Microsoft is absolutely making the right move here. For years they've stayed out of hardware, and let their OEMs mess it up. They wanted to "partner" to deliver a good end user experience, and that's never worked out.
Microsoft has done a similar in the hosted services space with Office365. Did that burn a lot of relationships? Oh most certainly - people are annoyed they can't resell Exchange or O365 and make any serious money. But so what? Microsoft is making their products available in a great way, and serving their customers better.
If Microsoft had taken this approach a decade ago, perhaps Apple would not have grown to twice MS's size simply by caring about the end-to-end user experience.
Your reference to O365 is incorrect: I was recently evaluating using that service, and Microsoft directed me to local resellers and solution managers to "evaluate my needs" and to handle licensing, exactly as if I had been looking into Exchange.
I can tell you beyond a shadow of a doubt that a LOT of Microsoft's MSPs ("managed service providers") and other hosters are totally screwed by Office365 and not happy about it in the slightest. Microsoft is offering a vastly superior product at a much lower price than any of their partners.
There's still some opportunities (especially with Lync), for 3rd parties, but overall the pool dried up a ton. Some partners will be OK, a lot will go crazy (Apptix/Mailstreet jacked my pricing from $12/mailbox/month to $35!), and some will focus on special niches. But the era of just popping up Exchange and selling that is pretty gone since O365 came around. (MS BPOS before O365 was similar, but wasn't nearly as slick, cheap, or promoted as O365.)
The reseller you deal with would be much happier charging you $15/month for a mailbox than getting a $1/month back from Office365 when he signs you up after "evaluating" your needs.
Microsoft's whole business is based on commoditizing hardware so they can profit more from software. This trainwreck has been in the making since the mid 80's.
How can an OEM differentiate if the whole point of making a PC is to build a machine compatible (as in "identical") to just about every other? It's painfully obvious playing this game has effectively cut their margins to zero.
But yes. You can blame the OEMs for willingly yield control over their products to Microsoft. At the time, it even made sense.
How are OEMs getting the blame for Microsoft producing a heavyweight and non-touch OS that was locked to an instruction set that still struggles to compete in the low-power, mobile environment?
What were they supposed to do, bend the laws of physics to save the wintel monopoly the bother of competing?
Look at what they did with all the pent-up innovation with Android tablets. Lets see, HP Touchpad, Motorola Xoom,Sony, Acer, Viewsonic, HTC, LG and a hundred others. How did they turn out? They even had full rights to change Android as they wished and all they did was make it even more bloated with uninstallable skins and adware
HTC and LG already quit the race. I am sure you'll find a way to blame Microsoft for this too.
Did you reply to the message you intended to? Your reply isn't relevant.
Microsoft is having their lunch eaten by Apple. There is nothing that OEMs could do to help Microsoft stem that. Android, WebOS and others having nothing to do with that basic reality.
Actually his reply does make sense, because the Surface is Microsoft telling the OEMs that a). bloatware is just that - bloat, and b). that OEMs create product ranges with herds of models per range.
Phone manufacturers like HTC/Sony/et al are doing the same with Android.
In other words, that's why one might argue that OEMs are to blame.
The short answer is the iPod, iPhone and iPad. Starting in 2004, Apple started releasing hardware products so popular they made its previous unit sales look like a rounding error, and then they kept doing that in new product categories while continuing to sell the old ones, every three years like clockwork. In each case they made huge bets to control the supply chain, keeping margins amazingly high and keeping competitors technologically behind for crucial months. Apple is now twice Microsoft's market cap because investors are betting they can keep pulling off this trick. (We're due for another one in 2013 -- the Apple TV?)
The really interesting question is, how did that happen? Personally I'm inclined to buy into the Cult of Steve Jobs. Because the other company reliably churning out blockbusters in the same time period, using surprisingly similar organizational methods, was ... Pixar. But there were probably some other people who contributed too.
The really interesting question is, how did that happen?
A lot of Apple's enormous and well-deserved success could be attributed to iTunes, I think. The iPod was a huge success, pulling people to use and start to get locked into the iTunes universe. Around the time of the release of the iPhone, iTunes was the benchmark and it was the massive differentiator of what made the iPhone the device to have (it's all very curious now. I keep no music on my device, using online sources like Rdio). The iPhone begat the iPad, etc.
Microsoft's third quarter 2012 and Apple's second quarter 2012 seem to be the same timespan, ending on the same day, and in that period Microsoft reported $17.41B, while Apple reported $39.2B.
If Microsoft had taken this approach a decade ago, perhaps Apple would not have grown to twice MS's size simply by caring about the end-to-end user experience.
Can we stop with the cargo-cult nonsense on here?
Apple has been following the same end-to-end approach for almost three decades. They had initial success, and then a decade bordering on bankruptcy. During that same period Microsoft became the most valuable company in the world, with the help of partners.
Seriously it is baffling how people can so easily make these armchair claims about what yields success and what doesn't. Just moments ago I saw another article that claimed that RIM needs to learn from Apple and Microsoft and own the whole chain (???!).
The implicit context for that claim is the consumer mobile market.
What works or doesn't in the desktop market is as relevant as what works or doesn't in the server market.
Microsoft has never generated anything of note in the mobile or consumer markets via an OEM strategy. And the only things it has generated of note in the consumer market are all first-party offerings. (Peripherals, XBox)
None of that suggests Microsoft must try end-to-end integration to succeed. But neither does their success on the desktop invalidate the fact that their OEM strategy has failed them horribly for a decade. (Tablets, UMPCs, Media Players, Phones)
The fact that Apple's attention to detail wasn't nearly as much of an advantage on the desktop, while Microsoft's 'ubiquity via licensing' strategy was, only underscores the point that the consumer mobile market is different.
And even the consumer phone market is demonstrably different from the rest of the consumer mobile market. Because while an OEM strategy is arguably working for Android in the phone market, it isn't going any farther in media players or tablets than Microsoft's OEM-based offerings.
So your point is that it takes more than a general strategy to be a success? Well, yes. It doesn't change the fact that lots of Microsoft's products, even its core Windows platform, is hindered by OEM's loading crap and generally not caring about the end-user experience.
And a lot of Microsoft's success was courtesy of partners with aligned interests (not unlike Android, it should be mentioned). Dell, IBM, HP, Compaq (pre-destruction), and on and on: all assisted in Microsoft's growth to powerhouse.
Apple pursued a very different approach -- one that was a running failure for many years -- until they rose, in my opinion, on the back of the iTunes entrenchment. Now they're making major dough by their position, but it's one that few others can emulate (RIM is currently falling hard with the same approach).
Can Microsoft cargo-cult and copy one part of that and grow by leaps and bounds? Maybe, or maybe not. De-aligning with their partners is as possibly a disaster in the making.
Apple was just ahead of their time. They were delivering a superior, end-to-end experience before people expected such a thing from computers. The masses have come to expect that now and Microsoft is shifting, later than they should have, to the in the right direction.
Apple really wasn't ahead of its time. Back during the 80s and 90s the extent to which a Mac or a Windows PC was "superior" was highly debatable. There were solid points on either side and it was never an apples-to-apples comparison.
But things changed. First, everything got cheaper. The average PC in 1995 is vastly more expensive than a tablet, smartphone, or laptop today. Second, Apple got a whole lot better. They upped their game by leaps and bounds. If you gave someone in 1990 who is using a Mac an iPhone they may not have any clue that the two devices bear any sort of relationship, and in many ways they don't share very much underlying technology. Apple spent the 2000s pivoting, again and again. Pivoting to services and digital goods (music and apps). Pivoting to mobile devices (iPod, iPhone, and iPad). Pivoting at the very foundations of their core software (MacOS -> OS/X and iOS). Making not one but two very significant CPU architecture pivots (PPC -> x86 & ARM). And on top of all that they honed their design and execution to an amazing degree.
That's the new Apple. They've taken over the market not by starting "ahead of their time" in the 80s or 90s and then waiting for the market to catch up. They've done so well precisely because they've kept running and kept innovating. It's all about the OODA loop.
MS has struggled with structural and cultural problems which has limited its agility and giving it some blind spots in key areas, though they are starting to get better.
I guess what I was trying to say is that Apple has always had a walled garden. They've always controlled the hardware and the operating system. Because of that they've always had a better experience. They didn't have to support the white box PCs from hundreds if not thousands of manufacturers. Microsoft always aimed to do that and considering the task they did a fairly decent job. But there were always problems.
The rise of digital appliances like the iPhone, iPad, and iPod have made people come to expect that level of stability and it-just-works experience from their computers. Apple had that before people expected it.
In the 90s and early 2000s consumers shrugged of the bad driver support, random crashes and litany of costly OS upgrades from Microsoft as just how things worked.
Moving towards computing as an appliance task, while hard for techies to swallow, seems to be the way things are going. As more people with varying levels of technical prowess get involved the successful companies will be the ones that keep the experience stable. Building a walled garden is the easiest way to do that. Apple did it in the 80s. Microsoft is taking a great step towards building their own with the launch of Surface.
I wish them all the luck, competition is great for the market. I just wish they would have done it sooner.
Microsoft management may have destroyed their partnerships, but they're certainly not imcompetent.
The Surface is the exact thing Microsoft needs to stay relevant for consumers. And if Microsoft can start selling their own hardware, in the end they'll be better and more profitable for it.
What does SemiArrucate thing Microsoft should do? Stay the same course that has seen them losing marketshare for a decade?
It's probably more accurate to say they've lost mindshare. The amount of PC marketshare they've lost to Apple is still pretty small.
But the biggest problem for Microsoft is that the market is shifting. Between smartphones and tablets, people just don't need PCs as much. So Microsoft is desperately trying to be a factor in those markets. Shrinking the PC down to the size of the Surface isn't a bad idea, but it will make OEMs very uncomfortable. They are feeling the same market pressure to get small and mobile.
So you're saying Microsoft could be more profitable than getting $80 billion a year from Windows licensing, by selling their own tablets? I highly doubt that. If Microsoft would be left alone to develop their own tablet, it's highly unlikely they will even get close to Apple's iPad sales.
The article isn't about HP bailing from Windows altogether, it's about HP bailing from Windows RT (i.e. ARM tablet) licenses.
So yes, in this case MSFT would be more profitable - do you think they can make more money creating a superior experience, without crapware, where they can absorb the entire margin of the device.
Or can they make more money shipping software to OEMs who have historically stuffed it full of crapware, failed to release timely updates, and only give MSFT a tiny cut of the proceeds?
Other than the certification requirements for Windows on ARM, everything else is pretty much speculation (e.g. license prices and HP abandoning Windows) or casting of the status quo as a sudden shift of the landscape (e.g. tablets from anyone other than Apple run Android, today).
The fact that there is an existing commitment to Android tablets by all the consumer electronics companies is probably the reason Microsoft is considering making it's own hardware (not that HP was really seemed all that gung-ho on partnering with Microsoft over the long term once they bought Palm to acquire Web-OS).
Windows on ARM is not Windows Phone or the Windows OS in so far as economies of scale. The tablet market is always going to be really small compared to the size of the phone and PC markets due to the "third device" nature of tablets and their orientation toward media consumption rather than productivity. HP isn't selling a lot of tablets today - nobody is, other than Apple and only because they don't have to share their slice of the pie with anyone else (i.e. the Android slice of the market is shared among lots of competitors).
I stopped reading when I got to the part about Windows RT become WART. This guy has an axe to grind and he just wasted thrity seconds of my life that I will never get back.
They have already mentioned they're looking to move their PC division, and transition towards a services model, a la IBM. I'm not saying this will all pan out, but that's what has come out.
They could but they would have a lot of developers sniffing around the edges trying to figure out if HP was really serious this time. Last time I went to their developer conference they said they were really serious, and then 3 months later dumped the entire thing.
Unlike Google, they actually had a decent tablet OS. They had ceded the smartphone market to Apple and Google. But at the time the only real tablets were coming from Apple. Some idiot bean count of a CEO saw the competition (iOS and Honeycomb) and got scared.
Enyo is still under active development, so no, they didn't snag the entire team despite what was inaccurately reported in all of the tech blogs at the time.
They don't have any hardware to run it on. The Touchpads are shutdown, finished, gone. The tools have been dismantled and the workers sent elsewhere. Enyo is little more than a project looking for a purpose at this point.
I am surprised people don't talk more about how badly HP messed up WebOS.
If they had put their weight behind it and licensed it could easily have given Android a run for its money and at the very least knocked RIM squarely out of the market.
This shouldn't be much of a surprise at all (if confirmed):
- Microsoft's rumored pricing strategy leaves little room for profit for the HW manufacturers.
- Before the Surface announcement Microsoft was seeing very little traction with ARM device manufacturers. ARM devices have been noticeably quiet during all of the tradeshows.
I'm guessing is that Microsoft prepared the Surface as a backup plan if they weren't satisfied their HW partners. This turned into a reality and Microsoft released the Surface knowing full well that they'd lose partners.
I wouldn't be surprised if the high rumored cost of Windows 8 is because Microsoft calculated it's profit margin (and risk) if it went the Surface route, then set the price based on that. If it's a zero-sum market (tablet sale is either Surface or Brand X Windows RT machine) then this works out (and Microsoft hubris does believe this is a zero-sum game).
Apparently Ubuntu is catching on fast in India, and Dell is selling Ubuntu laptops at 850 retail stores in India now, so that might not be such a bad plan for HP either.
With publishing houses like EA and Valve joining Ubuntu, and changing the perception that "Linux/Ubuntu is not for mainstream users", and the potential rejection of Windows 8 by the market, this could get interesting fast.
Google is registering 1,000,000 Linux machines a day. Small desktops, granted. But (IMHO) the Year of the Desktop was really about the year of Consumer Linux, which snuck up on everyone upwards, rather than flowing down in machine size.
I know you're joking (and I doubt Linux on the desktop will ever be a thing) but it would be hilarious if Microsoft were the one to propel the old PC assemblers into making a Linux push.
In all fairness to MS, HP's waffling over whether they were selling their desktop/laptop/othertop business or not and Dell's acquisition of Perot Systems to become a more services oriented company are flags worth noting.
MS isn't bleeding edge, but they seem to be reading the leaves pretty well.
This might actually help Microsoft become more like Apple, if they can shed some of the OEMs. MS may own the market in several areas, but Apple has the buzz and the flexibility to do pretty much whatever they think they need to.
It's a pity that these OEMs aren't talking about Linux as a replacement - accelerating the adoption of Linux would help pretty much everyone (including, eventually, Microsoft by forcing them to be more innovative).
It's the Linux kernel, but above that it's totally incompatible with the typical GNU/Linux stack. Linux in Android is just a convenient layer between the hardware and Dalvik.
The article is titled "HP said to dump Microsoft over Surface" which was the original title posted here.
Now the link title has been changed to "HP said to dump Microsoft ARM tablets over Surface."
So it was edited to try to make this look like a less inflammatory title? (As someone pointed out, who is breathlessly waiting for HP ARM tablets with Windows 8?)
The editors (? is that the right title?) of HN frequently change headlines to match the linked article, presumably to avoid the Reddit-like draw of linkbait titles.
I (the OP) edited it because the article is not about HP dumping MS but about dumping MS ARM tablets. People were complaining about link-baity headline now people are complaining about different headline. Oh well
Honestly, I haven't been impressed by any HP product in a while and being a big fan of Compaq / HP and an owner of a mobile workstation, it's a bit frustrating.
I hope this will be a wake up call for them although it seems more like they want to turn Google in the new Microsoft. I am not terribly eager to see that happening...
Agreed. As a consumer I say good riddance to HP's products. What Vizio is doing with their PC lineup is far more interesting and I think they'll have a bright future partnering with Microsoft and their Signature series.
I was under the impression that Google does have licensing agreements with OEMs, for the use of Google apps like GMail, Maps, Navigation, Play Store, etc.
I'm sure it's not $85 per device for the license but the point still remains.
Ok, so where are the big Android OEM's 7" $199 tablets?
Google, like Amazon is able to sell their tablet at that price at a small loss or no profit because of owning Google Play and selling content through it and the 30% cut of app revenue(Google does no curating of their apps so their costs are less than Apple's).
Not to mention early access to the OS, while all other tablets in the market are using the older version ICS.
How can HTC match that? They couldn't. So they stopped making Android tablets, same with LG.
What makes you say that? I mean, what kind of signals would you expect to hear from Redmond in case they did have a plan B? Obviously they do and just as obviously plan B's are almost never public.
If we've learnt one lesson from Microsoft it's that they can be really patient.
Look at the XBox. Started off poorly but it looks like they will dominate the next generation of consoles given how badly Sony has been faltering recently. So for all we know this could be a full blown shift into replicating Apple's integrated approach.
Microsoft has done a similar in the hosted services space with Office365. Did that burn a lot of relationships? Oh most certainly - people are annoyed they can't resell Exchange or O365 and make any serious money. But so what? Microsoft is making their products available in a great way, and serving their customers better.
If Microsoft had taken this approach a decade ago, perhaps Apple would not have grown to twice MS's size simply by caring about the end-to-end user experience.