Why Microsoft?s Tablet Strategy is Fundamentally Flawed

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    Posted: 19 September 2011 01:23 AM #76

    FalKirk - 18 September 2011 10:28 PM

    5) There is a military maxim that if you find yourself in a fair fight…you haven’t planned well enough. Microsoft hopes that Windows on a Tablet will give them two unfair advantages. First, they hope to bring over their huge user base from Windows. Without Windows on the desktop, then people could simply choose the tablet that they liked most, be it an Android Tablet, an iPad or a Metro Tablet. This does not favor Microsoft at all. For examples of how well Microsoft has done when they come late into a fair fight, see the Zune and Windows Phone 7.

    Second, Windows hopes to garner an unfair advantage from being a “real” computer. (I heard Thurott trumpeting this line already. “But it has a fan.” said a surprised Leo Laporte. Well sure,” replied Thurrott, “it’s a REAL computer.”) “The iPad is nice and all,” the Minions of Microsoft will coo, “but can it run “real” applications on a “real” computer?” In other words, Microsoft is hoping to attract all of those customers who are frustrated with the limitations of the iPad, those who want something more, those who want a single computer than can “do it all”.

    But will Windows load on ARM-based Metro tablets? It doesn’t sound like it will. Without Windows, the Metro tablet will have to compete fairly, yes? In other words, the iPad will trounce it.

    Same goes for the 2nd advantage they’re hoping for. An Intel-based Metro tablet that also runs Windows will definitely be better than the current crop of tablet PCs (no Metro), but who believes that this first generation is going to have the kind of battery life & weight people have come to expect from the iPad? Again the iPad wins.

    Ultimately, I wonder how many people really want a tablet to “do it all”? The argument has always been that few people would want to buy a $500 iPad when they can get a netbook that “does it all” for $300. This year iPads will outsell netbooks, both in unit sales and revenue.

    Microsoft is a software company. They can try to sell Windows 8 Metro to tablet OEMs, but that will put them in a “fair” fight with Apple. That’s not the case with Office. If they create an iOS optimized version of Office, they’d easily jump into first place on the App Store sales list. They already support Office on OS X, why not support it on iOS?

    Of course they’d rather dominate both the mobile OS and mobile software fields, but one is better than none.

         
  • Posted: 19 September 2011 02:52 AM #77

    Drew Bear - 19 September 2011 04:23 AM

    But will Windows load on ARM-based Metro tablets? It doesn’t sound like it will.

    I don’t know. It sounds like there will be three devices. Arm running Metro, Intel running Metro and Windows, traditional desktops running Windows. But it’s hard to tell. As we’ve discussed, Microsoft seems to clouding rather than clarifying this information. Maybe they have something up their sleeves.

    Drew Bear - 19 September 2011 04:23 AM

    Without Windows, the Metro tablet will have to compete fairly, yes? In other words, the iPad will trounce it.

    Yeah, that sounds about right. There will be some pro-Microsoft people who will buy it just like the pro-Android people bought Android Tablets. Some will legitimately prefer the Metro interface. It seems very nice assuming they get all the problems ironed out. But in a fair fight, I suspect the iPad wins hands down. People say that the iOS interface looks dated, but I suspect that iOS is just simple and just simply works.

    Drew Bear - 19 September 2011 04:23 AM

    Same goes for the 2nd advantage they’re hoping for. An Intel-based Metro tablet that also runs Windows will definitely be better than the current crop of tablet PCs (no Metro), but who believes that this first generation is going to have the kind of battery life & weight people have come to expect from the iPad? Again the iPad wins.

    It sure seems that way. I guess some people will accept the additional, weight, size and noise because they’re getting a “real” computer or because they really need some specific Windows applications in a tablet friendly environment or because the tablet will become the only computer they own. I’m not sure those people would be buying an iPad anyway.

    Drew Bear - 19 September 2011 04:23 AM

    Ultimately, I wonder how many people really want a tablet to “do it all”?

    Actually, I think everybody wants a tablet that will “do it all”. That’s why Microsoft kept trying to build one and that’s why no one came even close to building anything resembling an iPad until Apple did it. As usual, Steve Jobs didn’t give people what they wanted, he gave them what he needed. He realized that the dream of a tablet that could do it all was actually a nightmare. A desktop had to do what a desktop does and a tablet has to do what a tablet does. The key to building an excellent tablet wasn’t to try to make it an all it one device. The key to building an excellent tablet was to make it supremely good at what a tablet does.

    Drew Bear - 19 September 2011 04:23 AM

    The argument has always been that few people would want to buy a $500 iPad when they can get a netbook that “does it all” for $300. This year iPads will outsell netbooks, both in unit sales and revenue.

    This is an excellent point. The question was never “which is more powerful”, the question was always “Will it do the job I’m ‘hiring’ it to do?” The iPad does a wide variety of jobs that the netbook/notebook/desktop simply cannot do or cannot do well.

    Drew Bear - 19 September 2011 04:23 AM

    Microsoft is a software company. They can try to sell Windows 8 Metro to tablet OEMs, but that will put them in a “fair” fight with Apple. That’s not the case with Office. If they create an iOS optimized version of Office, they’d easily jump into first place on the App Store sales list. They already support Office on OS X, why not support it on iOS?.

    I’m sure you listen to the excellent Horace Dediu podcast. In the second half of his last podcast he talked about the economics of Microsoft. Think about what selling Office on iOS would be like. First, I’m not sure that it would be the sure fire seller you think it would be. It has name recognition, but it would be a totally different program on an iOS tablet than it would be on the desktop. Second, there’s Apple’s 30% cut. Third, what kind of price would Office command? Office has been sold as a premium product or bundled with each new PC for over a decade. The best of the best Apps only cost $10, $20, $30. Maybe Microsoft could make it up in volume. But that puts Microsoft in an awful bind. If they sell Windows on iOS, that’s one more point of differentiation that they remove from their tablet.

         
  • Posted: 20 September 2011 12:23 AM #78

    Mary Jo Foley disputes the notion that Windows 8 on ARM machines might only support Metro apps:

    The user interface (with the desktop mode as well as Metro) is going to be consistent across both X86 and ARM infrastructures. To repeat, the Desktop tile and experience will exist on both Windows 8 on x86/x64 and ARM hardware when Windows 8 is out (presumably next year).

    The fact that there is still confusion about this and that we don’t yet know the answer AFTER the developer’s conference is mind-boggling. Imagine Apple giving an event in which they didn’t send a clear strong message as to where their new operating system was headed.

    I keep reaching the same, almost unbelievable, conclusion that Microsoft is literally lying about the new OS - even if it is a lie of omission - in order to keep from alienating their base. Mind numbing doesn’t begin to cover it.

         
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    Posted: 20 September 2011 01:00 AM #79

    Meanwhile, developers who have watched the videos about creating apps or played with tools already know that Metro apps are based on XAML, which suggests embedded Silverlight for Metro.

    I guess I don’t know why you guys are all upset about not being able to figure out Microsoft’s plan. This is the same approach they used with Windows 7: combination ambiguity and trial balloon (see Starter restrictions). They evaluated the response and hit a home run—perhaps with the exception of limiting to Starter to 1024x600 screens.

         
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    Posted: 20 September 2011 05:39 PM #80

    FalKirk - 20 September 2011 03:23 AM

    The fact that there is still confusion about this and that we don’t yet know the answer AFTER the developer’s conference is mind-boggling.

    It’s one thing for the average consumer to be confused, but for people like Foley & Thurrott to be confused (uncertain at best) is crazy.

    We’ve pretty much come at this from all the different angles. They’re all nearly pure speculation until a real, off-the-shelf product actually gets reviewed. We’ve seen so many products get rave reviews after a demo/announcement (Zune, Palm Pre, Chrome notebook) only to see tepid response from consumers willing to pay money for it. This is effectively light-years away from being a concrete threat to the iPad.

    Let me just throw one last thought out there. Even after Intel commits $300 million worth of incentives, it looks like the hardware OEMs are still having a tough time matching the price of the MB Air with their “ultrabook” offerings. Why does anyone believe tablet makers (the same hardware OEMs) will be able to do any better with W8 iPad-wannabe tablets? They’ve tried that with the free Android OS and failed. So now they’re going to do better with a new OS they have to pay money for?

    There are a dizzying number of important ducks that Microsoft and their hardware partners have to line up in order for them to match what Apple has created in the iPad with the iOS ecosystem. It could happen next year, but the probability is extremely low. I wouldn’t bet any money on it.

    I am betting lots of money on Apple investing $billions today to ensure supply of the next generation high-res screens that will be used in the iPad & MB Air models of 2012. Wanna bet there’ll be a mad scramble (and subsequent delays) next year as OEMs try to react to Apple yet again?

         
  • Posted: 20 September 2011 09:17 PM #81

    Drew Bear - 20 September 2011 08:39 PM
    FalKirk - 20 September 2011 03:23 AM

    The fact that there is still confusion about this and that we don’t yet know the answer AFTER the developer’s conference is mind-boggling.

    It’s one thing for the average consumer to be confused, but for people like Foley & Thurrott to be confused (uncertain at best) is crazy.

    Agreed. In today’s Daring Fireball, John Gruber talked about one path that Microsoft could take along with its advantages and disadvantages. He also linked to a well thought out article that comes to the opposite conclusion. These aren’t opinion pieces. Rather, the two author’s are merely trying to tease out where Windows 8 is heading. Again, the fact that Microsoft isn’t TELLING us where their architecture is headed in the clearest possible way either means that they’re hiding something or that they haven’t yet made a final decision on the matter. Either way, it speaks ill of Microsoft’s efforts.

    Drew Bear - 20 September 2011 08:39 PM

    We’ve pretty much come at this from all the different angles. They’re all nearly pure speculation until a real, off-the-shelf product actually gets reviewed.

    I agree. I’m going to give it a rest.

    It’s not so much that we’ve beaten a dead horse. It’s more like we don’t know which horse Microsoft will be racing so we cannot yet lay our bets. This speculation is all useless until Microsoft tells us what they’re going to do with Windows 8.

    Drew Bear - 20 September 2011 08:39 PM

    Why does anyone believe tablet makers (the same hardware OEMs) will be able to do any better with W8 iPad-wannabe tablets? They’ve tried that with the free Android OS and failed. So now they’re going to do better with a new OS they have to pay money for?

    You make a great point. Both Google and Microsoft make the software, then they license that software to various hardware manufacturers. Most of Google and Microsoft’s manufacturers are one and the same. The hardware quality of the recent Android tablets was severely lacking. Why should we expect the same manufacturers to do a better job on Microsoft’s product line?

         
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    Posted: 21 September 2011 01:32 PM #82

    Another comment about hardware partners. This isn’t limited to Microsoft. Google’s Android partners also have the same issue. And that’s the coordination with the chip makers.

    When Microsoft first “revealed” Windows 8 at CES this past January, the not so quiet whispers were that they were going to demo it running on quad-core ARM machines later this year. NVIDIA clearly was unable to deliver that in time for BUILD, which is probably why developers were given Intel-based machines.

    Obviously Apple is working with Qualcomm, but the monogamous nature of that collaboration for the quad-core A6 means that similar delays are less likely. Qualcomm may take the results of the collaboration to make processors for other companies, but that initial concentrated burst of energy is solely dedicated to the development of a customized processor for Apple.

    BTW, maybe in anticipation that Apple will release a real quad-core product before anyone else, NVIDIA is supposedly jumping straight to a penta-core processor. They want to make it appear that tablets hitting the market after iPad 3 at least have “better” tech specs.

         
  • Posted: 25 September 2011 06:52 PM #83

    Dan Frommer has an excellent piece on Microsoft’s flawed business model HERE. Horace Dediu had a lot to say about this on his previous “The Critial Path” podcast as well. Here’s the gist of Frommer’s argument.

    Today, for each PC bought, figure that somewhere between $50 and $100 goes to Microsoft for a Windows 7 license.

    But for tablets that need to be $500 or cheaper to compete with the iPad, the idea of manufacturers spending $50 to $100 per device for a Windows license is a non-starter. Especially if tablet makers are choosing between ?free? Android as the alternative.

    How much could Microsoft charge? Perhaps $20 to $30 per device? Even less? That means that even if Microsoft?s partners can sell 25 million to 50 million tablets in a few years ? which would be considered a huge success ? that?s still barely a $1 billion business for Microsoft.

    The 90’s and 2000’s were lean times for the Mac. Yet it survived. Not only did it survive, it thrived. With only 5% of the market share, the Mac brought in approximately 35% of the profit share. How could this be?

    Apple sold both the hardware and the software. They did’t have to split their profits with anyone. They also sold a premium product. They could charge premium prices because their products were just that good. Apple has a business model that can thrive on small market share. The Mac proves it. I still think that Apple is going after market share in the smart phone business, but even if they’re constrained to just 20% of the market, they’ll do just fine.

    Microsoft has a licensing mode. They sell the software and let their customers build the hardware. Microsoft’s model does not do well in a minority role. Whereas Apple can make hundreds of dollars from the sale of their phones and their iPads, Microsoft can only make a small proportion of that. To be profitable, Microsoft NEEDS market share and lots of it.

    Is Microsoft going to have large market share in phones? Unlikely. Are they going to have large market share in tablets. Some think so. Most don’t. Does Microsoft have to reduce their fees on phones and tablets? Most definitely.

    It’s believed that Microsoft is charing around $15 per Windows Phone 7 phone. (There’s that stupid name again). How much is Microsoft going to be able to charge for a Windows 8 tablet? Thirty dollars? Forty dollars? Unlikely. Manufacturers can’t even beat the iPad’s price now while using a free operating system. How are they going to make it work when they add on another $30 or $40 fee from Microsoft?

    I’ve been thinking that consumer confidence in Microsoft my crash after Microsoft isn’t able to grab significant tablet market share within a reasonable time. But even if Microsoft doesn’t crash, they may simply bleed to death.

         
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    Posted: 26 September 2011 01:57 AM #84

    @FalKirk: You and Frommer have totally ignored netbooks and both OS and Office upgrades that come from Win 7 Startee OEM copies.