $500 and blame it all on Windows RT for slow sales, when Microsoft sent them back to the drawing board. Asus is destroying the Transformer brand the same way they did EeePC: unleashing boring variations hoping people just give up and buy one.
Microsoft did the most logical thing in reasserting product quality and vision. Like I said elsewhere, imagine if Sony partnered with Goldstar to launch the MiniDisc.
Microsoft also left one avenue open: Clover Trail. The ThinkPad Atom tablet is about the only appealing device so far, and it runs the full Windows.
Nokia will not have the resources for tablet at Windows 8 launch. They need to pull all the stops to ship WP8 in a massive way.
If anything, the Surface will be Acer and Asus' best excuse for not trying to match Dell, Sony, and HP in engineering and design, because Microsoft "pushed us out of the game." Really, as if Android will get them there.
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chanj
6/19/2012 4:13 PM EDT
Microsoft has a close hardware partner to work with, Nokia, in addition to all the other Windows device manufacturer. I wonder why Microsoft do not work with Nokia, giving them a leading position in the market. Well! If Nokia had no interest in tablet market would explain it.
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rick.merritt
6/19/2012 4:19 PM EDT
Good point. Nokia staked its future on Windows Phone, but got (or maybe asked for) nothing regarding Win RT.
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junko.yoshida
6/20/2012 10:35 AM EDT
Yep. That's what bothers me. Microsoft's move to Surface seems to be all about Microsoft; not about its eco-system.
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wilber_xbox
6/21/2012 10:53 AM EDT
i think Microsoft is building its reputation in the hardware so that they can take over Nokia in an year or two. Otherwise they would have partnered Nokia as Nokia has a lot of experience in hardware.
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iniewski
6/21/2012 10:56 AM EDT
Microsoft buying Nokia and becoming Apple II by integrating hardware and software?...interesting thought! Kris
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Frank Eory
6/19/2012 6:42 PM EDT
The biggest problem I have with this article is the secondhand hearsay from Acer engineers complaining that MS wants to charge $80-$90 royalty per device, at the same time it is directly competing with them by offering Surface as a MS-branded device.
First, wherever you heard that royalty fee, it sounds like b.s. No way are OEMs going to pay that much to put Windows RT on their tablets. Probably something more like $10.
MS isn't just competing against the iPad, it's also competing against Android tablets -- and Android is free. It's tough to compete against "free", but if Win RT is as good as many are hoping, maybe they can get $10 per tablet for it.
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rick.merritt
6/20/2012 1:59 AM EDT
Good point re the royalties. I went back to my notes from a May 2012 trip to Taiwan. Two sources told me royalties were about $45 on Win 7 and Msoft was looking to increase it.
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Frank Eory
6/20/2012 2:07 PM EDT
Perhaps they can get $45 or more for Win 8 Pro on that version of the Surface. MS has said that version will be priced comparably to Win 8 Pro ultrabooks. It seems to be targeted at taking a piece of that ultrabook market.
But the ARM-based version running Win RT is a lower cost unit that seems to be aimed more directly at the iPad and Android tablet market. In that market, the perceived value of Win RT is likely to be much less. MS has said this version of Surface will be priced comparably to other Win RT tablets, but it really needs to be priced somewhere between Android tablets and iPad to generate real market excitement.
The Win RT version of Surface with 64 GB is arguably comparable in hardware specs to a 64GB, WiFi-only new iPad, which retails for $700. A Samsung Galaxy Tab 10.1 with 32GB, WiFi-only, retails for $600.
That's a reasonable argument for setting the retail price range on the Win RT version of Surface somewhere between $600-$700.
It is left as an exercise to the reader to do their own BOM cost estimates (or look them up), but how much is the OS really worth to an OEM who must now compete directly against MS at the retail level?
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elctrnx_lyf
6/20/2012 6:55 AM EDT
I feel this is a complete betrayal. If Microsoft sells their own tablets competing with other OEM's like HTC and ACER, how the OEM's will generate enough sales. This will definitely discourage them to use windows 8.
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rick.merritt
6/20/2012 11:23 AM EDT
Unfortunately, for their next gen notebooks, desktops and hybrids, they have no viable alternative to Win 8 today.
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mcjw
6/26/2012 9:59 PM EDT
The OEMs you mentioned cannot generate enough sales even if they had $0 licenses to iOS and OSX. It doesn't matter what they use. That's the Surface's message to them.
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any1
6/21/2012 9:19 AM EDT
How is this different from Google coming out with their own tablet? I tend to agree with the point of view that says Microsoft was compelled to come out with their own hardware because HP, Dell, Acer etc, could not be trusted to field innovative products on their own. It seems to be a vote of no confidence in the entire PC industry.
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iniewski
6/21/2012 10:32 AM EDT
If it is a vote of no confidence to PC industry it is a very bold move...they basically start competing with their own customers, rarely it pays to do that...my personal bet is that this product will be cancelled/sold within 2 years...Kris
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mcjw
6/26/2012 10:16 PM EDT
Most of you see the Surface as being at odds with the status quo, but a capable businessmen will learn something from it, and see what he needs to react. This is Microsoft's response to Apple. Let's hope the rest of the industry wakes up.
Acer is most vocal about it being at odds with itself, and most stupid in this regard. The Iconia is firesale fodder at best, the same way Acer used to sell computers: better specs for lower price.
On the other hand, Sony, Lenovo, HP, Dell, Samsung, and Nokia are keeping quiet, probably readjusting internally for a meaningful response, hopefully in the form of a better product and tangible fresh thinking.
I don't think the rest of the industry is as incompetent as Acer is. At least Lenovo shows a lot of promise, if HP cannot find its way back to engineering its way above the competition.
Has Apple taught you nothing?
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rick.merritt
6/21/2012 3:47 PM EDT
@Kris: Indeed, Surface could be the next Zune or Kin, probably not the next XBox.
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daleste
6/23/2012 1:14 PM EDT
I agree. This will die out as quickly as it was announced. If I want a tablet, I don't want a keyboard. I don't need windows on my tablet. If I want a keyboard, I will use my laptop and unfortunately, windows. I'll pass on this device that costs more than a good laptop.
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WW Thinker
6/24/2012 11:10 AM EDT
This is appealing to those who are longing for truly thin & light, touch support, long battery life, reasonable graphic and CPU performance. Only idiots should expect this to be as cheap as the thick and heavy brick-like notebook PC today. After all, if tablet with far less function and power but equally thin & light can cost more than $650 to begin with, why shouldn't this cost more. Perhaps the question is: does Surface offer more than what enough population of the consuming publics are willing to pay for. I think not. Let's the market make the judgement. At the very lest, the IT dept of most enterprises would want this.
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selinz
6/22/2012 10:18 AM EDT
Rick, it's clear that you are not a Microsoft fan and anything that they would have done would have been met with disdain. Fine, but any Windows user would rather have a tablet that runs windows. In my mind, this creates a much bigger problem. Most Android Apps are free. Most Apple apps are a buck or 3. Most Windows apps are $50 to $500. Thus, if the tablet runs windows apps, how do you handle pricing?
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chanj
6/22/2012 2:57 PM EDT
2 days later after this article, Microsoft announced Windows 8 Mobile is not compatible with the existing Windows phone hardware. Lumia has just been launched this year. I wonder whether Stephen Elop knew about it. What a close partnership Ballmer brings!
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WW Thinker
6/22/2012 8:16 PM EDT
Reality is: many Android phones which were shipped in CY2011 cannot/won't be upgraded to Android 3.0 and 4.0. Many of these are mid-range or even high-end smartphones. So, quick obselence is not unique to Microsoft. In reality, WP7.5 could be offering more than what 99% of the users need. Rumour says that Win7.8 will brige the gap between Win8 and Win7.5, but I don't know how much are to be breached.
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chanj
6/22/2012 8:29 PM EDT
Ensuring compatibility through hardware version is a challenging task. With the introduction of new features such as voice recognition and better gesture detection, I have no doubt understood the challenge. Nonetheless, I hope the announcement of the Windows 8 compatibility won't hurt sales of Lumia too much.
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