Right up front let me say, I’ve been an Apple supporter since the IIe. I purchased one of the original Macintosh machines, having bought it in April of 1984 and since then I’ve owned almost 20 others in my life. Currently I own an iMac, a MacBook Pro, an iPhone, an iPad, and an Apple TV. However, I do follow Microsoft closely as what they do has major repercussions on the rest of the PC industry (go figure). So, while many will ignore all of my concerns because of my preset bias, I think I have some points that I think Microsoft should be concerned about.
So, the big news is that Microsoft is finally diving into the PC hardware business with their new Surface product. Kind of a Frankentablet/PC that at first glance will compete not only with the iPad but the ultralight PC market as well. The presentation was very Apple-like, lots of touchy-feely moments, lots of oohs and aahs as some of the new technology was explained. But it was also kind of slap-dashed and very incomplete in some critical areas.
Surface Pros
- Good looking, trim device, even if it does run Windows.
- Two models (RT, 8 Pro), two covers (Touch, Type) , what’s not to like?
- A Surface keyboard, nice. It seems so obvious once you think about it. Apple could have done this a year ago with their covers.
Surface Cons
- A kickstand, really? Nice if your counter is level and empty, but what if it’s not? What if the room’s light is reflected on the page making it unreadable? Then what do you do? No idea at this time. Didn’t appear adjustable in the announcement video
- HDMI connector position is way too high on the device. When used as a laptop the damn cable hangs off the top-right edge of the device just begging to be snagged by a reaching arm, a wandering cat, or a falling reference book.
- No information on battery life. Even a comment that it matches current ultrabook battery life would have been nice, but we got nada.
- A stylus? You gotta be shitting me? Is this a Frankentablet or what? It’s a PC, a tablet, a cuisinart? Who knows?
- Over 200 customs parts inside the device. iFixIt will be annoyed, not only has Apple reduced the chances they can do a repair or upgrade on the new Mac Book Pros, now MS has kicked them in the balls as well.
- Are all their designers color blind? I appreciate the option of colors, but the choices to my eye really, really suck.
Subsidizing Surface (XBox Redux)
A lot of press has been made about the licensing fees Microsoft has set for their OEMs to include Windows RT on their tablets when Windows 8 is released, estimated at $85 per device. During the presentation Microsoft made soothing comments about Surface being price compatible with similar devices, but it seems to me that can’t be true. If MS makes the device, then the license fee is an internal accounting wash which means they have an $85 profit margin built in automatically. Ouch, that’s gotta hurt and annoy their “partners” to no end. As MacDailyNews commented, their partners have been “PlayedForSure.” How can the OEMs compete with the razor thin profits they make on their devices already when their own licensor undercuts them? I’m sure there are a lot of hastily called meetings going on today in those OEM’s to formulate a viable strategy to remain in business and profitable. And I suspect that none of them are happy meetings.
In addition, one more thought came to me. That is that Microsoft will actually subsidize the cost of their Surface devices, as they did with the XBox. XBox hardware is only now selling in the black after years of losses. MS’s other profitable product lines (Office and Windows) enabling them to take huge losses on the XBox hardware year after year as they outlasted other companies less able to sustain annual losses in the billions of dollars. I think they plan to do the same with Surface.
Apple has tied up a majority of the supply chain for their own product manufacturing, barely able to grow manufacturing fast enough to keep up with the rapidly growing sales of iPhone and iPad, leaving the rest for the remainder of the industry. That means that Microsoft can’t get the best prices for materials, nor the best manufacturers, or the most efficient processes. At least not immediately. So, just as the OEM’s can’y build ultrabooks and sell them at the same price as MacBook Air’s due to price and supply issues, Microsoft probably can’t build a Surface that matches those prices either.
So what do they do? They subsidize the cost of the devices, or course, just as Intel is believed to be subsidizing the ultrabook market, or as Intel describes it, “co-marketing funds”. What’s a billion here or there for MS now? They have no choice but to take the loss just to get in the tablet game. Otherwise, they risk losing it all as the first and second most profitable new markets slip away from them. As the PC becomes less relevant to users in the future, they have to make the jump if only to stay alive as a company.
The Big Finale
I don’t know if its correct to describe a hardware announcement as vaporware, but I will anyway. The demos were carefully choreographed, the videos superfluous (the announcement of the name reminded me of the surround sound pretentious ad one sees before watching a movie) and fact free for the most part (smiling happy factory workers, smiling designers/developers). As expected, the Surface crashed shortly after appearing prompting the presenter to grab a replacement device to continue. They wanted so much to match Apple’s presentation polish and spirit, but lets face it, that’s not Microsoft’s demeanor at all, and the disconnect between their true nature and their faux presentation style was distracting at best.
But there were still a lot of unanswered questions at the end of the presentation that Microsoft couldn’t or wouldn’t respond to. Prices? Compatible with similar products. Release? Sometime this year. Battery life? Nada.
Win8 is expected to be released Oct 2012. To really make a splash, Surface would need to be released about then too. But that would probably be the RT version (Tegra ARM processor), which means little to none of the current applications for Windows will run on the device. I’m sure they have a plan to get apps that do run on the RT version by then, but will they be ready as well?
The Intel version (Core i5 processor) won’t arrive until “3 months later,” which tells me that it won’t be until Q1 of 2013 before people can get their hands on them at all. And that assumes they hit the previous unknown release dates with Win8 and the RT version of Surface. So, it’ll be 4 to 9 months before any of these devices are available.
Meanwhile, the reaction from the OEM’s should be an interesting story while we wait.
Update: That was fast, LG To Sideline Tablet Development To Focus On Smaller Devices. While it mentions Apple, odd coincidence it happens a day after the Surface announcement.
Update #2: See Microsoft kept PC partners in dark about Surface for more details.
