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Unable to compete, OEM bemoans Microsoft decision to step up

Like King Theoden of The Lord of the Rings, Microsoft Corp. (MSFT), old and gray, watched as Apple, Inc.’s (AAPL) tablets, which were increasingly cannibalizing users' screen time, imperiled its kingdom.  Like the king, Microsoft's advisors whispered false promises of security.  Any day now a successful Windows tablet would come out...

Except it didn't.  So Microsoft, at last awoken, took up the sword unveiling the Surface -- a slick Windows 8 tablet that shocked the tech world.

Now its finding that some of its former allies have taken its awakening quite badly.  Among those is Acer, Inc. (TPE:2353).

Acer played the role of Wormtongue to Microsoft's Theoden, ever lofting big promises in the tablet space, and ever falling behind Apple misstep by misstep.  Now the company hisses at its former ally for taking matters into its own hands.

Comments JT Wang, chairman and chief executive of Acer, in an interview with The Financial Times, "We have said [to Microsoft] think it over.  Think twice. It will create a huge negative impact for the ecosystem and other brands may take a negative reaction. It is not something you are good at so please think twice."

Campbell Kan, Acer’s president for personal computer global operations, adds a not-so-subtle threat, suggesting, "If Microsoft … is going to do hardware business, what should we do? Should we still rely on Microsoft, or should we find other alternatives?"

Microsoft in regulatory filings has acknowledged that its OEMs may be hurt by Surface.  But the key thing to note is that the whole reason that Microsoft entered this face was because its partners failed, miserably, to compete against Apple.

Acer's sour grapes are perhaps a testament to the overall weakness of its tablet line.  J.T. Wang in Dec. 2011 called his company's product's "cheap" and "unprofitable".  Samsung Electronics Comp., Ltd. (KSC:005930) and others have outsold Acer in the emerging Android tablet market.

Even if Microsoft's Surface proves successful, volumes will likely remain relatively low, by Microsoft's own accounting.  Thus companies like Samsung who have promising Windows 8 tablet products should be fine.  

For companies like Acer, who lack viable tablet product of any flavor, there will likely be much bellyaching.  But at the end of the day they forced Microsoft to make this decision in the first place, and if they focused on creating viable products rather than making hollow threats, then they would have far less to worry about.

Source: Financial Times

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RE: Aaaha
By Argon18 on 8/7/2012 8:54:45 PM , Rating: -1
Microsoft tablets are a huge joke. Is anybody going to buy them? I doubt it. It'll end up like the WebOS HP tablets that they had to give away for below-cost because no one would buy them. iPad owns the tablet space, with Android in a distant 2nd place. Microsoft isn't even on the tablet radar.

RE: Aaaha
By xti on 8/7/2012 9:50:22 PM , Rating: 4
If the pro is a decent tablet that runs x86... im in for 1.

RE: Aaaha
By Devo2007 on 8/7/2012 11:29:59 PM , Rating: 2
Why would Microsoft be on the tablet radar if they haven't even released a proper tablet before? (Tablet PC's running full-fledged Operating Systems don't count).

Also, Android tablets have been making inroads in iPad's market share. iPad is still tops, and if Apple does release the iPad Mini then it will likely continue; but if the iPad Mini ends up being nothing more than vaporware, then they'll be in trouble. Fact is, the 7" budget tablet is starting to gain a fair bit of traction. With Amazon set to release the next-gen Kindle Fire soon, expect competition in this segment to flourish.

RE: Aaaha
By polishvendetta on 8/8/2012 9:12:30 AM , Rating: 2
Pretty sure people said the same thing about the Xbox, and look where Microsoft is with that now.

RE: Aaaha
By retrospooty on 8/8/2012 8:45:15 AM , Rating: 2
"Microsoft tablets are a huge joke. Is anybody going to buy them?"

Yes. Businesses that need x86 apps to run. I would say that is it's "niche" but enterprise is more than just a niche, its a pretty big chunk at least. Beyond that, there are consumers that would want/need the same thing. "I want a tablet, but I need it to run my xxxxxx (x86 app)"

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