This week at Microsoft: Throwing everybody under the bus

This week at Microsoft: Throwing everybody under the bus

Summary: Microsoft has shown it is willing to upset anyone in its quest to remain at the top of the OS world. That could backfire.

TOPICS: Microsoft

Image credit: Ed Bott/ZDNet

The impression Microsoft is giving this week is almost one of desperation, and of a company willing to do anything to maintain its position at the top of the food chain. First came the surprise showing of the new Microsoft Surface hardware, which looks really nice. Then came a preview of the next big version of Windows Phone that looks compelling. These two previews show that Microsoft is willing to push anybody out of its way.

The Surface tablet announcement caught not only industry watchers by surprise, but also Microsoft's biggest partners. These companies, HP, Dell, Acer among them, had no real warning that Microsoft was about to compete with them. They are now in direct competition with the company that supplies the OS they use on all of their PCs. The entire PC industry changed with the Surface announcement.

With the Windows Phone 8 preview, MIcrosoft left its partners alone and went after its loyal phone customer base. Buried in the talk of new features, better hardware, and a new start screen, the bombshell was dropped that no existing hardware bought previously or even between now and Windows Phone 8 launch later this year will run Windows Phone 8.

Not a single Windows Phone sold to date will be upgradable to the version of the OS that Microsoft is trying to convince us is revolutionary. They are throwing every single customer under the bus. In a way they threw Nokia under the bus, too, since their phone sales just tanked for the rest of the year.

The excuse Microsoft handed out for the lack of upgrades to Windows Phone 8 is that the wimpy hardware used to date can't handle it. That's bittersweet, as the new hardware requirements only bring Windows Phone up to the level of the competition.

The need to totally revamp the hardware requirement for Windows Phone would have to be the worst case of long-term version planning by a major tech company but I don't believe that for a second. Microsoft is built on the ability to execute long-term plans. No, this would almost certainly have been the plan all along. To throw the loyal customer under the bus and make them buy new hardware.

You existing Windows Phone customers don't fret, all is not lost. You won't be able to upgrade to the next cool version, but Microsoft feels your pain. They are going to release an interim version just for you. It isn't Windows Phone 8, but it has a new start screen to make your friends think you have the latest. What a pal Microsoft is.

So it's been a big week at Microsoft. It's managed to upset all of its partners and a lot of its customers. All a part of the plan.


Topic: Microsoft

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  • Yeah, Nokia

    Yeah, Nokia has got to be reeling from the pain (though I seriously doubt they weren't aware already that none of their current hardware would meet requirements for Windows Phone 8).

    But I'm still mysitifed by those who seem to think that Microsoft has just put a stake through the heart of the OEMs with their Suface tablet. Serioulsy, the Surface is a nice device, and I'm sure it will find plenty of buyers, but Microsoft has left plenty of void for OEM's to fill with their own offerings.

    In other posts I've noted that there is room for a "toughbook" type Windows 8 slate. There's room for a slate with a better keyboard. There's room for bigger slates. There's room for gaming optimized slates. There's room for mutli-colored slates (pink, blue, green, you name it.) There's room for any innovation the OEM's can imagine. That has always been Wintel's strength.

    There's nothing in the Surface that prevents OEMs from bringing their own innovations to market. Let me give you just one example: I own an ASUS transformer TF300. It's similar in some ways to the Surface, but differs in a few significant ones. And one of the most signifianct differences is that the screen and keyboard dock mate with a hardware latch, and once mated the whole thing looks acts and feel like a regular notebook PC. The other day I was sitting in lounge chair in a local Starbucks with the TF300 in my lap, commenting in some discussion forum and it dawned on me: I would not be able to do this on the Windows Surface. And yes, ASUS is releasing something very similar to the Transformer for Win 8.
    • Exactly

      I definitely agree. This tablet can also be considered a wake up call to all the PCs with bloatware installed everywhere. It's kind of like Microsoft saying "if you want people to buy your product, make it better".

      I would also assume that the surface tablet will have very high specs. Not everyone needs that and there will most definitely be a tablet that comes at a more reasonable price with lower specs from multiple manufacturers. I see the surface tablet as a win win for the consumer.

      And with windows phone 8 it is disappointing that 7.5 users won't get the full upgrade but there's little you can do about it. You can't really move the hardware roadblock. And at least they aren't being like apple telling you are getting the next iOS update when you are really just getting a few simple changes (I would be willing to bet that any regular iPhone 4 would have no trouble running Siri).
      • It wasn't a wakeup call, but an abandon ship alarm.

        The OEMs are now forced to compete with Microsoft who has advanced the notion that they can "integrate" the software and hardware better than anybody else. And of course Microsoft sets the pricing for the OS, so they always have the controlling hand against the OEM "competition".

        I predict two things will happen: OEMs will generally abandon W8 tablets and stick to Android models, and they will retaliate against Microsoft, but not in the PC business. The server business is where Microsoft becomes vulnerable, all it takes is for HP, Dell and IBM to up their game in selling Linux-based servers instead of Windows-based systems. The shift has been happening anyway, but now there's a real business reason for the OEMs to push it harder.

        What will happen to the Microsoft desktop? It will continue to fade away, losing share to mobile, tablets, thin clients and even Macs. I don't see that Linux desktops will ever really catch on except when used as the embedded OS in thin clients.

        So Microsoft better put all its efforts into making the best possible tablet and smartphone, because that's all the market they will soon be left with.
        terry flores
        • ... I don't see that Linux desktops will ever really catch on except

          They will if the gaming industry starts to truly support it. There's definitely a move in that direction. Oh, i don't think it's for next year but I think the market has decided that it's time to expand their horizon. The problem with MS strategy was not WHAT they did but HOW they did it.
      • Google also designed its own phone

        The Microsoft hardware parthners needed a reminder, Windows 8 is not for traditional computers, the typical desktop computers running Windows XP and Windows 7 does not have a touch screen, but without however the new computer PC of Microsoft Surface is an example to follow, because Windows RT tablet may be seen as many, as a direct competitor to the iPad, this is true, but also, this tablet will have the support of Office, Smartglass, Xbox music, Xbox live, etc and also have ability to save files such as mp3 or mp4 videos with USB 2.0 which iPad does not support.

        And what to say about Surface with Windows 8 Professional, this is not one tablet like the iPad, this is a new paradigm in modern computing since it has a processor it can compete with the Mac Book Air and even Ultrabooks more advanced as the ASUS UX31. Surface with Windows 8 Professional is a demonstration of what a hybrid can provide without
        having a cost as high as hybrids were thought, for example the ASUS TaiChi is a computer it seems a hybrid but it will have a very high price, on the other hand Microsoft has now showed us how you can reduce the cost of ah hybrid by the correct design of vanguard and innovation including the best team of building materials designers on the planet.
        Gabriel Hernandez
      • I agree.

        As a WP7.5 user (switched from a Samsung Android POS), I would really like to get an upgrade to WP8, but the interim upgrade has much of what I was missing (customizable tiles for one).

        I just wish that MS would do the upgrading rather than letting the carriers decide what, if and when they will do it, if at all. When I switched, I got an unlocked ATT HTC Surround, which T-Mobile doesn't recognize, so I am stuck in a kind of limbo.
      • "Microsoft has now showed us..."

        Nothing. Absolutely nothing but their plans.

        How can you predict that "[i]Microsoft has now showed us how you can reduce the cost of ah hybrid by the correct design of vanguard and innovation..[/i]" when they have [b] yet to announce their price breakdown structure[/b]? Are you saying MS will buy into the hardware cost to gain market share like they did with the Xbox?

        Really Gabriel, you sound like you're on the MS marketing team. A lot of hype and hyperbole over products that are more vapor than reality. I like how you use phrases like "now MS has showed" when they have only announced their design intents. How well they carry through and at what cost is anyone's guess. We won't be showed nothing until they are real products we can buy and use. Then we'll see how it turns out...
      • I see alot of wishful thinking on your part, terry flores

        but not much truth or accuracy, to be honest

        But here is likely a much better prediction -

        OEMs will generally abandon Android models, as they aren't selling close to what they had hoped, and go with Win8 tablets, even with MS producng a model. They won't retailate in the PC business or the server business, as the majority of people buy MS based servers, not Linux based or barebones.

        HP, Dell and IBM to up their game in selling Linux-based servers instead of Windows-based systems would then allow another comapny to get 85% of all server sales worldwide, because a business won't change the OS their on because the company they deal with doesn't sell it, they'll just change comapnies.

        We see this al the time, heck you do the exact same thing.

        As for Windows desktop fading away, nobody is really predicting that, so teh numbers are stacked against you.

        Sorry, just fact, not fantasy
        William Farrel
      • @William Farrel

        [i]"OEMs will generally abandon Android models, as they aren't selling close to what they had hoped, and go with Win8 tablets, even with MS producng a model."[/i]

        Are we forgetting the added licensing fees Microsoft will be charging these OEMs? These are the same OEMs that's currently struggling to keep the cost of their products competitive against the iPad, and struggling to make a profit. Adding $50 - $80 license fee for Win RT/Win 8 Pro could just put them over the top. Rethink their Windows strategy.

        Now they not only have to compete against the market leading iPad, but also Microsoft's Surface. Good luck.
      • maybe people don't want to pay for quality

        How much more would you pay for a better keyboard? Or higher screen resolution? Or double current RAM?

        People are cheap. They've gotten used to PCs without monitors costing under US$500. They're getting used to iPad 3s with 2048x1536 screen resolution selling for less than US$500.

        Surface Pro may be a reasonable laptop alternative, though a 10" screen is kinda tiny for real work. Surface ARM is problematic. There'd need to be a lot of Metro apps to make it attractive because it's unlikely Office will be a major selling point for ARM tablets.
      • @terry flores = So ignorant of enterprise logistics

        Enterprises use a mix of Win and Linux because they have a mix of third-party applications that only run on one platform, but have to work with apps for the other platform.

        The Dells and HPs (manufacturing) are not selling servers with OSs on them to enterprises. The companies like IBM, Fujitsu and HP (facilites management) are usually contracted to setup and manage whatever equipment, OSs and apps the enterprises want.

        So the OEMs are not competition for MS at all in the server space, but are partially reliant upon MS OSs being used, just like they are upon Linux being used.

        But then, Intel makes servers, but that hasn't stopped Dell, HP et al making them as well, even though they are using many of the same Intel chips.

        I think you are so anti-MS, that you are making up disputes that don't exist.

        I haven't seen ANY reports on ZDNet about complaints from Samsung, Asus, or Lenovo about the Surface. It seems to be all from a whole lot of ignorant bloggers and commenters that think they have some right to speak for those OEMs.

        Until an actual OEM spokesperson makes an official complaint, it is ALL FUD from people who should keep their fingers still.
    • They want the premium margins

      MS has now been thoroughly schooled by Apple on how you go about running a profitable device business. Forget about the huge market cap gap, Apple now exceeds MS in revenues.

      Quality and vertical integration are where it's at. The more closed the better. MS's old open OS ways where fine for the early gold rush days of the 90's, but today's mobile devices users are far less tolerant of shoddy hardware/software integration, malware, driver issues, etc, etc. There's no money in it any more.

      So mobile and cloud computing means the desktop is under attack and the returns from the old cash cows, Windows and Office, are starting to get thinner. MS has to start getting some real traction in mobile devices and Apple has laid out the path to the highest profits--a premium brand built on quality and tight integration.

      Sure, MS will continue to go through the motions of half-heartedly servicing their OEM harem, but now their eyes are surely on getting a real piece of the game that Apple plays so well.
      • Does anyone think Microsoft can out-Apple Apple?

        [q]Quality and vertical integration are where it's at.[/q] The "trick" to those premium margins is create products that generate high-end demand [b]and[/b] maintain stringent controls on your manufacturing costs. I'm not sure that Microsoft has that expertise, at the moment. We'll see what the Surface retails for and when it's ship date is. I will suggest that an outright acquisition of Nokia would bring a great deal of that manufacturing expertise, at least in regards to handsets, to Redmond. They just have to do it sooner rather than later since Nokia is shedding people, and talent, like crazy.
      • @matthew_maurice

        Back in the 90's they used to say of Microsoft, if you shake hands with them, check to see if you still have all your fingers. Nokia, well that's one less competitor now.

        You're very much right about the differences between Apple and MS. I don't think MS has the balls nor the discipline to do what Apple does, but are still a desktop OS monopoly and that gives them a lot of power. They might be able to shore up more of that old time glory by being gutsy and launching crowd-pleasing, legacy hugging hybrid devices like Surface. The IT crowd generally loves and responds much more to hardware than software. It's easier to understand. They can touch it ... go figure.

        But overall, I think the one-OS-to-rule-all-hardware days are over. MS must know that. They have to become a device maker and begin to take full responsibility for the entire widget and it's UI/UX through both hardware and software. Try to become Apple.

        You can tell that the MS staff loved everything about building the Surface hardware. Becoming a device maker would make Microsoft a much, much better software company.
      • Writing on the Wall

        Surely Microsoft has observed - as has just about everyone else - that building some hardware, then slapping someone else's OS on it (Android or Windows) is not a winning strategy for the tablet market. Since it is now obvious that the traditional Microsoft model of selling OSs to hardware makers isn't likely to work for either the hardware makers or the OS company, Microsoft is going to change their model for this market.

        Yes, they have just thrown their would-be tablet manufacturing partners under the bus. But based on the observed performance of tablet makers in general who use an outside OS, under the bus appears to be where these tablet makers belong.

        I don't think Microsoft is going to be successful taking over the entirity of tablet design - the hardware + the OS - because Microsoft simply lacks the corporate culture (taste) to build an insanely great anything. But I also think Microsoft lacks the cultural self awareness to realize this.

        We will see how it turns out. The writing is on the wall...
    • If Nokia knew, why did they launch the Lumia 900 as it is

      If Nokia knew, why did they launch the Lumia 900 as it is then ?

      If they didn't, Microsoft have killed them.

      Surely launching the Lumia 900 as a Dual/Quad Core, MicroSDHC, NFC enabled power-house, 'WP8 ready' would have made sense.

      Look at the 2-3 months later Samsung Galaxy S3

      Elop needs sacked for allowing this to happen.

      Microsoft just killed Nokia.

      We've been told about the WP Fanbois how it works 'just fine' on single core/weedy CPU/weedy memory/no expansion 'Sky Drive' is the answer.... blah...blah.......

      MS have just told everyone WP7 hardware is too crap to continue.

      As the article says 'no long term planning', as WP7 platform, HW controlled by MS, is not even 2 years old and is now dead.
      • This isn't really that unusual...

        Especially in the mobile phone industry. My Android was outdated and outmoded 6 months after purchase.

        I think a mountain is being made out of a mole hill.

        1. Microsoft partnered with Samsung to create the FIRST line of tablets. So what? Everyone's acting like Microsoft will snub all other distributors. That's a stupid assumption given that their revenue comes from a multitude of distributors. They had to start somewhere, right?

        2. Everyone said they turned their backs on the WP7 crowd. Well, who didn't see that one coming? Nokia has been pushing single core devices for the past two years and passing them off as "premium" WP7 devices. While no doubt they are more than ample to handle WP7 and it's software, did anyone REALLY think Microsoft would stick to that technology forever?

        Microsoft wanted a presence in the mobile arena, so they introduced WP7. Microsoft wants to now dominate the mobile arena, so they are going to try their hand at the serious devices.

        W7 doesn't run on a P4, and runs poorly on a PD, right? You may think that's a bad comparison given the years between hardware, but in the mobile industry, everyone is being forced to think faster and move faster to stay competitive.

        How many devices are running ICS?
      • Killed Nokia

        I agree that if Nokia didn't knew about this change, that might end it...but that MS killed Nokia...i just don't see it...Nokia is practically death because of their lack of Innovation, because they didn't realized what the new cellphone era was gonna be like, Not because some kind of stupid agreement with MS.
        I'm pretty sure there's gonna be something for Nokia now with Windows 8 phone, but we'll just have to wait until then.
        Fer A.
      • Nokia plans

        How do we know Nokia don't have a WP8 handset already in production, yet to be announced? It wouldn't surprise me, in fact I think it's likely.
    • This is not the Wintel market.

      [i]"There's room for bigger slates. There's room for gaming optimized slates. There's room for mutli-colored slates (pink, blue, green, you name it.) There's room for any innovation the OEM's can imagine. [b]That has always been Wintel's strength.[/b]"[/i]

      We don't know that there will be room. Unfortunately for Microsoft's OEMs, the modern consumer tablet market is unlike the ol' WinTel commodity PC OEM market. Many seem to confuse the two thinking that because it's "Windows" the OEMs will automatically succeed. Just throw out a multitude of different "Windows" tablets PCs in the retail channel and watch it sell.

      That worked great for WinTel OEMs in the 90's and beyond when PCs were pretty much a requirement or mandated (compatibility, enterprise). Microsoft excelled during that time with their business model of licensing out the OS to OEMs who then dumped it on cheap throwaway parts with bundled crapware/bloatware (DELL) and pushed onto unknowing consumers. Consumer who for the most part didn't know how to use a PC but a PC was required in business and their household.

      Not sure this will play out the same with the modern tablet market which has shifted more to consumer electronic appliance-like device market than that ol' commodity PC. The vertical approach of one company controlling the whole user experience is what consumer will be looking for in this market, unlike the PC market. Where does the OEMs fit in now that Microsoft is building the whole experience?