Ronnie05's Blog

Microsoft Surface means more than just a tablet – its Microsoft’s departure from the OS led business model

Posted in Mobile Devices and Company Updates by Manas Ganguly on June 19, 2012

XBox and now Surface – Microsoft’s device philosophy is changing. ironically, it is possibly Microsoft’s ode to Steve Jobs

Microsoft Surface is remarked departure from Microsoft’s  decades-old business model to sell OS licenses to companies like HP and Dell, and rely on them to make and sell the hardware. Yes,times have changed.The quintessential OS maker has now ventured into devices. More than anything this move is possibly Microsoft’s tribute to Steve Jobs.

 

Apple has proven that the best computers — which rely on tight software integration more than ever before — are made when one company is in charge of designing both the hardware and the software, so they’re built in harmony and just work. Microsoft seems to have figured this out, too, via the Xbox and now this Surface tablet. That’s why the Surface is able to ship with a cool cover with a built-in keyboard. Such integration couldnot have been left to any other ODM. Microsoft has also learned that the best business model in today’s mobile industry — tablets and smartphones — is to the sell the actual hardware to consumers, not just license an operating system. Given today’s economics, the only way to potentially earn a profit of more than $100 per tablet is to sell the actual tablet. There’s no way Microsoft could earn that just selling Windows licenses to HP. Especially as it’s primarily competing with Android, which is sort-of free.

Will this thing be a hit and make Microsoft a lot of money? Enough to compensate for any potential decline in the Windows-for-PC business? Who knows. Would people opt for a Windows Surface in the face of a higely popular iPad. Perhaps some will, especially if they think Office means something to them. But I expect the iPad to continue its dominance of the tablet industry. But it sure looks like a better strategy for Microsoft than only trusting the Samsungs of the world to design great Windows tablets, and only trying to generate mobile revenue from Windows sales.

Sure, Microsoft may now alienate some of its Windows partners by competing with them. But as those partners have gone into the mobile industry, they’ve already strayed from Windows to Android, anyway. Windows8 is already a great option for Android ODMs given the Google-Moto acquisition. Plus, competition or not, as long as Dell wants to make PCs, it’s not like it has any real OS alternatives to Windows.

Microsoft is unquestionably late to this market, though it didn’t intend to be. But the interesting thing is that Microsoft is evolving with the times, both in terms of product design and business model. It may fail, but it’s at least learning to play the right game.

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