Microsoft: The Evil Empire re-Surfaces
Last week, Microsoft announced its Surface Windows 8 Tablet, breaking 30 years of tradition of strictly being a software company, their consumer video game console efforts with XBOX and sad Zune experiment notwithstanding.
The event was a surprise to everyone and it generated a lot of excitement for Microsoft. The tablet itself appears to be a compelling device and the company should be commended for its engineering efforts. If it means anything, I'm going to be buying one myself, although I haven't figured out whether I want the x86 or ARM version.
I haven't decided whether the Surface keyboard cover is a legit enhancement and key differentiator or just a gimmick. Nobody outside of Microsoft, not even the journalists covering the Surface pre-launch event has actually typed on the stock detachable keyboard cover yet, so as to how effective it will be as a data input device is questionable.
However the higher-end detachable black tactile keyboard (an additional purchase) looks like it will be comparable to an Ultrabook or a subnotebook typing experience. For getting "Real Work" done with Microsoft Office for the road warrior it will be useful and I will likely pick one up.
I will note, however, that similar 3rd-party products already exist for both the iPad and Android tablets, so it's not like detachable keyboards for tablets are a huge innovation.
Microsoft introduced a new hardware product far ahead of its general availability, which has brought it considerable criticism, even from its most stalwart advocates in the tech media. The ARM Surface won't be available probably until October and the x86 will not be available until the January timeframe, so the product still has the stench of vaporware on it despite all evidence to the contrary that the Surface is a very real product.
Compared to the way Apple does business, with products being immediately available for pre-order or in the channel within weeks of announcement, this comes off as amateurish.
I have made the argument here that while the Surface itself appears to be a solid and innovative piece of hardware, its release will have negative repercussions for the entire PC industry.
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In essence, by pre-announcing this device, it has created an "Osborne Effect" for the PC OEMs currently working on similar spec-ed tablets and Ultrabooks who must not only license Windows 8 from Microsoft but also leverage the same ODM component and manufacturing channel, putting them at a serious disadvantage on pricing for many models currently planned for the Fall 2012 and Winter 2013 release timeframe.
While my detractors now claim victory for end-users which will now have access to a high-quality Windows device directly from the source, the reality is that in the long term, this will have a negative impact on consumers.
With Surface, Microsoft seeks to remove vendor and device choice, which has always been one of the primary advantages of being a Windows user and a prime differentiator from using Apple products.
All things considered, a transition towards the Surface and other Microsoft-branded hardware would be a step backwards for the consumer, not forwards. And it damages Microsoft as well, because they would be competing in a very low-margin business against a company that is far more skilled at vertical integration than they are -- Apple.
Because Microsoft is new to the vertical hardware and software integration game, it is going to make early mistakes that its closest competitor, Apple, has spent two and a half decades learning from. The people who are going to suffer from Microsoft's early mistakes who jump into Surface hardware are going to be end-users, whether they are consumers or enterprises.
We don't know how many generations of updates Microsoft is going to support with their own PC/Tablet hardware. Since Windows is not an embedded operating system like iOS or Android is, nor is it truly modular in nature, it has a much larger payload. It is also vastly more complex to develop and maintain and thus has a much longer release and update cycle than its competitors.
While Microsoft has transitioned to a more of an incremental update model than its Service Pack model of previous generations, it is still a much less agile platform than that of iOS or Android in terms of the frequency of ongoing maintenance and upgrades. This is going to be perceived in some circles as a key differentiator or a key disadvantage depending on how you look at it.
We also are well aware of how difficult the new EFI bootloaders which are Windows 8 compliant are going to make installing competing OSes like Linux and Android. On a Surface tablet, you can be assured that there's no chance in hell an end-user will be able to make Linux or Android work on it, even if only a small minority of people would want to do it.
It sounds crazy, but even Apple's x86 hardware is more flexible in this respect.
This puts its users as a serious disadvantage. Arguably, this is true for the OEMs as well, but at least you have some additional flexibility with an OEM and with corporate managed hardware, such as delaying updates that would normally be forced on a consumer population.
We also don't know how Microsoft is going to address the demands of large corporations with imaging and pre-loads that OEMs currently do for their large customers. It probably isn't even possible with the ARM model and may not be practical at scale for them to do with the x86 model depending on the relative demand for the two products.
In the short term I believe Surface really is more of a consumer product than it is an enterprise/business product. I believe businesses require more resilient and ruggedized x86 hardware for their mobile computing needs if they require real PC applications, and if they require content simply consumption they have iPad which has a much larger library of apps to choose from.
From a vertical application development and device customization standpoint Android has a substantial lead over Windows RT and Windows 8.
If Surface succeeds then it is going to have to succeed at the expense of the OEMs which license its consumer Windows software and represents the bulk of its traditional revenue stream along with its enterprise software. The company cannot have its proverbial cake and eat it as well.
A success for Surface means the destruction of the OEM ecosystem and turning into another Apple. I'm not sure consumers and businesses really want another Apple, one walled garden is enough -- and at least Apple's walled garden is highly customer focused and has a good history of supporting products long after their sales lifecycle.
Conversely, in the consumer space, Microsoft has a reputation for abandoning technologies and customers when it suits them, so they are going to have to make a huge effort in changing their spots if they are truly committed to being a hardware manufacturer.
And I think it is also worth mentioning that antitrust forces in the United States and Europe could be brought to bear on Microsoft if Surface really does become successful and damages the business prospects of OEMs. If you thought MS-DOJ in the 1990's and the billions of fines from the EU in the last five years was a heck of a bumpy ride, think of what else is likely to come down the pike.
I have made the case elsewhere that the post-PC is definitely in the early stages and we are within 5 years of a full transition away from the x86 architecture as the predominant end-user computing platform, so I'm not going to backtrack on that.
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I don't wish to sidetrack, but what has not yet been considered in the coverage of this product at all is the effect that Surface will have on retail. You will notice that Microsoft hasn't made any announcements as to retail launch partners for Surface whatsoever.
The domain and the lifeline of most OEM PC equipment sales (save for Dell, which has always been partial to a direct sales model) has largely been in retail stores, so I think we should address this.
I have also in my writings have said that retail itself is in grave danger of being displaced by online sales -- clicks are inevitably going to kill the bricks.
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While Microsoft plans to build out its retail store infrastructure, I find it hard to believe that they will execute on the same scale and with the same effectiveness as Apple has done. Or will devote so much time to retail in order to speed adoption for Surface.
The reason being is that Microsoft has a massive employee base in product development and company operations (92,000) and only a small force in retail.
Apple has over 60,000 employees and only a fraction is in product development and company operations compared to their number of retail employees in their own 370-odd stores worldwide.
Additionally, Apple has considerable experience leveraging the traditional retail channel, and is building store-within store experiences to further increase their presence.
I don't see how Microsoft is going to be able to make significant headway here without disrupting the model somehow. They either have to put a lot of energy into direct sales -- which will whack the OEMs, or they have to put considerable resources into building their own retail infrastructure.
My ZDNet colleague, Ed Bott tells me Microsoft plans to build "hundreds" of Microsoft stores. If that's true, then you can be assured that Surface is going to be the most favored product there. So that whacks the OEMs too.
However, my bet is that Microsoft is going to favor direct and online sales over retail, bypassing many of the channel inefficiencies, as that will deliver the most bang for the buck.
Much of the blame for Microsoft's decision to go at Surface on its own rather than bring in a strategic OEM partner -- as Google has done in the past with its Nexus hardware -- is that the OEMs are dropping the ball and flatlining on innovation.
I would not dismiss all OEMs as having flatlined. I concede that Hewlett-Packard hasn't done anything interesting in a long time, and neither has Dell.
But if you look at what the Asian OEMs like Lenovo, Asus, Acer, HTC and Samsung are doing, those companies are making some very interesting and compelling products and arguably, have pioneered in the same convertible form factor which the Surface uses.
I will add, however, that these interesting designs we have seen from the Asian OEMs have largely been introduced with the Android and ARM space.
If anything, Microsoft's slow entry into the ARM architecture with Windows and allowing Android a 4-year head start hasn't helped their situation at all. So they are assigning blame in hardware innovation to the OEMs when they themselves have made their bed with Intel and maintained and coddled the quid pro quo PC architecture for the last 30 years.
If Windows RT provides a compelling platform, then the OEMs will exploit it.
But with Surface, Microsoft just kicked them all in the nuts and they are now probably thinking about differentiation and how to deal with a clear margin and supply chain disadvantage.
OEMs may have to cancel some products, including Ultrabook designs, that would have had to compete unfairly in the marketplace against Surface next year. And they are probably also examining the developments over at the green pastures in Android-land as a possible way to diversify.
They've had all of their eggs in Microsoft's basket for decades and the wolf just raided them.
For the Surface tablet (and for Windows 8 ) to succeed it is going to need many new exploitive applications written for the new Metro UI and WinRT API set.
So far, I have not seen compelling evidence that the traditional Windows software developers are devoting tremendous resources to this yet. So the bulk of the applications we are going to see at launch for Windows 8 will be on the x86 version, which are legacy Win32 apps.
That being said, Windows 8 represents a radical shift from the traditional Windows experience. So it's a huge risk for Microsoft.
Enterprises are going to be wary of Windows 8 until they see from limited pilot implementations how well it integrates into their environments and how they can manage it, so until then, Windows 7 will be king.
Many organizations only just migrated or are finishing their migrations to Windows 7, so a good deal of them are going to wait until the next major Windows upgrade cycle before making any more substantive changes.
And end-users? With Windows RT, they're going to have to buy all new replacement applications with the exception of pre-loaded Office. With Windows 8, there's very little advantage in using it to run traditional Win32 applications when Windows 7 does it so well and in such a familiar fashion. Buying retail copies of Windows 8 to upgrade existing Windows 7 PCs also doesn't make a lot of sense.
The Surface isn't the only product which Microsoft has demonstrated is self-centered and has no consideration for its end-users and its partners. Windows Phone 8 is just as much as a customer love-fest as its desktop and tablet sibling.
Microsoft apologists will likely burn me in effigy for this answer, but I think the company has made a strategic mistake by unifying the Windows code-base for Smartphone and Tablet-based OS with their desktop PC OS.
With Windows Phone 8, the software now runs on the same basic core as Windows RT and Windows 8, using an NT kernel and an NTFS-based file system in favor of a more traditional lightweight embedded Windows CE core.
There are some traditional advantages to code unification such as portability of applications, but running a heavyweight monolithic kernel on an ARM smartphone (and even a tablet) means you need much more RAM and CPU horsepower to power the stack. And in the case of Windows Phone, porting existing mobile Metro apps to Windows RT and Windows 8 isn't necessarily a slam dunk despite sharing a basic OS core.
I'll quote Microsoft directly here:
"Developers who build applications for Windows Phone will be very well prepared for building applications for Windows 8...and in many cases, may be able to reuse assets and business logic in building new Windows 8 applications... While Windows Phone applications cannot run on Windows 8 without being modified, developers have found it's fairly easy to port a well-written Windows Phone app to Windows 8"
Thats a pretty cagey answer.
This shift towards core OS code unification has made the Windows Phone 7 hardware immediately obsolete. By comparison, Apple has been able to support several generations of older iOS hardware such as the iPhone 3GS and the iPad 1 with successive OS updates which only have single processor cores and small amounts of RAM.
For the time being, Apple has kept their desktop OS and their Smartphone/Tablet OSes on separate development paths, although user experience innovations from iOS are being migrated/ported to OS X. This is very different from what Microsoft is doing.
Windows Phone 7 was able to leverage a single processor core and a lot less RAM and did not require a journaling file system, all of which taxes the hardware.
Additionally, by obsoleting Windows Phone 7 hardware so quickly, this is going to leave a lasting impression on consumers and its hardware partners and its carriers which sell their hardware that the company abandons its users and science projects whenever it suits them.
While the Microsoft's new tablets and Windows Phone 8 devices appear... on the Surface... to be a huge leap forward in Microsoft's evolution, they are indeed bad news for the end-user.
With Surface, Microsoft seeks to demolish the very same 30-year old industry that it worked so hard to create with the support of the OEMs and the users who depended on them and and provided the company with so much revenue for so many years.
Hurting the OEMs ability to compete and moving towards a direct manufacturing model hurts the end user because it will reduce choice, and threatens to establish the company as a monopolistic, closed-off ecosystem.
If the OEMs fail because of Surface's success, it will mean the loss of jobs in the manufacturing sector, particularly for OEMs that have a strong base of US operations such as Dell and HP, as well as other companies which support the OEM ecosystem such as resellers and distributors.
If Microsoft chooses a direct sales approach for Surface, retail will also suffer and it will also result in lost jobs. Despite what you might think, not all of this will come at the expense of Asian companies.
Microsoft has also hurt their early adopters and manufacturers of Windows Phone 7 devices by significantly changing the requirements for Windows Phone 8 and making all previous hardware incompatible.
This may sound trivial given the company's pitiful market share in the smartphone space, but having displayed such a willingness to abandon customers and orphan products cannot possibly bode well for the users who were duped into thinking they had a migration path and the manufacturers and carriers which signed on as partners.
In short, one thing is for certain. The Evil Empire has re-Surfaced.