Microsoft is Adapting to the New Realities of the Market by Aping Apple

Posted on June 19, 2012

Microsoft has decided to become Apple! Or Google – we’ll find out which. Yesterday, they announced that they would be directly building their own Windows 8 tablet called Surface.

Rather than just creating software for third party vendors to build their own hardware and promote the final product, Microsoft will do this themselves.

So will Microsoft become successful, like Apple, or crash and burn like Google did with its first Nexus phone?

It certainly makes sense for Microsoft to enter this market. Apple has shown it can be insanely profitable and that there are a lot of advantages from having a non-fragmented vertically-integrated solution. It means Microsoft doesn’t have to share the profit with manufacturers, and can make a decent return while servicing the consumer market.

It’s still early to determine whether the Surface tablet is actually any good. Microsoft has released a specification sheet, but that doesn’t tell us whether the interface is fast and responsive, or the hardware feels light but well made. And we certainly don’t know if the screen is anywhere near as good as the iPad’s retina display.

In an interesting approach Microsoft has decided to release two versions, an ARM based and Intel based tablet. The main difference is the software each version will run, either Windows RT for the ARM version or Windows PRO for the Intel version. It’s questionable today how good the Intel version will be, and we can expect severe compromises for battery life, performance and temperature.

In addition, Microsoft released a snazzy keyboard-cover for the Intel version only. This is a bit odd as the iPad has clearly shown that ARM-based tablets can support the use of a keyboard. Watch OEMs copying the keyboard for the ARM tablet within weeks of its release.

How does Surface impact third-parties?

A successful Surface will mark the beginning of the end for third-party PC manufacturers. Apple has changed the game and shown that it is necessary to have a large scale to support leading edge innovation. The iPad is the price it is because they know they can sell 10s of millions. That supports special manufacturing and volume purchasing. You cannot replicate those advantages buying off the shelf parts and putting them together, the Dell model. The third-party manufacturing model is dead.

In addition, Microsoft need’t fear competition from their old partners. After all, making an OS is hard, very hard, and the partners have little choice but to use Windows. There is no volume market for Linux on the desktop. So existing partners will be relegated to selling niche devices, like Panasonic has carved out in the [Toughbook](http://www.panasonic.com/business/toughbook/laptop-computers.asp “Tough computers and tablets from Panasonic) market.

If Surface is successful, I wouldn’t be surprised to see Microsoft making their own MacBook Air clones in 3 years time. This also paves the way for Microsoft to pick-up Nokia for a song in the next six months before its share price starts increasing again.

Will the Surface be Successful?

I firmly believe that the Surface will be the premiere tablet on the Windows ecosystem. The big question is how big will that ecosystem be?

Given the hold Microsoft has on the enterprise desktop, it clearly could be rather big! The future is all about ecosystems and Microsoft has a huge existing one to leverage to have its new products bought.

The release of Windows 8 should start that process and we can expect to see IT managers buying Windows tablets from next year. That volume alone should be enough for Surface to be at least moderately successful.

Will it become the tablet of choice for consumers over and above the iPad? That’s clearly unlikely. Apple’s rate of innovation remains higher than Microsoft’s, their interface is simpler and the whole ecosystem is more tightly combined.

Yet, we’re moving towards a future with three or four highly competitive behemoths offering us services, and we’ll have to choose which ecosystem we want to be part of: Apple’s, Microsoft’s, Google’s or Samsung’s.

Who will you choose?