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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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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.
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
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
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