Why Microsoft Should Screw Its Hardware Partners

This week, an audacious Steve Ballmer predicted Microsoft will sell millions of its new keyboard-equipped tablets, the Surface, in the coming year. He also talked a good deal of trash about Apple, promising to compete with it everywhere. But that’s short-sighted, as Apple isn’t the real competition. Microsoft needs to beat, or at least beat up on, its longtime allies: PC manufacturers.

If Surface is to be a hit, Microsoft can’t just position it as yet another iPad or Android competitor. It needs people to think of the Surface as a real mobile computer. It needs people to buy Surfaces instead of laptops. That means competing with its traditional partners like HP, Dell and Acer. Not only is this Microsoft’s best play, there’s not even a downside to it.

The Surface Pro (and to a lesser extent the Surface RT) is clearly a laptop competitor that’s going to cannibalize sales from Microsoft’s traditional hardware partners. But so what? Who cares if Dell or HP or Acer gets pissed off? What are they going to do, sell only Chromebooks? Go all in on Linux boxes? Exit the PC business altogether? HP’s promise to do just that turned out to be tellingly empty.

Sure, Microsoft needs its manufacturing partners. But those partners need Microsoft far more.

And then there are tablets. Microsoft isn’t even close to being a player in the tablet business, which is dominated by Apple and Android. (And, in all reality, Android is but a twee little sideshow relative to the iPad.) Many of Microsoft’s desktop partners have gone full-tilt toward Android tablets, so they’re already competing with Microsoft. So Microsoft’s best bet is to prove there’s a market in Windows tablets — which shouldn’t be hard given how abysmal Android tablets are.

Which brings us to phones. Ballmer left the door open to Microsoft rolling out its own phones. Windows Phone 7 has been a commercial failure, despite its UI being a critical darling. These phones just aren’t selling. Microsoft’s big mobile partner is Nokia, and Nokia is a wreck. Its flagship Lumia line has gone nowhere. HTC and Samsung, meanwhile, seem far more focused on Android. So if handset manufacturers and carriers can’t gin up any excitement over Windows Phone, Microsoft has to do that itself. And one clear path to this would be for Microsoft to release its own device.

In the weeks before it announced Surface, Microsoft’s hardware manager Ben Reed was on the pitch circuit talking to reporters. The meetings were odd — puzzling even — as he didn’t have any news to share. Instead, Reed spent an hour talking about Microsoft’s 30-year history in the hardware business, complete with hoary old mice. In retrospect, Reed was priming the pump, doing the groundwork for the Surface launch to plant an idea: Microsoft is a hardware company.

And if Microsoft is going to be a hardware company, it needs to be a hardware company. Microsoft’s biggest consumer success over the past decade has been Xbox. It needs to replicate that success, and the only way it can be assured of doing that, at least in the short term, is to screw its hardware partners. There’s no shame in that. It’s just business. 

Source : wired.com