This week has been some week for Microsoft partners. First, all of the OEMs who have faithfully followed Microsoft’s weaving way through operating systems towards the Promised Land of Windows 8 had their collective noses rubbed into the dirt when Steve Ballmer introduced Microsoft Surface. Dreams of a happy 2012 holiday season selling new PCs and tablets running Windows 8 evaporated for HP, Dell, Lenovo, Acer, Asus, Sony, and all the other companies who create hardware for the Microsoft O/S. The effect can be seen in the fall in stock prices as analysts rushed to slash predictions for revenues and shipments.
Next up we had the announcement that Windows Phone 8 won’t support current phones that run Windows Phone 7.5. The bone that these phones will receive an interim update (Windows Phone 7.8) in the near future wasn’t enough to make those who had invested in brand-new Windows Phones very happy. But the biggest effect has been on Nokia, which has seen analysts at Nomura cut revenue predictions from €10.9 billion to €6.0 billion for 2013. Windows Phone unit sales for Nokia will decline to 34 million, 41% lower than previously predicted. The reason: current phones can’t be upgraded, leading to an immediate loss in market attractiveness. The rumors that Microsoft is developing its own Windows Phone hardware heaps further pain on top of Nokia, a proud company that must surely be ruing its decision to go “all-in” on Windows Phone last year.
There hasn’t been much in terms of formal responses or adjusted plans from partners, probably because it will take time to digest the news and figure out just what Microsoft’s massive shift in hardware strategy means. Acer’s founder, Stan Shih, is reported that Microsoft isn’t really serious about tablets and might just be using Surface as a way to force the OEMs to up their game to be more competitive with Apple. This could be true. After all, so far Microsoft has only announced their intention to sell Surface devices through Microsoft Store and online. Nice as the Microsoft Stores are (the one in Palo Alto, CA is eerily Apple-like and very well laid-out), they hardly have worldwide reach. The closest one to me is probably some 4,000 miles away. And Microsoft isn’t exactly set up yet to sell and support tons of devices online. That might be changing though as rolling out an online sales capability is much easier than creating a network of physical stores and Microsoft could well be doing this behind the scenes in secret, much as they kept the details of Surface very close to their chest until they were ready to talk about it. Then again, there’s no real detail yet of when Surface devices will be available apart from “soon after Windows 8”. That doesn’t sound like Microsoft will make the major holiday selling season later this year.
In the meantime, the OEMs will be reviewing every piece of intelligence they can gather about the Surface devices to figure out what they can’t and cannot replicate or improve on in their own Windows 8 tablets. This article has a nice list of some of the innovative features that could be considered, if not protected by patent. Hopefully the exercise will cause the OEMs to break out of the rut that PC laptops (in particular) have fallen into when compared to what’s happening elsewhere. I like the HP Envy Spectre, but would prefer to be able to buy it with a larger screen and bigger SSD, which might make it a little more competitive against the likes of the new Apple MacBook Pro. Apart from the Spectre, I haven’t seen a Windows laptop that convinced me to spend any money in the last few years.
The OEMs are somewhat to blame for the sad state of innovation in the Windows laptop space. A little less attention to seeking big chunks of cash for installing unwanted software on new PCs and more focus on creating great hardware would be nice. Then again, Microsoft shares a lot of the blame too after the Vista debacle. Windows 7 is very good though and Windows 8 shows promise, if you can get your head around some of the UI design decisions that Microsoft has made to accommodate tablets.
When working at HP, I was often told (mostly by colleagues who preferred Linux or UNIX) that I partnered with the devil when engaged with Microsoft. After this week, some of their bruised and battered partners might just conclude that my ex-colleagues were right. I guess time will tell.
Follow Tony @12Knocksinna