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By outcompeting its partners, Microsoft is endangering them

"[O]ur Surface devices will compete with products made by our OEM partners, which may affect their commitment to our platform," writes Microsoft Corp. (MSFT) on the fourteenth page of its annual report filed with the U.S. Securities and Exchange Commission.

As noted by The New York Times, the quote represents Microsoft's most forthright comment regarding the fact that the media and public has largely perceived Microsoft's first-party Windows 8 tablet as superior to rival designs from OEM partners.

Microsoft CEO Steve Ballmer says that 10.6-inch Surface tablet is merely "priming the pump" for OEM partners' Windows 8 tablets.  But his filing indicates clearly that he and his company are aware that OEMs may be damaged by their inability to compete with his slick tablet offering.

There's some risk to Microsoft from this approach.  Competing with a customer ruined the relationship of Samsung Electronics Comp., Ltd. (KSC:005930) with Apple, Inc. (AAPL) and likewise Google, Inc. (GOOG) with Apple.  

"Surface" may prove poison to Microsoft's own. [Image Source: Microsoft]

However, not competing is ultimately an even more risky choice.  After all, it's hard to argue that Google is worst off for owning the world's most-used smartphone platform, despite the headaches that decision earned for it.

Likewise, if Surface does well it may create some headaches regarding OEM relations, but it would also be a boon to Microsoft's empire of holdings.

Source: SEC

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RE: They had to
By TheJian on 7/29/2012 2:43:05 PM , Rating: 2
It also serves to drive down one of apple's cash cows :) If you can make ipod/ipad/iphone commodity items, you're left competing with google on their own turf.

SEARCH. Nicely done google :)

At the same time of course, they end up with a ton of ways to get you to use that search. If you couple that with Gbit internet (up and down) I think they'll win hands down unless others get their own pipe. I agree, google/amazon are looking further out for success rather than today. As long as they lose nothing on the device, google can continue to marginalize apple sales into oblivion (much like MS IE vs. Netscape). Once google has serious gaming going (tegra3/4/5 etc) on a billion devices, devs will have to take notice also in a serious way. Consoles are already looking like their going to be on their way out with the next rev. Ouya is no doubt going to help tegra-nvidia/google in this area (and perhaps all android devices in the end). Many more are on the way as we see with Vizio Co-star doubling it's remote as a gamepad. It sold out in 12 hours and makes ANY HDMI TV google tv of sorts. A touch of gaming and chrome as a browser (with it or not) makes it a fairly attractive item. Any android phone with gamepad support and hdmi out (I'd say this will be norm shortly as all socs will be decent gamers next year compared to today's xbox360/ps3 etc) will continue to make handheld purchases questionable to parents.

The writing is on the wall...This is also the only way android (or any other) can hope to attack the stranglehold Microsoft has on gaming with DirectX. You have to get them written for your platform rather than DirectX to get anywhere.

"A politician stumbles over himself... Then they pick it out. They edit it. He runs the clip, and then he makes a funny face, and the whole audience has a Pavlovian response." -- Joe Scarborough on John Stewart over Jim Cramer

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