Microsoft Admits OEM Conflicts with Surface Tablet

CommanderFrank

CommanderFrank

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The introduction of Microsoft’s entry into the tablet market is still causing fallout with Microsoft’s present OEM partners. In a filing with the SEC, Microsoft warned that the introduction may cause a risk factor for the market of the new Windows 8 operating system.

The admission was part of a general warning Microsoft issued regarding possible threats the company faces from the emergence of the tablet devices.
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so even the great microsoft is realizing they may have created a lemon ... this will be fun to see how this plays out.
 
maxius said:
so even the great microsoft is realizing they may have created a lemon ... this will be fun to see how this plays out.
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:rolleyes: you realize the fallout that's going to be created is by microsoft offering their own hardware, right?
 
The OEM's need to step it up and make better stuff to compete with microsoft.
 
Nanan said:
The OEM's need to step it up and make better stuff to compete with microsoft.
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Microsoft charges those OEMs more than it's going to charge itself, so why would OEMs bother? At least that's what Dell, HP, Acer and others have said. Microsoft's product will always be at an advantage because it's Microsoft's OS too. It would be like Apple allowing Asus to make an Apple tablet but them charging them for iOS.
 
pelo said:
Microsoft charges those OEMs more than it's going to charge itself, so why would OEMs bother? At least that's what Dell, HP, Acer and others have said. Microsoft's product will always be at an advantage because it's Microsoft's OS too. It would be like Apple allowing Asus to make an Apple tablet but them charging them for iOS.
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I don't blame MS for wanting to do this, they have great software products but all of its major OEM's massively produce crap products, load bloatware on them and MS needs somewhat to show it off.

I don't think MS is going to continue releasing the product, this would be a good "entry" device, but their OEMs do need to increase their quality.
 
Keep in mind that this was an SEC filing. Such filings disclose just about every single possible risk the company could face short of a meteorite destroying the earth.
 
Between the problems M$ is stating are true and their changes to the MSDN, I am straying more and more from using Microsoft. Just have to wait for Steam to be Linux-native :D
 
Trimlock said:
I don't blame MS for wanting to do this, they have great software products but all of its major OEM's massively produce crap products, load bloatware on them and MS needs somewhat to show it off.

I don't think MS is going to continue releasing the product, this would be a good "entry" device, but their OEMs do need to increase their quality.
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It's the wrong approach, though. It would be like Intel, instead of making requirements for an Ultrabook, decided to build the Ultrabook themselves and bring it to market. MS should have just made a set of requirements for using win8 on a tablet device instead of making the product themselves. They don't have the retail presence to sell it and they rely far too heavily on their OEMs considering they make all of their money on software. It's just a bad move.
 
pelo said:
It's the wrong approach, though. It would be like Intel, instead of making requirements for an Ultrabook, decided to build the Ultrabook themselves and bring it to market. MS should have just made a set of requirements for using win8 on a tablet device instead of making the product themselves. They don't have the retail presence to sell it and they rely far too heavily on their OEMs considering they make all of their money on software. It's just a bad move.
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MS did that with windows phone 7 didn't get them much, even co developed the first product for it. Really what microsoft is looking for throwing their own name on a product is sorta to be taken seriously.
 
pelo said:
Microsoft charges those OEMs more than it's going to charge itself, so why would OEMs bother? At least that's what Dell, HP, Acer and others have said. Microsoft's product will always be at an advantage because it's Microsoft's OS too. It would be like Apple allowing Asus to make an Apple tablet but them charging them for iOS.
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This is the real problem. It is rumored that Windows RT is going to cost ~$100 for OEMs (since it is bundled with Office). Hardware margins are pretty thin and when trying to build a $500 iPad competitor, a $100 license fee takes away 20% of your usable budget. Now Microsoft comes along building a product to compete with a product where they don't have to pay the $100 license fee. For the same retail cost, Microsoft can make a product that is substantially better. With Windows 8 moving into the content market with the Windows app store, Microsoft can even use the Xbox model of selling the hardware at a loss and making up with it in app sales. For an OEM, this is a very unlevel playing field and there is very little incentive to even try to compete.
 
pelo said:
It's the wrong approach, though. It would be like Intel, instead of making requirements for an Ultrabook, decided to build the Ultrabook themselves and bring it to market. MS should have just made a set of requirements for using win8 on a tablet device instead of making the product themselves. They don't have the retail presence to sell it and they rely far too heavily on their OEMs considering they make all of their money on software. It's just a bad move.
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I don't like the approach either but I can't blame MS for wanting to do this. Come out with a limited product, get its face out there, show the public it can be good and force the OEMs to get their heads out of their collective assholes.

That is of course if it is only a limited time product or a product with no planned advancement.

This is the real problem. It is rumored that Windows RT is going to cost ~$100 for OEMs (since it is bundled with Office). Hardware margins are pretty thin and when trying to build a $500 iPad competitor, a $100 license fee takes away 20% of your usable budget. Now Microsoft comes along building a product to compete with a product where they don't have to pay the $100 license fee. For the same retail cost, Microsoft can make a product that is substantially better. With Windows 8 moving into the content market with the Windows app store, Microsoft can even use the Xbox model of selling the hardware at a loss and making up with it in app sales. For an OEM, this is a very unlevel playing field and there is very little incentive to even try to compete.
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I didn't think they were coming out with their own RT device, I thought this was just about the windows 8 slate?

Anyways, Windows shouldn't enter the tablet scene at all on the hardware side. The manufacturers are actually doing a damn good job here. Light weight, great screens, great port options, battery life, asthetics etc.

As for the price of the RT, it seems a bit steep but if it can get ACTUAL office applications working worth a damn I would buy it for sure!
 
Trimlock said:
I didn't think they were coming out with their own RT device, I thought this was just about the windows 8 slate?

Anyways, Windows shouldn't enter the tablet scene at all on the hardware side. The manufacturers are actually doing a damn good job here. Light weight, great screens, great port options, battery life, asthetics etc.
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There will be two models, the Surface and the Surface Pro. The Surface is ARM based and runs Windows 8 RT and the Surface Pro is x86 based and runs Windows 8.
 
I'd love to see OEMs respond to this by trying to make viable linux alternative machines instead of just paying licence fees to MS to be at a disadvantage on the W8 tablet front.
 
Tudz said:
I'd love to see OEMs respond to this by trying to make viable linux alternative machines instead of just paying licence fees to MS to be at a disadvantage on the W8 tablet front.
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With out viable office apps or easy integration, the Linux option may never be seen, or at least in large quantity.

Linux options would mainly be competing with the Android ARM devices anyways.

There will be two models, the Surface and the Surface Pro. The Surface is ARM based and runs Windows 8 RT and the Surface Pro is x86 based and runs Windows 8.
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Thanks!

That is questionable, there doesn't need to be an ARM variant, and honestly I think MS is going to have a hard time competing against the other ARM vendors in this area. Nexus 7, Transformer, A500 are all great tablets out of the box.
 
Linux options would mainly be competing with the Android ARM devices anyways.
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That would be Linux competing with itself. Google doesn't charge for Android (they can't, It's Linux), so it makes no sense for tablet manufacturers to pick up a different flavor of Linux.

The winRT devices were dead before they even hit the water. On ARM you get no legacy x86 support and due to the higher price of a winRT tablet (likely twice as expensive unless you go Microsoft's tablet which will be cheaper), it's going to be a hard sell.

The Surface Pro makes a bit more sense because it offers x86 legacy and desktop applications, but MS is going to have a lot of work to do with making that end more touch friendly.
 
Why is the Surface being referred to as a tablet. It looks like a netbook to me.

pelo said:
That would be Linux competing with itself. Google doesn't charge for Android (they can't, It's Linux), so it makes no sense for tablet manufacturers to pick up a different flavor of Linux.

The winRT devices were dead before they even hit the water. On ARM you get no legacy x86 support and due to the higher price of a winRT tablet (likely twice as expensive unless you go Microsoft's tablet which will be cheaper), it's going to be a hard sell.

The Surface Pro makes a bit more sense because it offers x86 legacy and desktop applications, but MS is going to have a lot of work to do with making that end more touch friendly.
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You can charge for Linux but you have to provide the source code and allow other people to redistribute and modify your changes. Free here refers to free as in speech, not free beer. Red Hat sells a GNU/Linux operating system and they just passed a billion dollars a year in revenue. Anyone can download, modify, and legally redistribute Red Had's versions of GNU/Linux. Despite that, they are still able to turn a profit by selling support and customizations.

Trimlock said:
With out viable office apps or easy integration, the Linux option may never be seen, or at least in large quantity.

Linux options would mainly be competing with the Android ARM devices anyways.



Thanks!

That is questionable, there doesn't need to be an ARM variant, and honestly I think MS is going to have a hard time competing against the other ARM vendors in this area. Nexus 7, Transformer, A500 are all great tablets out of the box.
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Application virtualization and the "cloud" make this irrelevant. A large organization can deploy GNU/Linux desktops and use application virtualization to handle running legacy Windows software.

priley said:
Between the problems M$ is stating are true and their changes to the MSDN, I am straying more and more from using Microsoft. Just have to wait for Steam to be Linux-native :D
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I can't believe people pay that kind of money for programming tools. Visual Studio is a complete ripoff and Visual Studio/.net encourage bad programming by hiding everything from the programmer. Every other platform either gives their programming tools away or charges a reasonable amount for them.
 
I don't recall Visual Studio hiding anything from me. How could I write any kind of application if everything is hidden from me?
 
damicatz said:
Application virtualization and the "cloud" make this irrelevant. A large organization can deploy GNU/Linux desktops and use application virtualization to handle running legacy Windows software.
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Do these exist? Its been a while since I've attempted to use Android for anything remotely usefull.
 
Funny how people say apple products are expensive,and when competition brings something to the table they complain its cheap stuff. I dont get the problem , if u want cheap tablets u go to oem's but if u want something high quality u go to apple. Eighter way u get what u pay for,i dont see the hate on cheap stuff,the cheap stuff is for people who can't afford expensive stuff .Its silly to expect something similar to the ipad at a price of kindle fire for example .
 
damicatz said:
I can't believe people pay that kind of money for programming tools. Visual Studio is a complete ripoff and Visual Studio/.net encourage bad programming by hiding everything from the programmer. Every other platform either gives their programming tools away or charges a reasonable amount for them.
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What? There are free versions of Visual Studio as well.
 
I think the OEMs are just scared, a lot of Windows 8 hate is fear. Fear of Metro, the Windows Store and now Surface and people dismissing it really fear it. Microsoft will probably have no problem selling Surface devices in the low millions of units which isn't a big deal for OEMs especially if Surface provides awareness and interest in Windows 8.

The problem will come if Microsoft decides to REALLY compete in the PC hardware that could be the problem, but I really don't think they want to, just way too many issues. I think something like limited edition devices though can benefit OEMs if it done right.
 
You can charge for Linux but you have to provide the source code and allow other people to redistribute and modify your changes. Free here refers to free as in speech, not free beer. Red Hat sells a GNU/Linux operating system and they just passed a billion dollars a year in revenue. Anyone can download, modify, and legally redistribute Red Had's versions of GNU/Linux. Despite that, they are still able to turn a profit by selling support and customizations.
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That's wrong. If it's built upon the Linux Kernel then you can't charge for it. Red Hat makes money off of services/support for RHL, not for selling the software. The reason people are able to download, modify and legally redistribute the software is because it's based on the Linux Kernel. If RH-Linux was its own OS then you wouldn't be able to do that because you'd have to ask Red Hat for every little step you took. It's the reason you can't redistribute, download and use Windows or OS X however you want but you can with Linux (so long as you abide by the fine print and don't charge for it).
 
damicatz said:
I can't believe people pay that kind of money for programming tools. Visual Studio is a complete ripoff and Visual Studio/.net encourage bad programming by hiding everything from the programmer. Every other platform either gives their programming tools away or charges a reasonable amount for them.
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Visual Studios is nice for the fact that I don't have to work on the background to deploy a quick application for the business. However, cost wise I am completely in agreement.

My primary issue issue though is in the change in license for the MSDN/TechNet.
 
siliconnerd said:
This is the real problem. It is rumored that Windows RT is going to cost ~$100 for OEMs (since it is bundled with Office). Hardware margins are pretty thin and when trying to build a $500 iPad competitor, a $100 license fee takes away 20% of your usable budget. Now Microsoft comes along building a product to compete with a product where they don't have to pay the $100 license fee. For the same retail cost, Microsoft can make a product that is substantially better. With Windows 8 moving into the content market with the Windows app store, Microsoft can even use the Xbox model of selling the hardware at a loss and making up with it in app sales. For an OEM, this is a very unlevel playing field and there is very little incentive to even try to compete.
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You know, I think you're on to something here. We should work to convince the OEMs that they shouldn't even consider Microsoft Surface. In fact, we should go as far as to recommend that they build iOS tablets instead, because... wait...

We can't build iOS tablets... Apple doesn't allow it. Nor do they allow third parties to build their PCs. In that case, we could try to do something with the blackberry tablet OS, but I'm pretty sure that's closed too and only available on Blackberry hardware. Same with WebOS -- HP wouldn't let you put that on whatever you wanted, but put that on their own devices.

Microsoft is in the business of making money. It's a good move for them.
 
It isn't just a price advantage. Its the inside track. Microsoft can debut hardware that's optimized for the OS ahead of everyone else.
 
pelo said:
Microsoft charges those OEMs more than it's going to charge itself, so why would OEMs bother? At least that's what Dell, HP, Acer and others have said. Microsoft's product will always be at an advantage because it's Microsoft's OS too. It would be like Apple allowing Asus to make an Apple tablet but them charging them for iOS.
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I'm going to have to side with the "tough shit, compete and deal with it" party because of how terrible 95% of Android tablets turned out. Microsoft made the first tablet a rather nice one. The balls in OEM's court now. Can't handle it? Maybe they should stick with making televisions and DVD players.
 
Demon10000 said:
You know, I think you're on to something here. We should work to convince the OEMs that they shouldn't even consider Microsoft Surface. In fact, we should go as far as to recommend that they build iOS tablets instead, because... wait...

We can't build iOS tablets... Apple doesn't allow it. Nor do they allow third parties to build their PCs. In that case, we could try to do something with the blackberry tablet OS, but I'm pretty sure that's closed too and only available on Blackberry hardware. Same with WebOS -- HP wouldn't let you put that on whatever you wanted, but put that on their own devices.

Microsoft is in the business of making money. It's a good move for them.
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There are plenty of other tablet OSes in the works or out that an OEM could build a tablet on besides Windows. The obvious one being Android, but there are several Linux based UIs that show potential including from Ubuntu and KDE. Also HP would allow other OEMS to build on WebOS. That OS is now open source.

The other option is just not to build a tablet. The cost to develop a tablet can be quite significant. If the tablet won't sell enough units to break even, it isn't worth doing. Trying to make your product look appealing against a competitor that fully controls the software, doesn't have to include the OS in it's BOM cost, and has the potential to make a significant amount of money from their built-in app store might not be worth doing.
 
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