Are OEMs to blame for poor Windows 8 holiday sales?

Are OEMs to blame for poor Windows 8 holiday sales?

Summary: One report suggests that Microsoft is frustrated with major OEMs, claiming they didn't build enough touch systems. But did OEMs really have much wriggle room to take risks?

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(Credit: Microsoft)

While Microsoft is publicly claiming to be happy with Windows 8 sales, a report has surfaced claiming that, behind the scenes, the Redmond, Washington-based software giant is blaming manufacturers for not building enough Windows 8-powered tablets.

The report comes via The Register, and is based on insider claims that the Redmond giant is now blaming OEMs for ignoring its advice to build PCs that would show off and make use of the operating system's new features.

"Microsoft is very frustrated with major OEMs," claimed the insider. "[OEMs] didn't build nearly enough touch systems, and are now struggling to find parts and ramp up. Microsoft says they provided very specific guidance on what to build."

But another source hit back at Microsoft, claiming that the OEMs "couldn't afford to make lots of product, lots of high-priced touch," because while "people would look at nice high-end products," they would ultimately end up buying a budget device.

Microsoft had also held a competition between OEMs to come up with the best PC. The best systems were to be pushed under two different labels--high specification "Hero PCs," and "Featured PCs" that had more mainstream appeal. Microsoft wanted 10 major "Hero PCs" to be advertised globally, and had promised to pay retailers to promote as many as 20 PCs on the "Featured PCs" list.

However, the source said that the competition was "opaque," and went on to claim that Microsoft was distracted by its own Surface tablet efforts, and as a result, failed to put enough effort into both educating users as to the new features and pushing traditional PC systems.

While there's certainly a symbiotic relationship between Microsoft and its hardware OEMs, with fortunes tied to each other's success, it's clear that the PC industry is in a pretty severe tailspin.

OEMs--most of which are operating on razor-thin margins--no longer have the wriggle room to take big risks, since a blunder could push a company past the point where it could be able to recover. Consumers are incredibly price sensitive, and this means that they prefer mainstream gadgets, including desktops and notebooks, to pricey ultrabooks and tablets. Even Microsoft's own Surface Pro tablet commands a premium price tag that's too high for the average consumer to swallow.

OEMs know that they can shift far more PCs priced in the $350 to $500 price bracket than they can tablets in $1,000-plus price range. This is why they are wary of making any bold moves when it comes to tablets. Enough companies--BlackBerry, Motorola, HP, and so on--have fumbled enough to make everyone else cautious. Not a single OEM wants to make hundreds of thousands of high-end tablets, only to have them sit on shelves ignored and gathering dust.

OEMs are playing it careful when it comes to Windows 8, and with good reason. While Microsoft may have thought that it was a good idea to pursue the touch/tablet markets, we have yet to see proof that this was the right move.

Until then, don't expect any hardware partner to take momentous risks.

Topics: Windows 8, Microsoft, PCs, Microsoft Surface

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81 comments
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  • IMHO THE OEMs ARE THE VICTIMS...

    The real causes for PC holiday sales drops:

    * Windows 8 is a corporate and consumer OS repellant

    * Surface RT is abysmal, everyone knows this except for M$

    * Convertibles will NEVER catch on

    * Touchscreens on Desktops and laptops make about as much sense as jalapenos on donuts

    * For 80% of consumers, a mobile device is all they need; everyone already had a Desktop

    If the Post-PC era has taught us anything, it's that Microsoft and Intel got too greedy by stifling mobile innovation for the last 30-years!
    orandy
    • Absolutely.

      And there is not a thing that the hired PR from Microsoft spouting off on this site can do about it.
      Bozzer
    • I could not

      have said it any better. You nailed it!
      coastin
    • Actually Microsoft numbers that were just released indicate the opposite

      to your diatribe - zerorandy!!!! the TROLL in person!!!
      Master Wayne
      • MICROSOFT CAN ONLY COOK THE BOOKS FOR SO LONG, MASTER BATER...

        Everyone knows that Windows is obsolete in the consumer world. It's the day when businesses decide to stop throwing billions away on Microsoft crapware that keeps M$ up at night.
        orandy
        • MS is waiting for the OEMs to perform, and, if they do not, MS will,

          and that is probably what's going to happen, where Microsoft will become it's own hardware manufacturer for tablets and touch-friendly PCs.

          The OEMs will have only themselves to blame, and the stockholders of those OEMs had better start looking at alternatives for their investments. Microsoft has already proved that they can produce their own devices, and now, they're even investing in a major manufacturer of PCs, that being Dell. Dell could become a Microsoft division in due time, and the other OEMs will have to either use Linux for their OS, or just produce Android-based "PCs" or "Chromebooks". But there too, they will be looking at devices with very low profit margins, so, in the end, many of them will either fold, or look to diversify into other fields.
          adornoe
          • Mostly true

            But let's flesh this out a bit. If the OEM's start pushing something other than MS due to MS now making it's own hardware, this also cuts significantly into the potential sales of Windows and Office. Because once someone cuts the MS umbilical cord, they realize that they never really needed that high priced software in the first place.

            MS is in a very sticky spot, and continuing to irritate the OEM's is not going to help it's case. The Surface Brand name took a beating due to the crap that is Windows RT. This is a catastrophic blunder, as now the consumers will be even more confused on what each model and OS offers or doesn't offer.

            The public is also starting to trend more and more to budget mobile devices, the high end is already saturated with the Apple iPads, and they have a very loyal customer base.

            Microsoft already blew the race to tablets back when the iPad was released, they doubled down and lost it when they decided to release the Surface RT first instead of the Surface Pro. Now by alienating the OEM's even more they are taking it even further.
            trumanp@...
          • Microsoft wouldn't have to worry about a decrease in Windows users,

            since, they could then pull an Apple, but, with still a much bigger user base.

            See, even if Microsoft were to lose half of its Windows users, they would still have a huge Windows base, and they could then use that base to market their hardware to, and then, Microsoft would have a much bigger piece of the overall PC market money, with hardware and software sales.

            If many of the OEMs weren't able to make money in the Windows ecosystem, then they'll be making even less with other OSes. In fact, many would be left with no other choice but to leave the computer business altogether. That, in effect, would leave even more for Microsoft to swoop up.

            Microsoft wouldn't be the loser; not in the least. They would actually have a lot more to gain by producing the whole product that is a PC, which includes the hardware and software and services. Win-win-win, all around.
            adornoe
          • MS is safe in Enterprise

            MS and Windows are untouchable in the enterprise work environments.

            OEMs are trying out Chrome and Android and this will drive sales further away from Microsoft in the consumer world. If Windows tablets don't go cheap soon, they will be dead!

            For comparison, in India, good, high-specd android tablets are available for Rs 10000. A Windows 8 touch machine costs atleast Rs 40000.
            mhe she
    • OEMs and Microsoft both are to blame

      The reason is price. Agree with 'orandy' here. We the people already have Windows PCs at work and even at homes. We want a complementary device to browse internet, watch media, and play simple games.

      Are we going to buy ultra-expensive Windows touch PCs or are we going to buy cheap Android tablets or chromebooks? OEMs and Microsoft should both know that they have to develop cheap touch products to compete with Android tablets, Ipads, and Chromebooks!
      mhe she
  • The OEM's were correct to hedge their bets.....Old kissy - kissy Microsoft

    woul have continued to stick it to the OEM if Surface had shown any type of flight instead of the nose dive that it has....................
    Over and Out
  • Are OEMs to blame for poor Windows 8 holiday sales?

    made sense. considering the small market size of high-end system that is basically owned by apple, making in-roads into that market is out for the time being. the market should be allowed to run its course vis-a-vis windows 8 adoption. it is still new and consumers normally shy away from anything new and unproven ...
    kc63092@...
    • It's crap, that's why.

      Their is far more competition for Microsoft than ever. Windows has to stand on its merits these days, and unfortunately Windows 8 is a downgrade over Windows 7.

      People aren't shying away from Windows 8 machines. They are simply not replacing their Windows 7, Vista and XP machines and buying iOS and Android tablets in their droves.

      The market has gone elsewhere.
      Bozzer
      • Really?

        "The market has gone elsewhere."

        I guess that explains why Windows revenue is up 24% and Windows profits are up 14% last quarter.

        Oh wait, it doesn't explain that at all. In fact, that certainly looks do DISPROVE what you stated. It is a good thing you provided so much evidence for your claims.

        Oh wait, you provided absolutely NO evidence for your claims.
        toddbottom3
        • Toddbottom3 ..don't you think it's said that Microsoft can generate a 24%

          profi and than put out a piece of dung dooo like Surface out on the market? and keep right on smiling all the way to the bank.

          But poster like you, Owlll1net and Loverock Davidson have NO shame.....you guys just keep spewing the same old FUD.......you THREE aught to be ashamed of yourselves..............

          while the end user gets screwed with those bugy apps and those flashing tiles in Metro that would drive a sane man to drink. Lets not forget that Surface can't even up date properly..... I'll say it again, Microsoft makes a 24% increase and the hard working consumers get screwed again....reminds me of another Vista fiasco
          Over and Out
        • Toddbottom3

          You are preaching to your very small MS only using choir, and funny as it sounds I actually bought an 11' Asus 8 notebook about a week ago. Played with it for awhile and realizing how user unfriendly it actually is installed a few windows store freebee games on it, and start 8 (so my fiancé didn't drive me crazy with questions over start menus and shutdowns) and gave it to her. She actually does enjoy it for e-mail and Facebook, but says in a day to scenario the UI is absolutely in the way and whimsically seems to jump from Metro (or whatever they call it now) to desktop, for whatever unknown reasons only Microsoft could explain. The OEMs are not at fault, they were cautious , and until Microsoft can either support the masses with a useable OS or give users an absolute choice of UI and a much better store experience they will continue to be cautious.
          partman1969@...
          • Whoops I meant 11" screen

            Asus model N202. Actually a real cool touch screen small form factor laptop.
            partman1969@...
      • wishful thinking troll

        windows 8 is a great operating system - the best ever released by Microsoft and it stands very well on its own.

        Windows division at Microsoft has again become the biggerst revenue driver at Microsoft. Check today's news. So no, no no no troll TROLL
        Master Wayne
  • OEM's do share their fault, Microsoft has done their part

    There was a time when the OS was not touch friendly or power efficient for a good tablet experience. Microsoft has done the impossible, built a desktop grade OS that is also touch friendly, efficient and can run on both Intel and ARM platforms.

    In all sense, and after using Windows 8 for over 6 months now is the best OS in the market period. All the negative press is either from Microsoft hater or writers who are already sold to Apple or Google camp.

    OEM's not only failed to do their part but are also responsible why Microsoft is taking things in their own hand. Whatever the reason, the hardware offered lacked significantly to be able to compete in the market.

    Microsoft should focus fully on bringing their own hardware, devices and stores. The ecosystem they help developed is turning their back on them so it is the only option to move forward.
    ninjacut
    • Really?

      "All the negative press is either from Microsoft hater or writers "

      So anyone who doesn't like Windows 8 is a Microsoft hater, despite being a windows person from 3.1...

      What utter stupid logic.

      Here's a bit of news for you. When I visit torrents and file locker forums, everyone is still pirating Windows 7. That's how **** Windows 8 is fella.
      Bozzer