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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 robinthakur on 8/8/2012 6:12:34 AM , Rating: 2
Google are not quite there yet on making their device suitable for content creation though, due to a distinct lack apps. Apple very nearly is (with a bluetooth keyboard, alot of execs where I work are happy to use their iPad in place of their thin clients for the majority of purposes and it plays nicely with Exchange, SharePoint, Lync etc) hence the Nexus 7 is for Consumption only. MS look to be in a good position with their Surface, and assuming it sells ok and doesn't violate Apple's patents on powered, attached keyboards (and doesn't split the market with the two confusing and largely incompatible RT and regular types) then things will get interesting in the tablet space. Google strategy depends on volume of sales though. For this to happen, you need one model to be on the market for a while, and to be seen as the standard for COnsucmers to go to (Apple's strategy) which typically doesn't happen with Android devices, unless the other manufacturers of Android tablets just give up at this point. For the volume they sell, it hardly seems worth the investment.


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