Software // Operating Systems
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10/2/2013
12:49 PM
Shane O'Neill
Shane O'Neill
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Microsoft Should Get Out Of The Device Business

Microsoft must get over Apple envy and play in the real world of mobile. First step: Unchain Microsoft software from Windows.

 Microsoft Surface: 10 Best And Worst Changes
Microsoft Surface: 10 Best And Worst Changes
(click image for larger view)
Is Apple envy getting the best of Microsoft? Over the past year, the software giant has burned partner bridges so that it could follow the Apple model of controlling the whole product.

But Microsoft's dusty inventory of Surface devices shows how difficult the integrated hardware-software market can be, as computing shifts from being device-centric to being centered on software, data, services and user experience.

Unfortunately, the alternative for Microsoft in mobile is equally hazardous: Keep relying on OEMs seduced by the popular and free Android. It's not as if Samsung and HTC are clamoring to pay a Windows license fee so they can make mobile devices most people don't want.

Steve Ballmer's successor will have to decide whether to stick with the "devices and services" model Ballmer set up just before announcing his retirement. Don't expect much to change. Microsoft isn't about to bring in a cowboy that will abandon the company's new business model and its $7.2 billion acquisition of Nokia.

[ Apple's gold iPhone is attracting copycats. Read Samsung Unveils Gold Galaxy S4: Apple Envy? ]

However, with Windows revenue falling and Windows Phone a distant third behind Android and iOS, with roughly 3% of smartphone sales, can this hardware quest possibly end well?

Commodization Of PCs And Tablets

The PC market has been on a downturn since the iPad was introduced in 2010. Research firm IDC predicts that PC shipments will shrink by 9.7% year-over-year in 2013 and that tablet sales will surpass PC sales for good in 2015.

Microsoft's Windows 8 Surface ultrabook-tablet hybrid devices are an attempt to assert some control over the diminishing PC market while establishing the company as a tablet player … all with the same device! Surface RT, Surface Pro and Windows 8 all landed with a thud this year despite sincere efforts to create a unique hardware and user interface experience. Surface devices account for just 3.7% of tablet sales, according to IDC. Surface 2 devices, announced last week, offer hardware improvements such as an adjustable kickstand and a touch cover keypad that enhances battery life, as well as 200 GB of free SkyDrive storage.

Surfaces

Out of the gates, the Surface 2 device (the ARM-based, cheaper, more "tablety" Surface that runs Windows RT) scored big when Delta announced that Surface 2 tablets will replace paper document flight bags for 11,000 pilots; this would normally be a job for iPads and is an indication of enterprise opportunities for Surface and Windows 8.

But down here on earth, Surface prices are still unrealistically high given the lack of demand from consumers and businesses (the 64-GB Surface Pro 2 is $900 and the 32-GB Surface 2 is $450).

Microsoft positioned Surface to inspire PC makers to improve ultrabook hardware. But that market is contracting, and inspiration is in short supply. As such, ultrabooks keep getting cheaper, thanks to more consumers buying inexpensive tablets for light computing tasks.

Both Surfaces offered the tablet-loving public more than it needed. The Surface Pro's 10.6-inch screen is too big, the price too high, the battery life too short and the selection of apps too scant to be considered a tablet, as the market has been defined by the iPad, iPad Mini, Samsung Galaxy Tab, Google Nexus and Amazon Kindle Fire. Consumers were also thoroughly confused by Surface Pro's operating system, Windows 8.

These days, being a laptop/tablet hardware maker is an uphill climb if you can't reap profits from the software and services inside. And so far, the embattled Windows 8 isn't providing the app and ecosystem perks Microsoft needs to lock itself into a hardware-software package.

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David F. Carr
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David F. Carr,
User Rank: Author
10/3/2013 | 1:33:17 PM
re: Microsoft Should Get Out Of The Device Business
Shane O'Neill for Microsoft CEO! Would you want that job?
Shane M. O'Neill
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Shane M. O'Neill,
User Rank: Author
10/3/2013 | 1:48:20 PM
re: Microsoft Should Get Out Of The Device Business
No! I can't imagine a more difficult and stressful job.
Lorna Garey
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Lorna Garey,
User Rank: Author
10/3/2013 | 4:32:21 PM
re: Microsoft Should Get Out Of The Device Business
Shane, it seems like an effort at covering all the bases. MS is big enough to straddle the two realms, hedge their bets and see what works, no?
Laurianne
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Laurianne,
User Rank: Author
10/3/2013 | 5:34:07 PM
re: Microsoft Should Get Out Of The Device Business
"Microkia" sounds Frankenphone-ish, perfect for October. LG is playing with curved smartphone screens. What is Microsoft playing with? If Microsoft/Nokia can't stand out, they are going to fall into the not quite an iPhone/not cheap enough to be an Android phone trap, no?
Scripter23
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Scripter23,
User Rank: Apprentice
10/3/2013 | 7:35:46 PM
re: Microsoft Should Get Out Of The Device Business
I can't see a good future for MS Office. You nailed it when you said the alternatives are free. There are now a billion or so devices not running Office. People have found alternatives. Corporate culture is now accepting of people using alternatives. The days of charging hundreds of dollars for Office are past.

MS should spin off Office while it still has value. Don't ride it into the ground like BB management did with their business. Seems like a radical idea, but it would be smart. Sell it for billions now, instead a trifling five years from now.
MichaelOFaolain
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MichaelOFaolain,
User Rank: Apprentice
10/3/2013 | 8:42:50 PM
re: Microsoft Should Get Out Of The Device Business
I'm convinced that the Surface Pro will end up being a winner. Like many, I didn't want to suffer through another Vista experience, so I promised myself I'd wait for what I guess is now designated as Windows 8.1.

Now I am convinced that when I make the switch it will be in 2014 when the Surface Pro 2 Docking Station is available and I'll be using:

1. As my new tablet a Surface Pro 2 128 GB (which has approximately 85 GB storage available for user content), with the Power Cover, a 64GB Ultra MicroSDXC Class 10 Memory Card, and a flash drive (if needed), to supplement, if not replace, my iPad 1 instead of a new replacement iPad.

2. As my desktop computer the same Surface Pro 2 in the Docking Station, with my current 25" non-touch monitor, and through the four USB ports the keyboard, mouse, scanner, and 1TB external USB backup drive I'm using right now.

I am bemused by those who discuss the lack of apps. The Surface Pro runs something called "software" which is simply unavailable on other tablets. It's what I depend on for computing. And the nice folks at Amazon make a Kindle App for Windows as do most other creators of the "apps" I use on my iPad 1. Even Apple iTunes runs on a Windows computer.

Of course, maybe I'm expecting more than the Surface Pro 2 can deliver, but somehow I think it will do what I want it to do. And I don't think I'll be alone in my choice.
D. Henschen
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D. Henschen,
User Rank: Author
10/3/2013 | 8:53:19 PM
re: Microsoft Should Get Out Of The Device Business
Should Google get out of the device business, too? For that matter, should Microsoft get out of the search business? I don't think Microsoft is just envying Apple; there's also the threat of the Android operating system.
mak63
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mak63,
User Rank: Ninja
10/3/2013 | 9:10:51 PM
re: Microsoft Should Get Out Of The Device Business
Surface Pro is a contender, It can go and beat the iPad or any Android anytime, well except the 50 bucks one. Nobody can beat that one yet! And the Pro it isn't just a tablet. It's a computer in a tablet form. $800 could be pricy in comparison with mid range or cheap laptops, but I believe is worth it. I know the RT platform don't have many apps just yet, but the Pro can run the millions and millions of programs designed for Windows.
That for me is worth a few extra bucks. Did I mention that is running an i core? lol
Shane M. O'Neill
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Shane M. O'Neill,
User Rank: Author
10/3/2013 | 9:17:32 PM
re: Microsoft Should Get Out Of The Device Business
Yes, I think that's Microsoft's intention and it can certainly afford to experiment with developing its own hardware. A year ago I would have said the branded hardware-software package makes sense for MS. But I thought, probably naively, that Windows 8 and Windows Phone would generate way more adoption and excitement.
Shane M. O'Neill
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Shane M. O'Neill,
User Rank: Author
10/3/2013 | 9:34:40 PM
re: Microsoft Should Get Out Of The Device Business
Yes the true enemy for MS in mobile is Android. It can emulate Apple or emulate Google to fight Android. It appears to be choosing the former. But a good compromise for MS would be to walk the line and emulate both. Have your Surface devices and Microkia phones, but also work with mobile OEMs, stop charging them for a Windows license fee and customize MS software for all mobile platforms. Microsoft could pull it off. Whatever takes to get people using Windows 8/Windows Phone, which so far has been a tough sell.
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