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Other manufacturers were informed by Microsoft

Microsoft Corp. (MSFT) shook the market when it announced "Surface", an eye-catching Windows 8 10.6-inch tablet design, which marked its intriguing decision to directly challenge its third party OEM partners.  With many already saying the Microsoft tablet could become a market darling and vie with the iPad for dominance, the big question was whether the move would also backfire by alienating OEMs and diminishing the third-party Windows 8 tablet market.

I. Some Manufacturers Knew About Surface Beforehand

Initial reports conflicted on whether OEMs knew about "Surface" beforehand. ASUSTek Computer Inc. (TPE:2357) spokesman Nick Wu stated to Bloomberg, "Our management did learn about that in a later stage.  It’s an investment by Microsoft to grow and build the ecosystem for Windows RT and we have no special opinion on that. We will continue to deliver our products."

Sources indicate that high-level management and others like Hewlett-Packard Comp. (HPQ) and Lenovo Group Ltd. (HKG:0992) also indicate that high-level management became aware of the device near launch time, although spokespeople for both companies refused to comment.

Microsoft's "Surface" tablet was a surprise to Acer, but others like ASUSTek were informed beforehand. [Image Source: Microsoft]

HP, the world's top personal computer maker, told Reuters in a statement, "We remain committed partners to Microsoft. We remain committed to Windows 8, and we will have a Slate product at the time of launch."

Similarly, Lenovo, the fastest growing PC maker on the market, commented, "Microsoft has been and will continue to be one of Lenovo's most valued partners."

Dell, Inc. (DELL) did not give any comment yet on the development.

II. Acer Appears to be Snubbed, Turns to Fantasy

But Microsoft appears not to have told one computer maker about "Surface" at all -- Acer, Inc. (TPE:2353).  An Acer executive is quoted by Reuters as saying, "No senior executives heard about the news last week.  We're quite surprised."

The strange apparent snub continued to get stranger when Acer founder Stan Shin spoke to DigiTimes, telling the publication that he thought Microsoft had no real intention to stick around in the tablet market long term.

He claimed that the "Surface" was just a publicity stunt/ruse to attract interest to Windows 8 and that the tablet would just be a one-off release, with no follow-up devices.

Stan Shih
Acer founder Stan Shih claims the Surface is only a publicity stunt and Microsoft will give up on future first-party designs. [Image Source: Zijing]

That seems like some rather peculiar wishful thinking.  First, Acer has made it relatively clear that it was one of the only -- or perhaps the only major manufacturer to be left in the dark about Microsoft's plans, so it seems kind of silly for the company's founder to now turn around and claim secret insight into Microsoft's market strategy.

Second, history simply does not support Microsoft's claims.  Once it saw success in markets like peripherals (mice, keyboards) and gaming consoles (the Xbox family) Microsoft didn't pull out, it stuck around.  It's hard to believe that Microsoft would drastically change its past strategy with the "Surface" and eventually pull the plug on what even Mr. Shih seemingly admits will be a hot seller.

This odd chain of events is the latest in a string of misfortune for Acer, which saw its PC market share plunge as the netbook market dried up.  Acer has expressed woes about its low profits and expressed an interest in being more like Apple, Inc. (AAPL).

Acer has made big promises in the tablet market, but thus far its Iconia line of Android tablets have shown little in the way of sales progress.  The best received Iconia -- the 10.1-inch A700 model is currently in 39th place in, Inc. (AMZN) list of top selling tablets, behind other sales "flops" like Research in Motion, Ltd.'s (TSE:RIMPlayBook.  The rest of the Iconias are even farther behind.

Sources: Digitimes, Reuters, Bloomberg

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RE: Worth remembering...
By Tony Swash on 6/20/2012 6:50:27 PM , Rating: -1
What I thought when I watched the Surface presentation was just how deep Apple's hegemony runs.

The whole thing was like a homage to Apple.

Surface itself seems a fine competitor for the iPad 1. Shame Microsoft didn't release it 18 months ago.

Whether Surface sells well and whether Microsoft can ever make any money on it (that's real money not the sort of peanuts they make on Xbox for example, or the piffling revenues Android generates for Google) is an open question. It wouldn't surprise me if Surface sells well but it also wouldn't surprise me if it didn't. I will be really surprised if Microsoft can mutate from making lots of money as a software company to making lots of money as a hardware company. That's a hard thing to do, ask RIM, or Motorola or Nokia or HTC.

Here is the reality of the world that Surface has to compete in.

"At least since 1981 Microsoft’s operating systems have been the consistent market share leaders, and by a very large margin. That is about to change. This year Android will be on more devices sold than Windows. iOS is also set to also overtake Windows next year."

In the five years since the iPhone launched we have arrived at a situation where Windows is on the cusp of being outsold by not one but two operating systems.

No wonder Ballmer looked so fed up.

RE: Worth remembering...
By Lonyo on 6/20/2012 7:36:47 PM , Rating: 3
Really? You're comparing Android and iOS to Windows to say Windows is being outsold?
Well Windows was outsold by Symbian I would expect in at least one year.
You're also comparing oranges with cars, just to compound your stupidity.

You're also treating Surface like one device. It's not, it's two products, which compete against different things.
Only one of those things is the iPad.
Apple (Jobs) said the iPad isn't a real computer, and never will be/was never supposed to be.
Surface Intel is a real computer. It doesn't compete with the iPad because it's more than an iPad will ever be. Per Steve Jobs. So while the Surface ARM may compete with the iPad, and probably (I agree) be not particularly special in comparison in many aspects (e.g. display/resolution), the Surface Intel is more than an iPad will ever be, and isn't supposed to compete with it, except by virtue of being a product with a partially same technology (a touchscreen), but apart from that, it's an actual full computer with a full operating system. Which isn't similar to an iPad at all.

RE: Worth remembering...
By EnzoFX on 6/21/2012 3:21:53 AM , Rating: 1
The convergence of mobile OS' and traditional OS' is definitely important. It matters not only go the software companies, but hardware too. Just think about ARM trying to beef up performance to match traditional CPU's and Intel trying to knock back power consumption to ARM's level. It's happening, so it's important to acknowledge, this isn't as tangible now, but it will get more important as it increases, and you bet MS cares about that stat...

Don't defend a stupid comment with an equally stupid one lol. It's more than the iPad will ever be? Wow you must be able to see into the future! This comment also completely counters the same mobile/desktop os conversion that's mentioned above. Of course iOS and Android are going to have an ever increasing functionality. They will of course one day rival a traditional OS's features.

Lastly, the argument that it's a full PC is silly to me. What is a "ful" pc? It doesn't have much expandability. Sure it will run some desktop software, at least the intel version, not the ARM version (which I'd bet would be the more popular one based on price alone). Furthermore, it's a tablet, people won't be buying it to run photoshop on a 11-13" screen. It's about how well they execute metro apps and 3rd party support for them. So this full "pc" argument is completely skewed to the point it's irrelevant.

RE: Worth remembering...
By sprockkets on 6/20/2012 9:37:46 PM , Rating: 2
blah blah blah

Thanks for the typical non sequitur.

RE: Worth remembering...
By Tony Swash on 6/21/12, Rating: -1
RE: Worth remembering...
By Pirks on 6/21/2012 1:48:50 PM , Rating: 1
Ballmer has to go for Microsoft to stand a chance
Yeah, the guy who was bold enough to break decades old stale desktop interface and desktop business model, who oversaw creation of two greatest MS products to date, WinPhone 8 and Surface, who started to pull kicking and screaming WinOldFags from stale desktop and into the new mobile era of Metro everywhere, this MS revolutionary has to go now? Is it what they call iLogic? MS investors are 100% sure Ballmer and Sinofsky are the only possible MS saviors at the moment, so sorry Tony, but ya Macolytes have to shut the yapper and watch MS waking up. You're welcome to scream in terror, yeah, but don't try to hide your real reasons why you want to see Ballmer and Sinofsky go. We all can see through your deception Tony :P No need to hide it man :)))

RE: Worth remembering...
By Tony Swash on 6/21/12, Rating: -1
RE: Worth remembering...
By Pirks on 6/21/2012 4:14:39 PM , Rating: 2
it was kind of odd that at the Surface event there was not a single demo of any software actually working on a surface device?
WinRT and Netflix were demoed for ARM and Lightroom was demoed on x86, everyone besides a few blind Macolytes like you saw that.
entering markets already full of strong competing products
"Full" of only ONE product from Apple who sells in noticeable quantities? Right on Tony, don't take your Macolyte blinders off your eyes, keep 'em closed man :P You look just as funny as Ballmer this way heheee

RE: Worth remembering...
By Tony Swash on 6/21/12, Rating: 0
RE: Worth remembering...
By Pirks on 6/21/2012 6:29:14 PM , Rating: 1
Maybe for Google, maybe to create a buzz and make some ppl want this product. I know for sure that now after I saw its presentation I will definitely NOT buy any tablet until I test Surface in my own hands this fall. Probably there are other ppl like me (one of them is another Macolyte who wrote a rave review about MS kicking ass, I posted a link for you here yesterday) who decided to wait until Surface released before making a purchase decision. Which is EXACTLY what Ballmer wants! Showing a really cool product prematurely was always in MS DNA, they'd show something and ppl like oooohhh maaan I'm waiting for this one! 'Cause the MS presentation is so slick, it makes you want to hold it in your hand and pull our your credit card and shit like that. Well ya know the drill Tony, we all were in Apple stores and we know this itchy feeling eh :)))

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