Government // Mobile & Wireless
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12/6/2012
02:45 PM
Art Wittmann
Art Wittmann
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Does Microsoft Really Need To Make Its Own Hardware?

Without some fundamental added value, Microsoft's hardware offerings are likely to go the way of the Zune.

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Steve Ballmer says Microsoft is seriously considering making more of its own hardware. It seems that even with the old guard of IBM, Dell, Toshiba, Sony and HP, and the new guard of Samsung, Lenovo, LG and Asus, and all those white-box manufacturers, Microsoft just can't find a reliable design partner.

Have we come full circle to where we started 50 years ago, when hardware and software were inextricably intertwined and necessarily provided by the same company?

Looking at the actions of some of the world's largest software houses, you could easily come to that conclusion. Microsoft now makes Surface, and it has made the Xbox for years. Google bought Motorola's phone division, probably for its patent portfolio but also to make the Droids it thinks people want. Google also makes the Chromebook. Even Oracle had to have its own hardware division, though the performance of Sun doesn't bear out the wisdom of that move. Its real play is purpose-built machines such as Exadata and Exalogic.

For the moment, put aside the question of whether the Oracles of the world are doing the right thing and focus on the trend as it relates to end users. Such moves start with Apple envy. After all, if Microsoft works with partners such as Intel or an ARM licensee to create reference designs, it would be hard to believe that manufacturers wouldn't help make prototypes.

Microsoft, Intel and system makers have collaborated to good effect in the past. Ultrabooks are a prime example: While they're not revolutionary, Ultrabooks address most every problem users have with laptops, from weight to battery life to processing power to boot time. They're a major improvement over last-generation notebooks and netbooks. Intel produced the reference designs, and a few months later systems showed up from a variety of manufacturers.

So what's Microsoft's problem with that model? The biggest problem is that it's not what Apple does, and Apple's share price has outperformed Microsoft's consistently.

It's not that Microsoft's products aren't good enough and that better hardware integration is the answer. The problem is that they're not good enough to displace entrenched products tied to an ecosystem investment, namely, Apple's iTunes and App Store. Without some fundamental added value, Microsoft's tablets are likely to go the way of the Zune. That's not because Zune wasn't a solid product; it might have been terrific, I never tried it. And the reason I never tried it is because I have an investment in iTunes and I know the iPod/iPad/ iPhone interface for playing music.

What's Microsoft's big value add? For businesses it might be compatibility with Office. For consumers I have no idea what it would be -- Xbox compatibility? This Apple-Microsoft dynamic reminds me of Ford's breakthrough with the Mustang. Chevy was a close follower with the Camaro, and both were big sellers. Dodge made the Dart and Charger, both technically great cars that never really caught on. Microsoft's third to market here. It had better have something more important than its Metro technology if it wants to compete, no matter who makes the hardware.

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PMcDougall
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PMcDougall,
User Rank: Apprentice
12/10/2012 | 2:19:20 PM
re: Does Microsoft Really Need To Make Its Own Hardware?
i think Microsoft's decision to get into hardware is as much economic as technological. Hard to justify those Windows license fees given the alternatives. Hardware is a commodity, software is becoming a commodity, but Apple has shown you can make money by bundling--as long as you've got sufficient brand cachet. That's the real challenge for Microsoft
Laurianne
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Laurianne,
User Rank: Author
12/10/2012 | 6:37:14 PM
re: Does Microsoft Really Need To Make Its Own Hardware?
For many consumers, part of the what-tablet-to-buy equation is the Apple store genius bar. As the honorary tech support person for many family members, I appreciate the value of the genius bar. Can't figure out via the phone what mom did to the Macbook? I just send her to the mall. I wonder if Microsoft can replicate that experience -- so different from the PC support nightmares of old. And if someone is already loyal to the Apple genius bar, so much the harder the task for Microsoft. The service and support issues are just as important as the hardware design issues. With hardware OEM partners, Microsoft can't control the service consumers get.
Laurianne McLaughlin
InformationWeek
NiteOwl_OvO
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NiteOwl_OvO,
User Rank: Apprentice
12/10/2012 | 6:47:31 PM
re: Does Microsoft Really Need To Make Its Own Hardware?
Microsoft's problems are self-inflicted. They entered the MP3 player market too late and even though the Zune was great it was too little too late, now they're well on their way to repeating that success with the Surface. They have very aggressively controlled the software market on business and home computers for decades. So much so, that many people don't want MS involved in the mobile device arena at all. It's not that they want to see MS go down. MS has a bad reputation for not playing well with others and for dictating to consumers (and developers) what consumers want. Many consumers would prefer that MS played a smaller role in mobile devices while these new devices evolve to meet consumer's needs.
newyorkcitymale
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newyorkcitymale,
User Rank: Apprentice
12/10/2012 | 7:44:39 PM
re: Does Microsoft Really Need To Make Its Own Hardware?
They don't need to... but I'm glad they are. I love the design of the Surface, and am hoping to buy a Surface Phone later this year (if available).
newyorkcitymale
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newyorkcitymale,
User Rank: Apprentice
12/10/2012 | 7:49:59 PM
re: Does Microsoft Really Need To Make Its Own Hardware?
While true that Microsoft doesn't have the brand cachet of Apple, I still say that the Surface tablet is much better-looking than the rather dated-looking iPad. Furthermore, the touch cover was a brilliant idea. At least in this case, Microsoft out-Appled Apple. Will that translate into sales? It's still too early to tell. Some analysts are trying to kill Windows 8, RT and the Surface after one month on the market... which is ridiculous. Many critics panned Windows XP as well... and we see how successful that went on to be. The reality is that most consumers don't read these tech blogs, and they don't care about "projections." What they care about is getting a great device that does what they want it to do. If Microsoft can deliver that, then they'll have a shot at gaining ground in mobile. Early reports are that Windows Phone 8 is gaining traction--selling 300-400% more than WP7 last year. That's a huge improvement.
Stephane Parent
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Stephane Parent,
User Rank: Moderator
12/10/2012 | 9:29:00 PM
re: Does Microsoft Really Need To Make Its Own Hardware?
I hope you meant "the next twelve months" when you said "this year". Because, if Microsoft can't come out with the SurfacePro in 2012, they sure can't come out with a SurfacePhone in the remaining three weeks. (How would a SurfacePhone differ from Windows Mobile 8?)
moarsauce123
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moarsauce123,
User Rank: Ninja
12/10/2012 | 11:32:24 PM
re: Does Microsoft Really Need To Make Its Own Hardware?
Try 70 years back, that is when Zuse delivered the first computers and those included software. That was eventually Zuse's downfall as creating the software was costing more than what he could make on the hardware.
Anyhow, who cares if Microsoft makes its own hardware or not. They (re)branded hardware for years or had their designs built in a sweatshop in China. All these Xboxes and Microsoft keyboards need to come from somewhere. So now they make hybrid tablet / netbooks. The problem with that is that not all MS hardware is great (such as the Surface RT) and it often runs crappy software (such as the RT) and generally is overpriced (such as the RT, Xbox, keyboard). Microsoft is just one more vendor that would do better if they delivered some decent hardware at a decent price. The Microsoft design is as awesome / dysfunctional as the other designs as well. We all could jump up and down of joy if Microsoft made stuff that is drastically better than the rest, but it isn't.
Andrew Hornback
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Andrew Hornback,
User Rank: Apprentice
12/11/2012 | 3:45:25 AM
re: Does Microsoft Really Need To Make Its Own Hardware?
Art - first and foremost, as a Dodge and Chrysler enthusiast since I was "knee high to a grasshopper", you forgot a couple of things like the Dodge Challenger (which directly competes with the Mustang and Camaro) and the Chrysler 300 (or if you want to go back a few years, the Dodge Magnum). To say that they never caught on - perhaps they didn't sell the same number of units as Ford or Chevrolet, but then again, the Chrysler brands were always the smaller of the 3 in production numbers during the heyday of the Muscle Car anyway.

I don't see Microsoft being able to compete with Apple for a number of reasons - Apple has a VERY tight rein on the hardware manufacturers that it works with and the actual products that they put on store shelves. Why? Having limited configurations makes it easier to fully support from a business sense. Quick example - look at the number of SKUs available in the Mac Pro line and then compare that to the Lenovo ThinkStations. Which direction is Microsoft going to go in? Limited SKUs for improved support at the risk of alienating users who want things "just right"? Or a large number of SKUs to satisfy users and end up costing more in the support phase?

In the end, it comes down to dollars and cents - if Microsoft can produce a superior product that the consumer wants at a better price than their competitors, they may have a chance in the hardware game. Otherwise, I don't see this turning out well for our friends from Redmond.

And finally - what happens when the lawyers get involved? Invariably, someone's going to claim a patent infringement and there'll be a multi-billion dollar settlement over a rounded edge on something. There's a lot of risk in that aspect alone...

Andrew Hornback
InformationWeek Contributor
eafpres
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eafpres,
User Rank: Apprentice
12/11/2012 | 5:32:00 AM
re: Does Microsoft Really Need To Make Its Own Hardware?
Agree that service & support are important to reach the masses, but not convinced Apple Stores and the genius bars are the solution. Apple just dumped the head of retail stores. Maybe time for a rethink? I think the Geek Squad does a credible job on PC stuff, and they have just branched into Target Stores. That won't work for Apple, but it could work for Microsoft to partner with something like that.
eafpres
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eafpres,
User Rank: Apprentice
12/11/2012 | 5:48:11 AM
re: Does Microsoft Really Need To Make Its Own Hardware?
I don't think manufacturing per-se is the issue, as noted by others already. It is the entire thing--the hardware, software, marketing, selling, support, etc. I hate to use the ecosystem word but that pretty much describes it. However, everyone thought Apple had that sewed up and although they are doing "great" Android phones lead, Google apps has caught up, everyone else's phones have bigger screens, more optimized for video, and can run flash, and Apple just figured out small tablets with a copy of themselves (typically a bad idea--"new, now with less than before!!"). So it is not impossible to create a system and gather a following.
When I saw the update for Xbox OS it was perplexing. Then Windows 8 appeared and it started to make sense. Microsoft has for over 10 years had a vision that the Xbox can become the portal into the home, and everything else relates to that. Apple would like to get there with Apple TV etc., but that is where Microsoft has a huge lead having so may Xboxes already out there. If they complete an OS convergence, figure out the TV and other entertainment aspects across platforms (they already have Netflix on Xbox live so if they can make sharing completely seamless, and make the OS transparent...) they might suddenly emerge not only as a threat to Apple but as a threat to set top boxes, cable companies, and the like.
I agree that from what I have read about RT vs. "real" 8 it is a half-step to launch Surface with RT. Part of the whole "ecosystem" argument from the PC side is Office software. Surface with RT cannot run that suite, so I won't touch it. But if the Surface with full 8 and Office compatibility meets expectations, that could be my 1st tablet, and my iPhone 4 could go away once my Verizon contract runs out, in favor of a Windows Phone. We'll see.
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