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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 GotThumbs on 8/8/2012 9:19:48 AM , Rating: 2
Acer execs need to go back to school and learn about free markets. If they can't remain competitive...then they should die and be reborn.

Microsoft is not preventing ACER from building a tablet.....MS just got tired of the current substandard products. Lazy, unimaginative and complacent development should not be sustained through charity. It's a business....get to work or fade away into history.

Time for ACERS execs to grow up. It's not kindergarten.

RE: Aaaha
By Reclaimer77 on 8/8/12, Rating: -1
RE: Aaaha
By bah12 on 8/8/2012 10:37:43 AM , Rating: 4
Hypocritical much? By your own admission Android is far superior to iOS, and Acer has access to Android. So by extension the OEM's have had a superior OS, and still failed to compete. I agree Windows has not been viable in the tablet/mobile space, however it is quite clear Andriod can be.

MS just hasn't seen any OEM come up with an iPad killer using ANY OS. IMO it is just too big of a gamble to fail. Win8 has enough naysayers on the desktop, so it better damn well revolutionize the tablet/mobile space. It is far to risky to leave that launch success to OEM's that have utterly failed for the last few years to make anything remotely competitive (in the tablet space that is).

RE: Aaaha
By spamreader1 on 8/8/2012 11:49:10 AM , Rating: 2
My understanding was Microsoft wasn't impressed by the offerings that OEM's were preparing with the windows 8 pre-release anyway. Not necissarily an issue with thier current attempts at using windows 7 in the tablet market.

RE: Aaaha
By encia on 8/8/2012 11:15:39 AM , Rating: 1
For tablet OS, the "substandard product" is Windows 7.

"It's okay. The scenarios aren't that clear. But it's good looking. [Steve Jobs] does good design, and [the iPad] is absolutely a good example of that." -- Bill Gates on the Apple iPad

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