11 of 12Image
Dedieu is a by-the-numbers kind of analyst, who whips out the charts early and isn't afraid to extrapolate.
For Microsoft to maintain their profitability, they have to find a way of obtaining $80 of profit per device. Under the current structure, device makers will not pay $55 per Windows license per device and users will not spend $68 per Office bundle per tablet. Price competition with Android tablets which have no software licensing costs and with iPad which has very cheap software means that a $300 tablet with a $68 software bill will not be competitive or profitable.
However, if Microsoft can sell a $400 (on average) device bundled with its software, and is able to get 20% margins then Microsoft is back to its $80 profit per device sold. This, I believe, is a large part of the practical motivation behind the Surface product.
Didieu is a master at analyzing Apple's moves. It's less clear that his math is as well grounded for Microsoft's very different business.
A good old-fashioned rant. I am sure the first draft had some cuss words in it:
Am I the only person who believes this thing is a total jump the shark cluster-you-know-what for Microsoft?
What are the OEMs supposed to do? Well I suspect that if you are someone like a Lenovo or a Hewlett-Packard, you probably are seriously going to re-think whether or not you really want to produce tablets with similar specs to the Surface RT and Surface Pro.
You now have to out-value the Surface devices, or you have to play the Enterprise game with beefier, more expensive Windows 8 convertible tablets with higher-res screens and faster CPUs and SSDs that nobody other than select Fortune 500 firms may want to buy, because they’d rather do business with a hardware partner they already buy systems from.
Cranky. But thought-provoking.
What I want to know is, what's in the water over at Gizmodo?
Microsoft is the most innovative consumer tech company right now.
And it isn't just this week's announcements that did it. This has been building all year. There's Windows 8, Xbox Live, Skydrive, Kinect, SmartGlass; even Hotmail stepped up its game. The Surface, and now Windows Phone 8, merely feel like the culmination—or maybe the fulfillment—of what Microsoft has been poking and prodding at for the past six years when it first introduced the Xbox 360.
Microsoft is a company reborn. It's not just significant because of past achievements. Microsoft is exciting again because of what it's doing right now.
OK, they've had a rocky relationship with Apple for a few years since that iPhone-in-a-bar incident, and the enemy of my enemy is my friend and all that. But still, this is pretty enthusiastic stuff: