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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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By robinthakur on 8/8/2012 5:20:17 AM , Rating: 2
Lol, you must be joking. Only one tablet so far has been accepted fully into the Enterprise space and has the number of decent apps that the iPad does. What's the point of lovely hardware with nothing to run on it? IMO Apps and particularly exclusive apps (and of course environmental lock-in) is what keeps people buying iPhones and iPads, not the shiny and well built hardware. I can open and edit all MS Office and PDF documents, use SharePoint fully, Lync Server, One Note (through MS's own iPad apps!) and get full exchange mail/calendar compatibility on my work iPad and probably only the MS tablet will match or better it on Office compatibility. If they release a version of Office for the iPad at this stage, MS have signed their own death warrant IMO, people at work prefer them to their thin clients (and give them nicknames).

Acer do what they do very well apart from tablets, they make cheap bang for buck laptops for windows users. They are not positioned as Apple competitors despite what their CEO might like to believe. The trackpad and buttons alone are awful on my old Acer and the whole thing flexes like its supposed to be a feature. The margins are thin for a reason. If you do pony up for a Retina Macbook, it's very clear that you get what you pay for, it's built like a beautiful tank.


"There's no chance that the iPhone is going to get any significant market share. No chance." -- Microsoft CEO Steve Ballmer














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