Home Was Microsoft’s Surface A Mistake? Of Course Not

Was Microsoft’s Surface A Mistake? Of Course Not

In a column for PCMag.com, well-known analyst Tim Bajarin argued Monday that Microsoft has “betrayed” its hardware partners with the launch of its Surface tablet, and that it should abandon its infant hardware business. It’s a strange, protectionist argument mired in the past. And it’s dead wrong.

Bajarin’s argument can be summed up like this: After watching Apple and Google control the ecosystem, Microsoft decided to do the same. But by doing so, Microsoft has alienated its partners, who will be less receptive to Microsoft in the future.

To that, I say, so what?

Apple & Google Have Their Own Hardware

Bajarin’s first point is obvious, but spot on. Apple first tied together its Macintosh computer and OS with the iPod, then the iPhone and iPad, combining hardware, software (including apps), media, services and a pair of operating systems into a coherent whole. Google approached the problem from another direction, launching a comprehensive suite of services, then adding devices and later media services from Google Play. And Amazon has built out from its media business, tapping into a fork of the Android OS, and designing its own tablet.

Microsoft’s been late to this game because of a few factors:

  1. It failed to immediately recognize the importance of the Internet.
  2. It relied on its hardware partners.
  3. The hardware efforts it did pursue, like the Xbox, Zune, and computer mice, were tangential to the PC.

As Bajarin notes, however, the modern ecosystem or computing platform consists of hardware, software, services and media. Microsoft maintained control of the last three, but not the first.

Did Microsoft need to create the Surface? No, it did not. Microsoft’s hardware partners are already bashing their brains out to create PCs with sufficient margins to keep them in business. And yes, any Surface tablets that Microsoft sells is likely a sale the partners won’t make.

We already know that those partners are unhappy, and it’s very possible that Surface could become the most popular Windows tablet simply because of Microsoft’s own massive marketing effort, which simply drowns out any promotions by its hardware partners. You do have to feel somewhat sorry for those partners, whose most compelling selling point so far seems to be “We’re cheaper than the Surface!”

Here’s where I think Bajarin’s argument breaks down.

Co-opetition Is Commonplace

In a recent interview with Bloomberg BusinessWeek, Apple chief executive Tim Cook was asked about the disparity between partnering with Samsung, one of Apple’s largest component suppliers, and suing Samsung’s device business for patent infringement. Cook’s response: “It’s awkward.”

Sure it is. But that’s the way business is conducted today. Microsoft needs its manufacturing partners, and they need Microsoft. But that shouldn’t stop Microsoft from trying to bash their brains in. Simultaneously cooperating and competing – “co-optition” – is par for the course. Look at Twitter and its apps partners. Ditto for Apple and the developers who occasionally get in Apple’s way. An even better example is collaboratively sharing patents among various companies to develop specifications that benefit all of them, like Wi-Fi.

And let’s face it – some of those partner’s products are crap. They’re full of bloatware, they’re slow, they use subpar components. Part of the blame lies within the retailer community, which encourages proprietary, low-cost builds that they can use as “doorbuster” promotions. Microsoft’s Surface is the “hero” tablet, the premium device that all other Windows tablets should aspire to. And, as we’ve argued before, that’s why Surface carries the “hero” price tag. Even if some Best Buy retailers are inexplicably burying it in the discount section.

But that doesn’t mean that Asus, Acer and others are merely carrying water for Microsoft, either. Every manufacturer in the world – including component manufacturers like Super Micro – tries to differentiate themselves to capture more sales and bigger profit margins. In 1989, for example, Asus was founded as a motherboard and card manufacturer. Today, it is the world’s fifth-largest PC manufacturer. All of the world’s top five PC makers – HP, Lenovo, Dell, Acer and Asus – have expanded into the tablet market; some, like HP and Dell, failed to make their tablets into viable products.

Co-opetition Runs Two Ways

Still, the options are there. HP tried and failed with WebOS; Dell had less success with the free Android OS than some of its competitors. But when each manufacturer expanded into the tablet market, was there any grumbling from Microsoft about raising their Windows license prices, or cutting them off?

Nope. Nothing that leaked out, anyway. Partnering with a company in one area simply does not mean that you have to share common goals in every area, or that you have to do everything in lock step. It’s a business deal, and business deals can be “awkward” and still work out to both parties’ benefit.

Some companies acquire “personalities” – among them Apple, Google, and Microsoft. Personalities humanize what would otherwise be a collection of employees, products, policies and service contracts. So if a company like Apple were to go out of business, would it be missed? Unquestionably. But would Acer? I doubt it.

This may sound callous, but another faceless offshore supplier would step up. And if the products had the right mix of quality and cost, we’d buy them.

Similarly, if Microsoft went out of business, would Acer fall? Probably not. The company would simply pivot toward Android or some other operating system.

Competition drives innovation. This is one of the fundamental principles of a free market, and one of the central tenets of organizations like the Federal Trade Commission.

Say what you want about Microsoft’s Surface tablet itself; there are plenty of criticisms available to choose from, ranging from the price, to the tiny apps store, to the limitations of the Surface RT OS. But to call Microsoft’s decision to manufacture the Surface a mistake itself misses the point. 

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