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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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LOL! Funny Stuff Microsoft!!
By Belard on 6/26/2012 7:18:56 AM , Rating: 1
Awww... poor Microsoft. Blaming everyone else.

2001, released tablet XP... these sold for years for $1500~3000.
2009, Windows7 - excellent Desktop OS... *IS* not a mobile OS.

Microsoft is CONFUSED why none of their partners did well? WTF... really, WTF?! What did Microsoft give them to go against the iPad?

A bloated (well made) desktop OS! So the "slates" had to sell for $1000+ because of the huge SSDs or HD required to run the OS. When MS introduced WP7 - they SHOULD have made it "WindowsMobile 7" and made a *shhhh* tablet version of the same OS. DUH DUH DUH!

HP? They quickly went WebOS and totally murdered Palm and made a crappy product. Oops, I mean another crappy product. The HP Touchpad had a good screen and WebOS is actually good (but buggy)... but the $500 device felt like CHEAP garbage compared to the $500 ipad. Not a good sign.

So for the past 2+ years, $1000 Samsung/ASUS Slates have been on the market... and SOMEHOW, (A) anyone is shocked they don't sell well (B) Supposed to compete with $300~500 Android/iPad tablets (C) Make a profit? (D) And yet Windows 8 is going to make people pee in their pants and rush out and BUY these $1000 tablets?!

Is there a voting system on the net we can use that'll allow us to VOTE what WE THINK will happen?

While Win8 is a touch-based OS... even on the tablet, I think it'll be a bit of a pain. To get back to the Start Screen (Metro) you have to hit your finger on the tiny slab of a hidden Start button on the Desktop screen (if its a hidden button, its STILL a FRAGIN button) or press a physical button on the tablet itself (if it has one).

This is why I think Apple would be stupid to get rid of the HOME button on their devices... its one button. But its ONE physical button that'll take you HOME, no matter what is on the screen.

Here is what is going to happen... one of two things:
A) Windows8 is loved by all, people will rush out and buy Windows8 tablets and phones to match their desktop systems. (because No Windows user ever buys iPhones, iPods or iPads)

B) Windows8 is hated by most people. They run away from Win8 tablets and Win8 Phones... MS craps all over themselves... their partners get Angry and cry in their pillows (Its vista but 3x worse). Perhaps they can continue to sell Win7 PCs or look at Linux.

I understand WHY Microsoft wants/needs to do this... I think it can work, *IF* done correctly. The only reason to buy or own a WindowsPC TODAY is to run OLD software or MSOffice. Games? Nope, MS killed PC Gaming. Proof: show me those AAA XBOX360 games, especially those published by MS for Windows.

The #1 APP/program that people use is the BROWSER. With the browser, you can do anything... play games, talk to people, do business... and not touch the Windows OS.

Until recently, my plans were to buy a Nokia Lumia 900 (I want the 800, its smaller) phone... but waiting for the WP8 version with HI-RES display. Think I'll stick with Android, and put my WP7 Launcher on it and leave it at that.

If most tech people HATE Windows8, then most novice users are going to HATE Windows8... and anything to do with it.

We'll know in 6 months where all this is going.

RE: LOL! Funny Stuff Microsoft!!
By torpor on 6/26/2012 2:05:14 PM , Rating: 2


Optimus UI.

OEMs have shown, time and again with Android, that if they really want to they can make their own UI enhancements/changes.

The problem that has plagued Windows tablets is that, instead of starting fresh like they did with Mobile, the same people in the OEM companies who are responsible for the vanilla, cost-minimized, adware-laden PCs were given the task of making tablets.

And so, with their "prestigous MBA" and management checklist in hand, they began making tablets just like they made PCs. After all, there was a checkbox to fill!

Windows Tablet: [check|blank]

If you want profit sharing and stock options, you'd better have that set to Check. And so they did.

But no one ever really thought about what they could do with it. Until Microsoft did it itself.

And, Samsung/ASUS have not made Slates. No one has yet - except Microsoft. So tone it down a couple of notches, Mr. FUD.

RE: LOL! Funny Stuff Microsoft!!
By Belard on 6/27/2012 1:45:25 AM , Rating: 2
And, Samsung/ASUS have not made Slates. No one has yet - except Microsoft. So tone it down a couple of notches, Mr. FUD.

1 - = $1250~1600, depending on its i5 configuration.

2 - = $1099 ~ $1500, depending on the config.

3 - HP Slate 2, with its 8.9" dinky screen running an Atom CPU, it starts at $700.

Maybe you learned something today?

"Vista runs on Atom ... It's just no one uses it". -- Intel CEO Paul Otellini

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