The Omnibus AFB Surface Topic

  • Posted: 24 June 2012 03:51 PM #241

    I am not buying this surrender theme for anything more than the business model for Mobile.  And best case, it is a partial surrender only.  Microsoft has apparently concluded that the Apple model of complete platform control is the winning strategy for Mobile.  But at the same time, there is no suggestion that OEM’s will not be able to build their own mobile devices with licensed software from Microsoft.  So they are still hedging.

    There is no surrender on the PC business.  The same business model still applies.  Surface is irrelevant to the dynamics of that market. 

    I read the theme here that the iPad is responsible for the slowing PC market.  Where is the evidence of a cause-effect relationship?  How do we know that “good enough” is not the guilty party?  Meaning that PC’s have reached the point where the upgrade cycle had been stretched out, because the pace of innovation and performance increases have now hit “don’t care” state for the vast majority of buyers.  Do I really need a faster machine if my day is dominated by running Office, email, and the web?  If I don’t need stronger performance, than what is the upside of moving from a boring 3 year old box to a boring new box?

    My company builds a demanding video app that runs perfectly fine on three year old machines.  This app pounds the system way harder than most other apps, and even it does not drive the need for a faster machine.  So in short, how do we know that the slowing PC market would not have happened whether the iPad came along or not?

    Also, although anecdotal evidence can be misleading, has anyone see any evidence that iPads are replacing PC purchases?  I know a lot of people with iPads and NONE of them are replacing PC’s with iPads. The iPad is a supplemental device for these people, not a PC replacement.  Has anyone here seen material first-hand evidence that iPads are replacing PC’s?  I have not.

         
  • Posted: 24 June 2012 04:10 PM #242

    ^ I agree with most of this.  The software in enterprise is not challenging the hardware as it used to, so enterprise can stretch the replace-and-retire cycle.  Do people need Office to load a few seconds faster to improve productivity?  No.  The economy and longer replacement cycles are probably better explanations for slowing PC sales than the iPad making inroads.

    There’s no doubt that iPad has a future in the enterprise and Surface is MSFT’s attempt to stay relevant.  It’s a flawed strategy but that’s how MSFT rolls.  LOL

    The enterprise market is big enough to make some equally big assumptions about it.  For that part of enterprise served by MS Office, the learning curve for alternative software solutions is steep enough to slow transition out of it.

    [ Edited: 24 June 2012 04:12 PM by ByeTMO ]      
  • Posted: 24 June 2012 04:28 PM #243

    Please see the statements made by Tim Cook during the most recent conference call concerning device convergence and Apple’s efforts to avoid an effort at device convergence unlike Microsoft’s efforts with the Surface.

    Specifically, please read the unit sales forecasts Tim recites for the tablet market to exceed the PC market in unit sales in 2015.

    Conference call Q&A

    The question is from A.M. Sacconaghi and Tim’s response is immediately below the question.

         
  • Posted: 24 June 2012 04:43 PM #244

    Lstream: You are quote right. Windows PCs became “good enough” in terms of performance and features some ten years ago except for games. Since then most enterprise sales have been driven by TCO, support contracts or initial layout. Not a situation where quality or differentiation except in price or cost is relevant. Several other people have observed that for this reason about ten years ago Moore’s law stopped meaning twice the speed at the same price every 18 months, but instead became half the price every 18 months.

    The market was indeed saturated anyway. It had been several years since I had replaced my desktop or my laptop when I finally switched to Mac, and I am a computer scientist! I just never pushed the machines with what I did! Most people keep their Windows computers for 5 years or more now, and the hand-me-downs are abundant.

    The reason I have been upgrading my Macs on a regular basis for almost 10 years are:

    1) Easy and reliable migration
    2) A high resale value

    Once you realize this, you can figure out that you will pay the same amount of $ in deprecation no matter whether you run the machine into the ground over 4 years or replace it every year or so, but if you replace it often you will always have a new, cool computer.

    But I really don’t need to. I just like to.

         
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    Posted: 24 June 2012 04:45 PM #245

    DawnTreader - 24 June 2012 07:28 PM

    Please see the statements made by Tim Cook during the most recent conference call concerning device convergence and Apple’s efforts to avoid an effort at device convergence unlike Microsoft’s efforts with the Surface.

    Specifically, please read the unit sales forecasts Tim recites for the tablet market to exceed the PC market in unit sales in 2015.

    Conference call Q&A

    The question is from A.M. Sacconaghi and Tim’s response is immediately below the question.

    His response is perfect reaction to the Surface.

    TC is not only a manufacturing genius, but SJ is dead wrong about TC not being a product guy.  He understands the tablet market better then anyone.  His enthusiasm and excitment over the iPad is so well described that people miss the message he is delivering.  The adoption rate is so off the charts that there is no end in sight to the growth potential.

    The writing is on the wall for MS, they know it and responded with the Surface.  It was such a desperate move that they threw their partners under the bus and they did not do it with strong conviction.

    I agree with DT, that the Surface may not see commercial release at all.

    [ Edited: 24 June 2012 05:04 PM by omacvi ]      
  • Posted: 24 June 2012 04:53 PM #246

    DawnTreader - 24 June 2012 07:28 PM

    Please see the statements made by Tim Cook during the most recent conference call concerning device convergence and Apple’s efforts to avoid an effort at device convergence unlike Microsoft’s efforts with the Surface.

    Specifically, please read the unit sales forecasts Tim recites for the tablet market to exceed the PC market in unit sales in 2015.

    Conference call Q&A

    The question is from A.M. Sacconaghi and Tim’s response is immediately below the question.

    Both Tony and Tim are saying the PC market and iPad are distinct markets.  In fact Tim is going further, by saying that they will not attempt convergence.  I think we agree that Microsoft will attempt convergence, and that they will fail.

    My main point above is that the iPad and PC’s are distinct markets, and therefore the iPad cannot be held responsible for declining PC sales.  At least not without some more convincing evidence, which we do not appear to have.  I think what Tim and Tony are saying is consistent with this point of view.

         
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    Posted: 24 June 2012 05:29 PM #247

    Anecdote, meet slide:

    About 18:30 in.  Forstall iOS 5 demo, WWDC 2011. 

    http://www.youtube.com/watch?v=A5X28xmBS34&feature=youtube_gdata_player

    Think beyond borders.  There’s more than that, but this is an important one.

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  • Posted: 24 June 2012 05:45 PM #248

    omacvi - 24 June 2012 03:20 PM

    I attended a party last night.  Two of my friends there were upper management in the health care field.  One is a regional manager for an international orthopedic implant company and the other a manager ( with an MBA) for a medical group company that manages hundreds of physicians and consults with several hospitals.They both shared news to me and showed me things that blew me away.  That news made me realize MS is in real trouble.  The Surface is dead on arrival…..

    Two great stories. Thank you for sharing them.

         
  • Posted: 24 June 2012 06:06 PM #249

    Drew Bear - 24 June 2012 05:06 PM

    Just to veer back to the topic title, I think it’s premature to declare a Microsoft surrender. I’m not a history buff, so maybe I’m interpreting the topic title simplistically. I just think there’s plenty of action left in this “conflict” and Apple will continue to attack and maneuver. At best you might say that Microsoft is headed towards their Appomattox moment, but don’t realize it?.

    Sticking with military analogies, it’s very wise to adopt the successful tactics of your enemy. But it’s a grave mistake to try to ape you’re enemy’s inherent advantages.

    If you’re playing basketball and you’re tall, there’s no point pretending that your short and quick. If you’re a big burley home run hitter, there’s not point in trying to become the leader in stolen bases. If you’re a land locked nation, there’s no point in trying to build a 600 ship navy.

    Copying Apple’s presentation style is a good example of copying an enemy’s successful tactics. Pretending that you can beat Apple in the integration game is madness. Apple’s raised hardware/software/ecosystem integration to an art form. Attacking Apple there is akin to a full frontal assault on Apple’s strongest fortress where they have their largest guns. It’s folly.

         
  • Posted: 24 June 2012 06:22 PM #250

    Lstream - 24 June 2012 06:51 PM

    There is no surrender on the PC business.  The same business model still applies.  Surface is irrelevant to the dynamics of that market.

    Vehemently disagree with you here. In 2007 there were approximately 400 million computing devices sold and 95% or more of them ran Windows.

    In 2011 there were 650 million smart phones, 50 million tablets and 400 million traditional PCs sold. About 40% of those devices were running Windows. See the pattern?

    People don’t realize it because Microsoft is still making money hand over fist, but they are on an ever shrinking island. I don’t know how many smart phone sales there will be this year but I can say with confidence that less than 5% of them will be running Windows. There are expected to be over 100 million tablets sold this year that don’t run windows too. And PC sales around the world are flat and declining.

    If that doesn’t paint a dire picture for you, I feel quite certain that it paints a dire picture for Microsoft. They pioneered tablets and phones and now they’re completely locked out of the two fastest growing markets in all of tech. In 2007, the only question you had to ask was whether your hardware or software was Windows compatible. No one who owns a phone or a tablet asks that question today, and tomorrow no one who owns a notebook or desktop will ask that question either. If Microsoft does not become relevant in tablets and phones, they won’t be relevant anywhere. And they well know it.

    Sources you can Google:

    “Gartner: Apple Mac sales surged while Windows PC shipments plummeted in Q411 in UK , France”

    “In focus: Mac attack - the big switch is on - Windows, software, pc, operating systems”

    “Apple vs. PC Shipments: “PC” Decline Worse Than Reported”

    “Apple’s Killing Your PC (AAPL, HPQ, LOGI, MSFT)”

         
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    Posted: 24 June 2012 06:26 PM #251

    Mercel - 24 June 2012 06:19 PM
    DawnTreader - 24 June 2012 05:54 PM
    roni - 24 June 2012 05:17 PM

    Since this is the Apple Finance Board,

    There was nothing in or about the Microsoft announcement that leads me to change my thinking about Apple as an investment. 

    By the time the Surface is ready, Apple will have reported selling another 50 million iPads (this quarter and next).

    That’s when and if the Surface becomes a commercial product.

    I don’t think there’s an “IF” about it.  I’m surprised people think otherwise.  Whether it’s fated to the Zune scrap pile or something else is really the bigger question.

    it’s an “if” because they announced a tablet to the press a couple years ago and then killed the project.

         
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    Posted: 24 June 2012 06:29 PM #252

    Seriously, this is NOT Project Courier. 

    Never mind the highly unfortunate/ill-considered name of the enclosure.  Microsoft will ship the Surface(s) or it will be the biggest embarrassment in Microsoft’s corporate history.

    Of course, exactly when we’ll see the first shipping Surface within the next 3-12 months is another question.

    [ Edited: 24 June 2012 06:32 PM by Mav ]

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    Posted: 24 June 2012 06:30 PM #253

    Lstream - 24 June 2012 07:53 PM

    My main point above is that the iPad and PC’s are distinct markets, and therefore the iPad cannot be held responsible for declining PC sales.

    The markets are overlapping, not entirely distinct. As Forstall said in that WWDC 2011 clip, a growing percentage of consumers are finding an iPhone or iPad meets all of their personal computing needs. This may actually be more true in developing countries where landline Internet access continues to be costly and more difficult to acquire than wireless access.

    I don’t know that there is “hard” evidence for iPad cannibalization of computers, but there seemed to be a pretty clear correlation between the iPad announcement and the crash of the netbook market. I also think the theory that many consumers will buy an iPad instead of a 2nd or 3rd computer also has merit.

         
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    Posted: 24 June 2012 06:33 PM #254

    For context: 

    About 18:30 in.  Forstall iOS 5 demo, WWDC 2011. 

    http://www.youtube.com/watch?v=A5X28xmBS34&feature=youtube_gdata_player

    Signature

    The Summer of AAPL is here.  Enjoy it (responsibly) while it lasts.
    AFB Night Owl Team™
    Thanks, Steve.

         
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    Posted: 24 June 2012 06:36 PM #255

    Mav - 24 June 2012 09:29 PM

    Seriously, this is NOT Project Courier. 

    Never mind the highly unfortunate/ill-considered name of the enclosure.  Microsoft will ship the Surface(s) or it will be the biggest embarrassment in Microsoft’s corporate history.

    Of course, exactly when we’ll see the first shipping Surface within the next 3-12 months is another question.

    i think it will very likely launch, but it’s not a forgone conclusion.  note they’ve had no problem cutting bait before: Bob, Courier, Zune, Kin, etc.