Rethinking MSFT's Strategy

[Korlon]

The SP3 is on its way and from what I've seen there is more interest in talking about it within the circle of current surface users than there is on the outside. Now it is early, and the darned things aren't in stores yet, but at this point the lack of excitement is, well, both unsurprising and earned. However, this could be an interesting opportunity for MS.

In introducing a 12" tablet MS can attract some serious numbers in the enterprise market however the really interesting potential, if MS takes this one step further, a 12" screen can be a massive boon if they use a decent GPU in there and sell it as a portable gaming system. Who cares if the GPU will make the product thicker and heavier? Gamers hold gamepads/joysticks/driving yokes, not the screen. Get some more power in there and you have a whole new S.K.U.

For the SP and SP2 users keep working on a 10.2" model. For some of us it's a perfect size. Even though I may want a 12" screen I see no compelling reason to upgrade to the SP3 as the hardware is hardly differentiated from its predecessor and to be honest, I would never buy an expensive device without seeing it, hearing other people's experience with it and how the producer follows up with updates and consumer concerns.

Keep working on the Mini. With the superior inking ability of the SP2's Wacom tech, it has the potential to be a fantastic tool for personal assistants. Maybe Alsop was correct in nixing the model, but don't give up on it. Keep working on it and develop it to a specific niche/task.

As for the RT, well maybe the fact that MSFT can make a 'Pro' model as thin and as light as the Rt/Surface while increasing screen size is telling us that there is no need for an RT/Surface model. Just my opinion.

No one product can be everything to everybody. We all know this. There needs to be some differentiation in hardware according to what market you are trying to reach. It is admirable that MSFT has the best hardware configuration for the enterprise realm, however the company has to refocus it's energies and dump the 'Laptop Replacement' spiel. It's old, and it's never going to happen with a single tablet model. In other words, MS has to stop creating models based on processor/RAM and SSD. Instead create models with function in mind. Enterprise, Gaming, Home, The ULTIMATE MOFO... whatever. The general public may understand that 512 GB is more than 256 GB, however they MAY NOT understand what it is they need. Help them out. Stop the RT/Surface development and stick to the PRO as you are segregating your own consumer base, and there is really nothing now that you can do with the RT that you can't do on a PRO.. Matter of fact just call it Surface and add Enterprise, Gamer, Home, THE ULTIMATE MOFO...

If MS really wants to do something special, to REALLY make it stand out from the rest... Make the damned machines upgradeable. Spending up to $2k is too much for a throw away device.

Oh, and for the love of God, Please.. PLEASE ... P-L-E-A-S-E make a silo for the pen. How many times do you have to be asked? And for Kayzee, put that damned windows button back on the bottom bezel. I got your back on this K.

 

[WillysJeepMan]

Interesting. I'm seeing plenty of discussion and buzz about the Surface Pro 3 in places that are hostile towards anything Microsoft. In my opinion, Microsoft has fired a shot across the bow of the S.S. Cupertino and some of their fans are now scratching their heads wondering what just happened.

Microsoft needs to NOT release a Surface Mini. They've just announced that "Windows with Bing" licenses for hardware manufacturers is now $15 per license (down from $50). This means that tablets running Windows x86 will break below the $200 price barrier. Dell and Asus will most likely offer something in that price range with decent quality.

Where does that leave a Surface Mini? $350 for a Windows RT version, $400 for a Windows x86 version... that assumes that they'll be able to include an active stylus in that. I don't know what kind of market there is for a premium 8" Windows tablet.

Depending upon how Microsoft's other projects are doing, I can see Microsoft producing a Surface 3 with a 3:2 aspect ratio, or ceasing development of ARM-based Surface devices completely.

I still think that Microsoft is holding some cards up their sleeves to see what Apple commits to next month at WWDC.

 

[CrippsCorner]

And for Kayzee, put that damned windows button back on the bottom bezel. I got your back on this K.

you know this! Think I'll break the sill and colour it in with a permanent marker lol.

I do agree with aspects of what you've written. For me, the RT is DOA but that's just for my personal usage... I'd love to see a Mini, but again, personally I'd prefer a Pro, or at least the option of one. I was kind of counting on that release for me and other members of my family, now I'll probably have to buy a third party release, which isn't what I want when I'm used to the quality of Microsoft hardware (and Apple)

 

[al2fast]

I'd love a mini, a real x86, with 4gb of ram and more importantly more than 64gb of storage. I'd pay the premium for the premium device. I just sold my sp2, the screen proved to small to be my daily driver and was too big to be that device to read with or browse the web with comfortably for extended periods. Found myself going to the iPad mini for that. The 8" dells and lenovos are decent today, but just lack the on board storage for me.

If they could just figure out a way to make that surface more stable when you type in your lap with an attached keyboard that would be a huge bonus for me. I find myself using and typing with my laptop, 90%+ of the time, on my lap. In my opinion the sp2 sucked when using like that.

 

[kristalsoldier]

If we are talking about MSFT's strategy, then we need to take into account not simply their tablet hardware, but also their phone and general computing hardware. Concurrently, we also need to take into account their OS strategy as it relates to these two broad groups of hardware.

With the introduction of the Surface line-up, MSFT declared, essentially, two strategic objectives. First, that they wanted a piece of the tablet market - specifically, the consumer tablet market. Second, they wanted to gain traction in the phone market (again enterprise and consumer segments). Underlying these two strategic objectives was (and remains) their intent to revise and reissue their baseline OS (i.e., Windows).

MSFT's strategic intent with Win 8 should be considered in this light. As is rather obvious now, Win 8 had (and has) a singular objective - provide a common OS platform that would unite their general computing space, the tablet space and the mobile phone space. But MSFT also had (and continues to have) a major problem with this. For one thing, the requirements of each of the spaces are different. A phone cannot handle an x86 OS. Second, the OS has to be one what can intelligently configure itself to the hardware to which it is applied to satisfy varied user-requirements. And, third, the market in which MSFT has to play its game has a number of heavy weights who control two of the three spaces, namely, tablets and mobile phones (Apple and Android respectively). The third problem is further compounded by the fact that MSFT's competitors dominate virtually all segments (considered price-wise and in terms of form factor) of the tablet and phone spaces.

In all of this, MSFT's greatest asset is its installed base in the general computing space (in which they have no real competitors).

We should consider MSFT's strategy in this context. With the Surface line, MSFT indeed was providing its OEM partners with a "reference object". But the stakes were and are higher than that. They also want to demonstrate two broad trends - or at least their understanding of them - in the general computing space - (1) convergence of multiple access points of information into a small number of devices which responds to the call for mobility; (2) to move the general computing paradigm, which till now has been deskbound (and laptop-centric) into an ultra lightweight context.

If you look at the "concept" of the Surface RT and the Pro (speaking generically), it responds to these two objectives. Again, the problem for MSFT was branding. While the RT was meant to respond to #1, the Pro was meant to respond to #2. To all intents and purposes they failed in this. Why? This is because - to all intents and purposes - they were unable to adequately differentiate between the OS for the RT and that for the general computing space. Of course, I also think they were unable to create the appropriate conditions for the reception of the RT in the sense that they rushed it into the market. As a former user of the original RT, I know how incomplete the device felt when I first got it. Things only improve after multiple firmware updates, app updates and finally with the release of Win 8.1. In my opinion, this was MSFT's first strategic error. Their hardware (for the RT) was not ready. And, more importantly, their OS in Win 8 was also not ready. Optimally, they should have released the Pro 1 first and should have launched what is today the Surface 2 with the release of Win 8.1. This may have provided a much softer landing for the entire Surface line up.

With the introduction of the SP3, MSFT is now signalling a slightly modified strategy, but one that make a lot more sense. For one thing, they are remaining true to their original strategic intent, namely, that of responding to the two broad trends that they think is emerging in the general computing space. One need only to look at the form factor of the SP3 for a confirmation of this. This leaves the question of the RT line up. We already know that Win Phone 8.1 is a rock-stable OS and, to all intents and purposes, it is doing well in secondary markets the world over. The app situation for Win Phone 8.1 is not bad (at least as compared to Win 8 RT). So, it makes sense to merge the Win Phone OS with the Win RT OS since their use cases are quite close to each other. So, a class of devices running such a merged OS would have a number of advantages - (1) the commonality of the app store (2) the diversity of hardware profiles that the OS could be installed on - from 4" devices to 10" devices - and (3) a clear distinguishing between the consumer and prosumer spaces.

What this means that I would expect a 8" Surface RT tablet to be released either (1) when Win 9 (Threshold) is released, or (2) when Win Phone 8.1 and Win RT OS are merged. The most critical thing will be the availability of a common app market. I would expect a 10" Surface 3 RT (probably with a 16:9 AR) to be released when the Modern UI version of Office is released - the latter will, most likely, come preinstalled with the device. I wish MSFT would include a Pen, but I am not sure they will. I also wish MSFT would use the 3:2AR, but again, I am not hopeful. Why? Because MSFT will use the Surface 3 RT and smaller devices to target the consumer market and the 16:9 AR is better than the 3:2 AR for media consumption.

I don't know if the above makes any sense at all! So, your comments are most welcome. Thanks!

 

[CrippsCorner]

If they could just figure out a way to make that surface more stable when you type in your lap with an attached keyboard that would be a huge bonus for me. I find myself using and typing with my laptop, 90%+ of the time, on my lap. In my opinion the sp2 sucked when using like that.

 

[WillysJeepMan]

....

What this means that I would expect a 8" Surface RT tablet to be released either (1) when Win 9 (Threshold) is released, or (2) when Win Phone 8.1 and Win RT OS are merged. The most critical thing will be the availability of a common app market. I would expect a 10" Surface 3 RT (probably with a 16:9 AR) to be released when the Modern UI version of Office is released - the latter will, most likely, come preinstalled with the device. I wish MSFT would include a Pen, but I am not sure they will. I also wish MSFT would use the 3:2AR, but again, I am not hopeful. Why? Because MSFT will use the Surface 3 RT and smaller devices to target the consumer market and the 16:9 AR is better than the 3:2 AR for media consumption.

I don't know if the above makes any sense at all! So, your comments are most welcome. Thanks!

What you posted makes sense. I disagree with some of it, but it is certainly well considered and I appreciate that.

I think with the introduction of the SP3, Microsoft gained a victory on the hardware side, but a loss on the marketing side. Microsoft took a fragmented and confusing mess known as Surface gen1 and gen2, and made it worse. There are now 2 different "Surface Pens" that are incompatible with different devices and not usable on the Surface itself, a "Surface Pro Type Cover" that is not physically compatible with the Surface Pro or Surface Pro 2. Surface Pro 3 is a different size than the Surface Pro 1 or Pro 2.

It's like the tech version of the Keystone Cops.

 

[kristalsoldier]

What you posted makes sense. I disagree with some of it, but it is certainly well considered and I appreciate that.

I think with the introduction of the SP3, Microsoft gained a victory on the hardware side, but a loss on the marketing side. Microsoft took a fragmented and confusing mess known as Surface gen1 and gen2, and made it worse. There are now 2 different "Surface Pens" that are incompatible with different devices and not usable on the Surface itself, a "Surface Pro Type Cover" that is not physically compatible with the Surface Pro or Surface Pro 2. Surface Pro 3 is a different size than the Surface Pro 1 or Pro 2.

It's like the tech version of the Keystone Cops.

Thanks!

As for your observation - I agree. But I also think MS is wiping the slate clean (though in recent years they seem to be doing this too often). One should also keep in mind that the SP1 and SP2 (and the Surface 1RT) - to a large extent - was Sinofsky's legacy, which has been roundly criticized (and correctly so IMO) and for which Sinofsky was effectively fired. One indicator of this - albeit in a light-hearted sense - is the colour differentiation. Just think about it! There are three devices which are of one colour (dark) while the Surface 2 and the Surface Pro 3 are the silver colour. That - if you buy into this theory - marks a break from the Sinofsky legacy. Further, the similarity - in terms of appearance and form factor - between the Surface 2 and the Surface Pro 3 would lend credence to that. Insofar as the AR is concerned, I think MSFT will continue to maintain the difference because of the individual target markets that each of the devices are targeted towards.

 

[WillysJeepMan]

As for your observation - I agree. But I also think MS is wiping the slate clean (though in recent years they seem to be doing this too often). One should also keep in mind that the SP1 and SP2 (and the Surface 1RT) - to a large extent - was Sinofsky's legacy, which has been roundly criticized (and correctly so IMO) and for which Sinofsky was effectively fired. One indicator of this - albeit in a light-hearted sense - is the colour differentiation. Just think about it! There are three devices which are of one colour (dark) while the Surface 2 and the Surface Pro 3 are the silver colour. That - if you buy into this theory - marks a break from the Sinofsky legacy. Further, the similarity - in terms of appearance and form factor - between the Surface 2 and the Surface Pro 3 would lend credence to that. Insofar as the AR is concerned, I think MSFT will continue to maintain the difference because of the individual target markets that each of the devices are targeted towards.

I know that my thinking is in the minority here (and other Microsoft forums) but "rebooting" a line in a highly competitive market is the kiss of death. Microsoft did that very thing with the Zune (and with Windows Phone). Each generation of device offered technically superior hardware, but this repeated "wiping the slate clean" breaks any momentum built, and causes additional expense to early adopters. Yeah, I know that the general mindset is, "big deal... what you bought still works so why care about the new stuff being so radically different?"

This wiping the slate clean causes uncertainty in the accessory aftermarket. Accessory makers for the Surface are not dealing with large quantities to begin with and when Microsoft changes things up so drastically, it causes the makers to retool and redesign. In the end, they'll simply not engage in accessories... there's a small market for those accessories and most likely not be compatible with the next gen.

What Apple does "right" (but not from the perspective of spec junkies) is incrementalism. Buy a device and some accessories and except for a rare major shift (like going from 30 pin connector to lightning connector), continue to work beyond the current generation.

Do we really expect aftermarket "blades" (that were introduced last Fall) when 7 months later Microsoft introduces a different form factor? Or how about the 1024 sensors in the new TouchCover2 that promised the ability to use the entire Cover as a touch pad? No software has been produced to take advantage of that... and won't now that the SP3 is out with only a TypeCover option available.

These radical changes between generations is no small issue.

You don't get a second chance to make a good first impression.

Then for the Microsoft faithful to lay the blame at "stupid consumers" and "anti-Microsoft press" simply adds insult to injury.

 

[kristalsoldier]

I know that my thinking is in the minority here (and other Microsoft forums) but "rebooting" a line in a highly competitive market is the kiss of death. Microsoft did that very thing with the Zune (and with Windows Phone). Each generation of device offered technically superior hardware, but this repeated "wiping the slate clean" breaks any momentum built, and causes additional expense to early adopters. Yeah, I know that the general mindset is, "big deal... what you bought still works so why care about the new stuff being so radically different?"

This wiping the slate clean causes uncertainty in the accessory aftermarket. Accessory makers for the Surface are not dealing with large quantities to begin with and when Microsoft changes things up so drastically, it causes the makers to retool and redesign. In the end, they'll simply not engage in accessories... there's a small market for those accessories and most likely not be compatible with the next gen.

What Apple does "right" (but not from the perspective of spec junkies) is incrementalism. Buy a device and some accessories and except for a rare major shift (like going from 30 pin connector to lightning connector), continue to work beyond the current generation.

Do we really expect aftermarket "blades" (that were introduced last Fall) when 7 months later Microsoft introduces a different form factor? Or how about the 1024 sensors in the new TouchCover2 that promised the ability to use the entire Cover as a touch pad? No software has been produced to take advantage of that... and won't now that the SP3 is out with only a TypeCover option available.

These radical changes between generations is no small issue.

You don't get a second chance to make a good first impression.

Then for the Microsoft faithful to lay the blame at "stupid consumers" and "anti-Microsoft press" simply adds insult to injury.

Agreed! (Edit: But I also think that they had no choice especially after the Sinofsky debacle, for which I blame not only Sinofsky, but also Ballmer and the MSFT board).

I am not sure MSFT - for at least a decade or so - had their strategic priorities set up. I think they were more in a reactive mode and best described as status quoist. Only now do I see a more coherent strategy for MS - when I say "now", I mean with the (enforced) rebranding of SkyDrive into OneDrive, the revamping of Outlook.com, the expansion of Bing's search capability, Office 365 and how each of these (and other sundry stuff that I can't recall at the moment) play into their concept of "hardware" (or, as they insist, "devices"). I also think that for the past decade MSFT was reacting to the market rather than influencing and shaping the market. I think with folk like Satya, Panos, Meyerson and yes, even Elop to some extent, that is changing. They appear to be more in sync with the times. Of course, all this is from the outside and simply based on publicly available materials and thus could be wildly off.

 

[guymalloc]

Prime example, (though many too young to remember), IBM's MCA (micro channel architecture). IBM thought it would solidify their position in the PC market, and insure sales of upgrades only from IBM. Instead it almost killed their PC business in less than a year. And assured a solid market for several competitors that stuck with 'standard' mobo's and hardware from multiple sources. We have IBM to thank for the 'standard' PC, and because of their MCA blunder, the diverse PC market we still enjoy today.

 

[WillysJeepMan]

Prime example, (though many too young to remember), IBM's MCA (micro channel architecture). IBM thought it would solidify their position in the PC market, and insure sales of upgrades only from IBM. Instead it almost killed their PC business in less than a year. And assured a solid market for several competitors that stuck with 'standard' mobo's and hardware from multiple sources. We have IBM to thank for the 'standard' PC, and because of their MCA blunder, the diverse PC market we still enjoy today.

Thank you for that stroll down memory lane. During my career at IBM I spent many a year developing for and supporting their PS/2 line. Oh, and whenever a new wave of MCA cards were produced, the BIOS on those machines needed to be updated via a Reference Disk. I won't tell you how much hair I lost because of issues caused between the PS/2 hardware and OS/2 (RIP).