Microsoft plans to sell 'a few million' Surface PCs in the coming year

Microsoft plans to sell 'a few million' Surface PCs in the coming year

Summary: With Surface and now Perceptive Pixel, is Microsoft gearing up for total hardware domination?

SHARE:
99

Since Microsoft unveiled its first Microsoft-branded PCs, the Microsoft Surfaces in late June, I've been wondering how ambitious the company's scale-up plans were.

surfacecovers

On July 9 at the Worldwide Partner Conference opening keynote, I got an answer. CEO Steve Ballmer told attendees Microsoft's goal is to sell "a few million Surface PCs" in the coming year. (I actually thought I heard Ballmer say "a few millions," with an "s.") Ballmer also said that according to estimates, there will be 375 million Windows PCs sold in the next 12 months. His implication was there would still be lots of OEMs making Windows 7, Windows 8 and Windows RT (Windows on ARM) machines, too.

The "few million" figure is interesting on several fronts. First, if it's true, Microsoft isn't coming out of the gate with full guns blazing. Some Microsoft watchers have been claiming Microsoft's goal is to catapult itself to the top of the Windows PC supplier heap as soon as possible. These folks have claimed Microsoft has lost all faith in its OEMs and now believes the Apple model -- one hardware supplier doing end-to-end software/hardware systems -- is the only way to advance in this market, going forward.

But given how long it takes to get a new line of hardware cranked up -- getting adequate supplies of components, finessing the manufacturing and quality-assurance processes, staffing up for a whole new customer support experience -- I was doubtful Microsoft would be hawking a huge number of Surfaces its first year, even if officials wanted to do so. With all these variables, a few million is pretty ambitious, I'd say.

I also didn't believe, like folks such as Acer's CEO Stan Shih seemingly professes to, that Microsoft made its Surface announcement as more of a scare tactic or an incentive to get partners to do better, not because it wants to be a hardware vendor.Ballmer's comments today, to me, made it clear Microsoft is in the hardware business, and here to stay.

Speaking of Microsoft and the hardware business, Microsoft also announced today plans to buy large-screen multi-touch display vendor Perceptive Pixel. I wondered whether this meant yet another foray in hardware for the Softies. Will Perceptive Pixel be making Microsoft-branded displays for Office users, I wondered? (If so, this wouldn't be the first time the Office team at Microsoft dabbled with hardware. Anyone remember the Microsoft RoundTable RingCam videoconferencing system?)

Giovanni Mezgec, General Manager of Office Product Management, told me today that Microsoft is still in the process of mulling how best to produce new Perceptive Pixel displays. Microsoft hasn't ruled out involving OEMs in the process in order to bring down costs, he said. But nothing final has been determined, other than the fact that Perceptive Pixel Founder and Chief Scientist Jeff Han and his team are going to become part of Microsoft's Office business unit if and when the purchase receives regulatory approval.

Topics: Tablets, Microsoft, PCs, Windows

About

Mary Jo has covered the tech industry for 30 years for a variety of publications and Web sites, and is a frequent guest on radio, TV and podcasts, speaking about all things Microsoft-related. She is the author of Microsoft 2.0: How Microsoft plans to stay relevant in the post-Gates era (John Wiley & Sons, 2008).

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Talkback

99 comments
Log in or register to join the discussion
  • A few million

    Did Ballmer put is pinky to the corner of his mouth when he said that? If true that Surface will only be available in Microsoft stores, then a few million is a crazy high number. If you'll be able to purchase it through normal retailers (BestBuy, OfficeMax, etc), then they might make the number.
    craigber
    • Online Stores

      They also have online stores as well at microsoftstore.com. The suface is one of the highlighted items and has a note saying coming soon.
      Row5
    • OEM parthners should learn from Surface going forward

      It's not news that a few years back, Acer loaded a brand new PC with dozens of Gigabytes of trialware, shareware and applications with very bad quality, If you try to uninstall this software, your Windows registry still keeps most of the values in there and your computer won't boot as if you had a brand new PC with only the Windows OS installed.
      This decision made many customers angry with Microsoft, since they said Windows didn't boot so fast, and it wasn't Microsoft's fault, it was the OEM fault since they installed third party software which nobody asked for. Microsoft wants customers to have the experience of a new OS without any crapware installed to experience booting times of 15 seconds, this will be possible on other devices from OEM manufacturers if they don't install all this trialware and crapware, so OEM vendors, is your call, if you want to keep customers in, you better remove all the crapware on new devices.
      Gabriel Hernandez
      • If they go OEM...

        ...instead of their own branded tablets, then the crapware is sure to follow. The profit margins for OEMs is so thin, they won't be able to resist.
        CaviarBlack
      • The truth is...

        "This decision made many customers angry with Microsoft, since they said Windows didn't boot so fast, and it wasn't Microsoft's fault, it was the OEM fault since they installed third party software which nobody asked for. "

        Microsoft has forced the OEMs into the "race to the bottom", remember that every OEM PC has to have the exact same load of Microsoft software. Company D can't change the browser to the one of their choice, nor can they install another browser, without being penalized by Microsoft. By forcing every computer to look identical, the OEMs were forced into lowering prices to a point they have to install "trialware" to make any profit at all.

        "Microsoft wants customers to have the experience of a new OS without any crapware installed to experience booting times of 15 seconds, this will be possible on other devices from OEM manufacturers if they don't install all this trialware and crapware, so OEM vendors, is your call, if you want to keep customers in, you better remove all the crapware on new devices."

        Then maybe Microsoft should only charge $15 per copy of Windows? If the OEMs weren't so cash strapped by the "Microsoft Tax", they wouldn't need to load the trialware. You can't have low prices, an decent running systems.
        Jumpin Jack Flash
        • Except that actually there's no truth to any of that.

          oems do not have to have the same mix of MS software or any other software and call install as many browsers as they want. None of the oems has to install any trialware to make any profit. They can and do set their profit margin to whatever they want. And the oem cost of windows is consistent to all oems so they are not cash strapped by that in any way. They have miles of profit margin to play with in competing with apple which is the only real alternative to the other oems who are paying the same as they are for windows. They could all raise their price $100 and still be well under apple. They just dont because they are competing with each other, which is good for consumers and why they are so much lower priced.
          Johnny Vegas
          • Prisoner's dilemma

            Game theory tells us that a collection of OEMs faced with the conditions you describe will, one by one, install crapware. They will all end up with the same crap, and with no advantage. But if you start with no crap, there is an advantage in being the first guy to install crap: you can lower your price. But then the second guy sees what you did, and he loads up his machine with crap and meets your price. And so on, until we're all in Hell.
            Robert Hahn
          • So cheap, poor quality and...

            Stunted performance is your definition of "good for the consumer?"
            Bruizer
          • Yes, it is good for the consumer

            "So cheap, poor quality and...
            Stunted performance is your definition of "good for the consumer?"

            Yes, in the same way that $14,000 Chevrolet Sonics are good for the consumer. If they didn't exist, poor people that can't afford to spend less than $100,000 on a car wouldn't be able to drive. Are Sonics anywhere near as good as Cadillac CTS-Vs? No. So?

            As for the whole "race to the bottom" catch phrase thing you guys have going on, I know that this is one of the talking points that your employer (Apple) has asked you to bring up (it is so obvious since all of you bring it up) you ignore the fact that while cheap Sonic equivalents exist, those same makers are still making and selling Cadillac CTS-Vs. It would be one thing if the consumer could ONLY buy cheap, poor quality, stunted performance Sonics but this simply isn't true. In fact, many Alienware computer owners could look down on Macs and feel sorry for people who are stuck using cheap, poor quality, and stunted performance computers. Yet cheap, poor quality, stunted performance Mac Minis are still "good for the consumer", right? Don't get me wrong, I feel sorry for people who can't afford anything better than a Mini but I'm glad that at least they have benefitted from Apple's "race to the bottom".
            toddbottom3
          • race to the bottom

            It's not the race to the bottom of price that is the problem, it's the race to the bottom in margins which is causing the PC OEMs serious headaches, especially because MS still gets the same license fee for the OS whether the device is $2000 or $400.

            HP, the biggest PC OEM has 5% margins, yet they still have a hard time making a competitive tablet or ultra book.
            Synthmeister
          • But this is true of all components

            "MS still gets the same license fee for the OS whether the device is $2000 or $400"

            So does Seagate, Intel, AMD, Kingston, Nvidia, etc. When Apple buys a 1TB drive from Seagate, Seagate gets the same fee whether the drive is going into a $150 Mac Mini or a $3000 Mac Pro. So?

            Why should MS charge more for a Windows license if the manufacturer decides to put in a $1000 video card instead of a $50 video card? That makes no sense. And if MS DID charge more for Windows just because a customer decided they wanted a faster CPU, I know you would be up in arms about that one.
            toddbottom3
        • OEMs have a suprising degree of latitude

          They can set whatever default browser they want (in the US - in Europe, it's the user who chooses via the "ballot"), they can load whatever crapware they'd like.

          There are some restrictions on how much "damage" they can do to the out-of-box visual aspects of the desktop and they can't change the basic functionality of Windows, but other than that, they can party pretty hard on the OOB experience (unfortunately, that's usually for the worse).

          A lot of Microsoft's OEM relationships were set in the aftermath of the DOJ trial.
          Flydog57
        • Microsoft isn't pointing a gun at anyones head.

          The manufacturers are completely free to not install Windows on their products at any time. They are free to go with one of the hundreds of flavors of Linux. But that wouldn't work, would it? The hardware the manufacturers produce has no value other than the parts in the box.

          Why does a software company need to show the hardware manufacturers how to make a viable tablet for business? Because the people that assemble computers are like the people that assemble fast food burgers. They don't much care if it's better than someone else, or if it's even good. They all make the same thing. And if you're not happy with it, tough. Try customer service with Toshiba sometime.

          You couldn't be any more wrong if you tried. The manufacturers exist BECAUSE of Microsoft, not despite them. Let HP try and sell computers with Linux on them. See how that works out.

          If they COULD sell millions of computers without Windows, don't you think they would?
          pishaw
          • Sure they are

            "The manufacturers are completely free to not install Windows on their products at any time. They are free to go with one of the hundreds of flavors of Linux. But that wouldn't work, would it? The hardware the manufacturers produce has no value other than the parts in the box."

            What? And lose their volume licensing deals if they installed another OS on to their machines.

            Yup, the gun.

            "Because the people that assemble computers are like the people that assemble fast food burgers. They don't much care if it's better than someone else, or if it's even good. They all make the same thing."

            Which explains all the bottom feeder hardware that's out there

            "And if you're not happy with it, tough."

            EXACTLY. Which is what predatory monopolies do. Trap people into their own ecosystem with no way out. You are then are forced to pay their prices which in essence (as ubiquitous monopoly as Monopoly is) turns into a de facto *tax*.

            "You couldn't be any more wrong if you tried. The manufacturers exist BECAUSE of Microsoft, not despite them."

            Dell and HP were around long before they sold Microsoft-based PCs. Hyperbole, much?

            "Let HP try and sell computers with Linux on them. See how that works out."

            They don't have to. Dell and HP are grumbling about getting out of the PC business altogether and focus on other services, the way IBM did a few years back. I think this is going to happen in the next few years or so. Maybe even sooner than you think.

            "If they COULD sell millions of computers without Windows, don't you think they would?"

            Nope, not with the monopolistic lock-in ecosystem being the way it is. They've been in it for so long, they can no longer think outside the box on that one.
            CaviarBlack
          • And yet ...

            HP and Dell, along with several smaller OEM's have tried selling PC preinstalled with Linux. Almost all have relented and abandoned their Linux product range.

            Add to this list, the fact that, originally, 100% of netbooks cam with Linux preinstalled. Within 12 months of Microsoft reintroducing XP in order to enter the Netbook market, less than 10% of netbooks came with Linux installed - Linux lost 90% of its market in just 9 months!

            The primary reason for the lack of Linux support from the major OEM's has been a lack of high-quality drivers for the vast array of differing chipsets and devices which results in a poor end-user experience and thus, significantly higher support eliminating the already wafer-thin profit margin.

            Dell is trying again right now, inviting the Linux community to recommend the hardware etc., that they'd like to see shipped within dedicated Linux laptops. Who knows if it'll work this time around?
            bitcrazed
          • Netbooks

            "Add to this list, the fact that, originally, 100% of netbooks cam with Linux preinstalled. Within 12 months of Microsoft reintroducing XP in order to enter the Netbook market, less than 10% of netbooks came with Linux installed - Linux lost 90% of its market in just 9 months!"

            And the additional hardware requirements and poor performance of XP on netbooks drive the price up to the same as a laptop, and the experience was horrid. Immediately thereafter the netbook market dried up for some reason.
            symbolset
          • The netbook market dried up because $500, 4GB, 15" PCs ...

            ... came down in price to $350 - matching 10" 1GB netbooks. Now Windows 7 netbooks cost $299 and consumers are glad to pay $50 more for the difference in capabilities.
            M Wagner
          • @CaviarBlack

            Oh ... and before I forget, OEM's are free to sell their machines running whatever OS and/or combination of OS and 3rd party software that they want to without it affecting their Windows OEM pricing.

            That was part of the DOJ ruling from 1998, so you're only 14 years behind the times!
            bitcrazed
          • @bitcrazed

            They're not under DOJ oversight anymore, so they're free to go back to the good ole days. Like when Gates lied under oath. Remember that? Only it may be Ballmer doing a monkey dance when the critical mass is reached. That is, IF he's still around.

            Monopolistic bad habits are hard to break, now aren't they...
            CaviarBlack
          • Hear hear!

            ... That argument lost its weight a LONG time ago, dude. It's *great* to see people calling Microsoft a monopoly and then praise their precious Apple. (Not saying that's what was done here, but some peeps seem to love to throw that out there.)

            Microsoft isn't really the big, bad, evil giant you'd like to think they are. I, and I may be alone, am actually amazed at what they bring to the market! That amazement is only topped by my amazement at how HORRIBLE they are at marketing their awesomeness. ( ;

            My two cents and probably not worth it. [ ≈
            jbwillis01