Why the Surface tablet launch signals a bold new direction for Microsoft

15th Oct 2012 | 14:43

Why the Surface tablet launch signals a bold new direction for Microsoft

Redmond hopes hardware innovation will drive software success

26 October 2012 will be a landmark day for Microsoft which signals a fundamental shift in the company's strategy.

Yes, it's the day that Windows 8 will be released to the world, but more significantly it's also the rumoured launch day for Surface - a bold new hardware platform which is indicative of a broader philosophical rethink for the Windows creator.

Since the announcement of Surface, Microsoft has been in fighting mood, and its old rival Apple is the focus of this new found aggression. Shortly after revealing Surface, CEO Steve Ballmer went on the offensive, telling CRN "We are not going to leave any space uncovered to Apple... Not the consumer cloud. Not hardware-software innovation. We are not leaving any of that to Apple by itself. Not going to happen. Not on our watch."

In the context of Surface, there's a not-so-subtle message of intent in Ballmer's choice of words. Microsoft believes it is ready to take on Apple at its own game - hardware focused innovation.

Although Microsoft has launched hardware products in the past, it has always had a software-first philosophy. Bill Gates' original genius was to make a platform agnostic operating system and ensure every PC manufacturer used it, creating a global monopoly of Windows powered machines for Microsoft developed software to run on. This focus on software over hardware was the key to the company's massive success.

When Steve Jobs returned to Apple in the late 90s he pursued a contrary approach, focusing on hardware first instead of software. While Microsoft had built up an enormous platform monopoly with its ubiquitous Windows operating system, Apple leveraged hardware innovation and superior product design to entice people into a walled garden where software-hardware exclusivity ensured that everything just worked.

In other words, while Microsoft was ruling the world by being hardware agnostic, Apple overthrew it by being hardware religious.

Back in the game

This strategy not only allowed Apple to play itself back into the game with the iMac and iBook, but ultimately led it to crack open and dominate brand new markets with the iPod, iPhone and iPad.

Apple proved that a hardware-first philosophy is not only a viable strategy for competing in existing markets; it's also a devastating advantage when it comes to capturing new markets ahead of your rivals. Jobs summarised this approach at the end of his keynote speech at the Macworld Conference and Expo in January 2007:

"There's an old Wayne Gretzky quote that I love; 'I skate to where the puck is going to be, not where it has been.' And we've always tried to do that at Apple."

The upcoming launch of Microsoft Surface, a hardware platform which not only appears to match the design quality of Apple's iPad but also threatens to surpass it in terms of innovation, is arguably the first significant move by the Redmond giant to react to Apple's recent dominance. Perhaps Microsoft is now ready to fully recognise the role that hardware innovation can play in driving software success.

This doesn't mean that Microsoft is going to completely abandon its hardware agnostic mentality, of course it's not. However, it seems the company has now acknowledged the importance of pushing its Windows 8 platform on both the hardware and software fronts.

Setting the standards

Surface is designed to set a benchmark for Windows 8 tablets which other manufacturers must strive to live up to. Microsoft hopes this will deliver a one-two punch which will simultaneously appease the ferocious appetite for hardware innovation that Apple has stirred up in the modern consumer, whilst also cultivating a Windows 8 software ecosystem that works seamlessly across the expanding breadth of computing devices that users now own.

The implications of this are clear: Microsoft now believes it can be both hardware agnostic and hardware religious at the same time.

Microsoft Surface

Steve Ballmer may have Apple in his sights with this new philosophy, but that doesn't mean Microsoft is simply going to follow where Apple leads. Microsoft, like Apple, wants to skate to where the puck is going to be, not where it has been.

Microsoft was actually the first to pioneer the tablet form over a decade ago, but its hardware design was clunky and inelegant, like much of the physical output from the old, software-first Microsoft. So it was Apple who finally captured the potential of the tablet with the iPad. Steve Ballmer doesn't want to let this happen again.

Getting smarter

So Microsoft will take the fight to iPad with Surface, and possibly to the iPhone with an all new Microsoft smart phone if you believe the rumours. However, in order to get ahead it knows it must also lead the charge into new markets like smart TV and ensure that this time around its hardware innovation and design quality holds up against the arrival of Apple and others into those markets.

Thanks to the remarkable leak of a 2010 Microsoft roadmap document, we can now say with reasonable certainty that Microsoft will launch a smart TV box in 2013 under its Xbox gaming brand. It is reported to feature an always-on power state and dedicated TVR chipset so you can record TV while gaming or when you leave the house, gesture and voice control via an updated version of Microsoft's Kinect sensor, the ability to run apps concurrently with games and TV, and advanced streaming technology so you can serve all that entertainment out to your smart phone or tablet seamlessly.

The existing Xbox 360 already offers movie, TV and music services along with social apps like Facebook and Twitter, and Microsoft has been hiring talent from big broadcasters for some time. It's clear that the company views smart TV as a key battleground moving forward, and it's a battle Microsoft believes it's in a good position to win.

Sitting alongside Xbox president Don Mattrick at Mobilebeat 2012 in July, Kleiner Perkins partner Bing Gordon expressed his own confidence in Microsoft's smart TV strategy: "Google owns eyeballs. Apple owns ears and fingertips. With Xbox, Microsoft has a shot at owning the living room".

Of course Microsoft won't be alone in contesting this market. TV manufacturers are already offering smart sets and rival videogame firms like Sony and Nintendo are preparing to launch their own next generation systems which will include smart content and apps. And yes, Apple itself has long been rumoured to be lining up a smart TV product to replace Apple TV.

Apple TV

History has a way of repeating itself. Just as a new direction allowed Apple to come back at Microsoft with iBook and iMac, so too a new, more hardware-centric Microsoft is hoping to come back at Apple starting with Surface.

And just as Apple's strategy led it to crack open new markets with iPod, iPhone and iPad, so too Microsoft is hoping it can finally open up the smart TV market.

But can the house that built Bill Gates built have its cake and eat it, too? Can Microsoft become hardware religious while still making Windows 8 hardware agnostic? When Surface launches, we'll begin to find out.

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