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Microsoft saw its partners were needy, unwilling and unable to push the envelope in the tablet space

As the picture surrounding Microsoft Corp.'s (MSFT"Surface" tablet fleshes out via interviews and leaks, one thing is for sure -- Microsoft would love to see its third-party partners succeed with their Windows 8 tablet designs, despite the fact that it's now competing with them.  But the decision to compete is also a big vote of no confidence in these third-parties' ability to compete with Apple, Inc. (AAPL).

According to a new report in The New York Times, which uses a former Microsoft executive as a source, Microsoft's decision is deeply rooted in a fallout with Hewlett-Packard Comp. (HPQ) regarding the Slate tablet and subsequent disappointments from other OEMs.

I. Microsoft Predicted Tablet Market Early, Had High Hopes

In 2007 Apple shook up the market when it released the iPhone, the first multi-touch smartphone.  To be fair, the market was already trending towards touch-screens, but suddenly the trend was summarized with a singular iconic device.  Microsoft, which had played with touch technology in its labs and mobile products for years, took note of the increasing convergence between mobile devices and the personal computer (PC).

It baked basic touch capabilities into Windows 7, which launch in late 2009.  To Microsoft's disappointment, partners expressed little interest in taking advantage of these capabilities.  Initially Microsoft played with idea of a dual-screen tablet called Courier.  But internal disputes and hesitance to become a first-party PC maker caused Microsoft to shelve the plans.

Then rumors of an Apple tablet picked up, and suddenly the touch-plans went from an expansion effort, to an essential effort.  Microsoft was determined to not let Apple gain a monopoly in this market, which it had long recognized the merit of -- perhaps even before Apple.  It contacted HP, the world's largest maker of personal computers, and what Microsoft considered a trusted partner.

And HP delivered at first.  Prototypes of the Slate 500, like the one presented by Microsoft CEO Steve Ballmer at CES 2010, were relatively attractive.

Ballmer Slate
A prototype of the Slate tablet, demoed by Microsoft CEO Steve Ballmer at CES 2010, looked attractive. [Image Source: Bloomberg]

II. Slate Design is "Completely Ruined", Subsequently Flops

But both the former Microsoft executive and a former HP executive comment that the Slate 500 was "completely ruined" when it was handed over to HP's manufacturing organization.  The tablet ballooned in size.  To make matters worse, HP poorly integrated the touch screen with Windows 7.  Users would touch the screen and face a lag before the tablet would respond.  Describes the former HP executive, "It would be like driving a car, and the car not turning when you turn the wheel."

Three weeks later late Apple CEO Steven P. Jobs showed off his slick iPad, which had none of the awkward lag of the HP Slate.  While the original Slate prototype was relatively good looking, it was outshone by the iPad, which featured a slick aluminum case.

Steve Jobs iPad
Steve Jobs's iPad was a hit, while the Slate flopped. [Image Source: Reuters]

The case was no small feat.  Apple had to procure a large amount of high quality aluminum to make it, so it entered a large bulk purchase agreement with a mine in Australia.  The former executive recalls shock at Microsoft meetings regarding just how deep Apple would dip into global supply chains to produce Mr. Jobs' "perfect" device.

And if the early Slate prototype was a bid homely compared to the original iPad, the final bloated design was downright unsightly.  Microsoft was frustrated.

And it didn't help that HP blamed Microsoft. HP saw its tablet shortcomings as primarily in the software department.  It complained how Microsoft's small icon size made icons hard to click and it was not a fan of Microsoft's Windows 7 touch keyboard.  HP felt that the licensing fees it paid Microsoft for Windows should have been applied towards making better OS software/firmware support.

Seeing that the Slate was destined to flop in sales (and it did, after almost being cancelled), Microsoft tried to reach out to other partners.  But it faced disagreements regarding price and features.  "Faith had been lost," the former Microsoft executive recalls.

III. Microsoft Focuses on Surface and Windows 8

Ultimately, Microsoft decided not to devote significant resources to cultivating a Windows 7 tablet from any of its partners.  Instead it focused on perfect Windows 8 for touch devices.  But this time around it knew better than to trust third-parties.  It was sick of their failure to compete with Apple in the tablet space, and it was sick of taking the blame for that failure.

Evidence of just how much Microsoft has learned was on display at the Surface announcement.  Much like Apple bragged of its iPad's unique aluminum case, Microsoft's belated counter was built on a material it went to great lengths to secure bulk purchase agreements on -- magnesium.  It argues that magnesium offers many advantages over Apple's aluminum, including superior scratch resistance.  Comments Windows President Steven Sinofsky, "The case is one-of-a-kind."

Notably, nary a partner delivered that kind of dedication to their supply chain and innovative case design at Computex 2012.  They instead relied on their Chinese partners to build more standard designs, although they expect to price them at similar points to the iPad and Surface.  This lack of ambition is all too familiar to Microsoft and a validation of why it made a smart move with Surface.

With "Surface" Microsoft controls its own fate. [Image Source: Microsoft]

Microsoft may say its decision to make Surface was not a slight to its third-party partners.  Comments Steven Guggenheimer, a Microsoft corporate vice president, "Microsoft has tremendous respect for our hardware partners and the innovation they bring to the Windows ecosystem.  We are looking forward to the incredible range of new devices they are bringing out for Windows 8."

But no matter what words it chooses, Microsoft can not hide the unspoken message -- it is dead-determined to beat Apple -- with or without its partners.

Source: The New York Times



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RE: x86
By JasonMick (blog) on 6/25/2012 1:46:27 PM , Rating: 5
quote:
Microsoft needs the x86 version in the RT's body. Cooling fans in a tablet is a big no no. And the RT just isn't compelling enough compared to either Android or iOS
I disagree. If the price is right, the x86 will sell great -- perhaps better than the slimmer RT

Even at 13.5 mm/903 g it's still looks very slick with the magnesium case and keyboard/cover. The iPad 3 is 9.4 mm and 660 g, so it's true its ~40 percent thicker/heavier.

But remember -- the first generation iPad was 13 mm thick and everyone thought that was just peachy at the time.

And also you're comparing an Apple to an Orange -- the Ivy Bridge chip will be vastly more powerful than the 1 GHz A5X, allowing for much more ambitious apps. And that's not to mention that being able to use legacy x86 software, access to full-fledged Office, etc. opens a world of possibilities.

You can't pack a laptop CPU into a tablet without some sacrifices of form factor. But for many, those sacrifices would be worth it.

You can't run Photoshop on an iPad, you CAN on a Surface x86 tablet.


RE: x86
By Spuke on 6/25/2012 1:56:17 PM , Rating: 2
I might just pick one of x86 versions up to replace the wifes computer. But still waiting on an external Thunderbolt video card.


RE: x86
By tayb on 6/25/2012 2:09:35 PM , Rating: 3
quote:
Even at 13.5 mm/903 g it's still looks very slick with the magnesium case and keyboard/cover. The iPad 3 is 9.4 mm and 660 g, so it's true its ~40 percent thicker/heavier. But remember -- the first generation iPad was 13 mm thick and everyone thought that was just peachy at the time.


The size is no issue. It has almost the exact same depth/weight as the original iPad and I used that for almost a year with absolutely no complaints.

quote:
And also you're comparing an Apple to an Orange -- the Ivy Bridge chip will be vastly more powerful than the 1 GHz A5X, allowing for much more ambitious apps. And that's not to mention that being able to use legacy x86 software, access to full-fledged Office, etc. opens a world of possibilities.


The Ivy Bridge chip will be more powerful but it will also have quite a bit more overhead. The biggest benefit is all of the applications available. QuickOffice is neat but it is not Microsoft Office. You could do real work on a Surface tablet. My iPad 2 is relegated to web surfing, subway surfing, and Netflix.


RE: x86
By kleinma on 6/25/2012 2:57:45 PM , Rating: 4
With an ivy bridge i5 and solid state drive, this thing will be plenty fast. Sure photoshop might take 5-10 seconds to load on it, but on most people's desktops today it probably takes 5-10 seconds before they even see the splash screen come up.

Every MAJOR app will come to Windows 8 that you might want to stick with iOS or Android for. It will really become just as lucrative a market as those platforms, but maybe more so since it will cross all form factors (desktop, laptop, tablet, and soon to be phone).

So then some company who has to write an app for OSX, iOS, Google ChromeOS, Android, and Windows 8.

Now who has the fewer ports to be done in that scenario?


RE: x86
By Samus on 6/25/2012 6:48:56 PM , Rating: 2
I don't get why a cooling fan in a tablet is a big no-no? Have you felt how hot the new iPad gets? 10 minutes into watching HD Video and it's uncomfortably warm.

Cooling fans are fine, as long as it hits the advertised 6-8 hours battery life.


RE: x86
By retrospooty on 6/25/2012 2:10:13 PM , Rating: 4
"I disagree. If the price is right, the x86 will sell great -- perhaps better than the slimmer RT"

Exactly... If nothing else, in the business environment, being able to run your office apps (and I don't just mean MS Office) is a huge plus. This is why no tablet has made any significant inroads into enterprise. Now we have the ability to do that and it may be huge. On top of that, there is the same factor for home use. I am not big on tablets, becasue I cant run my X86 apps on them. I need my Photoshop, Acrobat Pro, etc etc. Now with that, a tablet is an option. This turns a tablet from a "toy" into a useable "tool".


RE: x86
By amanojaku on 6/25/2012 6:52:52 PM , Rating: 5
Surface sounds like the closest thing to the tablet most of us have been waiting for. DisplayPort. HDMI. USB. SDXC. x86 OS.

I wish Steve Jobs was still alive. The look on his face when this thing was announced would have been priceless, as would the look on his face when the inevitable lawsuit got tossed.


RE: x86
By Reclaimer77 on 6/25/12, Rating: 0
RE: x86
By Mint on 6/25/2012 7:14:38 PM , Rating: 2
Precisely.

iOS and Android tablets will soon be squeezed into a very tight niche. Smartphones can do everything they can and are far more portable. x86 tablets will soon have negligible power consumption difference (we all know Clover Trail and Brazos will find its way into x86 tablets, and there's no reason for them to cost more than the netbooks of last year) and Win8 x86 will make them far more capable than these tablets.

I too never bought into the tablet craze, and I never will until it can truly replace a notebook. If you can carry a tablet, then you can carry an ultrabook/netbook, so I just don't get why you'd want to sacrifice functionality for it. I even find the clamshell design of a notebook more comfortable when lounging or laying down.


RE: x86
By MrBlastman on 6/25/2012 2:23:26 PM , Rating: 4
The Surface is basically everything I've been wanting in a tablet since the whole iPad/Android junk has been around. I've not once considered buying one due to the the software hurdle and closed platforms but now... this changes things. This promises to be a tablet that is useful, not just something fancy looking to keep on the coffee table and talk about.

Why spend money on something to look cool and just collect dust, anyways? The Surface looks like it might actually be useful. I'm not sure if I'll take the plunge on tablets just yet, but this iteration builds a compelling case to do so. My wife has that aging Macbook... Who's battery never lasts more than a year and a half... hmmm...


RE: x86
By WalksTheWalk on 6/25/12, Rating: -1
RE: x86
By MrBlastman on 6/25/2012 3:38:26 PM , Rating: 5
What are you talking about? Surface has a 10.6 inch screen plus 16:9 format. What? 16:9? The iPad has 4:3! Yet, 16:9 is appealing to me because there will be no letterboxing for video...


RE: x86
By Belard on 6/26/2012 6:40:42 AM , Rating: 1
For many people, the 16:9 screen... well, sucks.

Hence, I've not had much interests in the Android tablets. I don't use my iPad as a video player... if I did, the 16:9 would make more sense.


RE: x86
By WalksTheWalk on 6/26/2012 8:43:02 AM , Rating: 1
Yes, I was mistaken. Given that it's a 10.x inch tablet, this sounds much better. I still think Microsoft has classic branding problems with their tablets in that their are two variants and MS has done a poor job of consumer mindshare: x86 and ARM, and customers are going to be confused. The non-tech people I know don't even know Microsoft (or their partners) have tablets coming out.

Microsoft now also has channel conflicts now. I'm betting the channel is going to let MS take on the burden of proving ARM tablets in the market before they jump onboard.


RE: x86
By Janooo on 6/25/12, Rating: 0
RE: x86
By amandahugnkiss on 6/25/2012 4:03:52 PM , Rating: 3
From his post:
"You can't run Photoshop on an iPad, you CAN on a Surface x86 tablet."

He never said anything about it running on both versions.


RE: x86
By fic2 on 6/25/2012 4:51:36 PM , Rating: 2
quote:
Microsoft needs the x86 version in the RT's body. Cooling fans in a tablet is a big no no. And the RT just isn't compelling enough compared to either Android or iOS
I think this has been part of the whole "compete against Apple" thing - not necessarily just with Win tablets but also with Android. Look what Moto did with their first tablet - a premium price over the iPad with specs that just barely met the iPads. All the tablet and notebook manufacturers have done this with their Mac Pro/Air wannabes, too.


RE: x86
By NobleKain on 6/25/2012 6:16:31 PM , Rating: 2
There's 1 thing that could solidify a HUGE score in M$ corner, and one that could crush this whole dream:

FTW: If they release this piece with an actual competitive, true-HTML5 capable browser, even the RT version will be compelling (x86 should in theory be able to use Chrome is M$ fails to deliver a suitable IE)

FTL: If they wait so long to come-to-market, the hardware may very well be to dated for anyone to care about this any longer. That's ultimately what killed any chances for Win Phone 7. When it was first demo'd it was compelling, but by the time they got it in the stores, all of the devices were crippled by dated (and required) hardware. I worry M$ will do the same here. A Jan. launch date, as some are suggesting, will likely make even the x86 version undesirable.


RE: x86
By safcman84 on 6/26/2012 4:20:45 AM , Rating: 3
The x86 tablet is the one that interests me the most, especially if it can connect to an external monitor for "desk" work (document reviews, editing etc). In fact, it it the 1st tablet which I can see replacing my old fashioned laptop.

I never saw the point of the tablet for work purposes, because I could not be bothered lugging around an additional device (no mater how small) as it could not replace the functionality of the traditional laptop.

Windows 8 could make a killing in the corporate world. The company I work for (multi-national Pharma company) dipped its toes into the I-pad world but now is discussing abandoning the I-pad and going with WIn 8 devices due to I-pads lack of power and flexibility. If MS play their cards right, they will take over from Blackberry as the key business provider.


RE: x86
By bupkus on 6/26/2012 10:00:36 AM , Rating: 2
quote:
If MS play their cards right, they will take over from Blackberry as the key business provider.
Good point.


"Nowadays you can buy a CPU cheaper than the CPU fan." -- Unnamed AMD executive














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