Categories

Switcher

Nokia’s Windows (Smart)Phone performance was drowned out last week by Microsoft’s big announcement of the Surface inventory write-off. They are pieces of the same puzzle however.

First, a look at Nokia.

There were 7.4 million Lumia phones sold in Q2 with 0.5 million sold in the US. Although Windows Phones grew sequentially from 5.6 million the previous quarter, and up from 4.0 million in the same quarter last year, total smartphones are down y/y and nearly flat over the last four quarters. This is of course because Symbian phones have finally disappeared from volume shipments. The following graph shows the history of Nokia’s smartphone shipments.

Although it’s tempting to compare Lumia to iPhone (given the premium positioning in the US) the average price of €157 or $206 shows that Lumia is more adequately compared to Android. This is about a third of what Apple gets for its iPhones.

That’s not necessarily a bad thing. Nokia’s always had a knack for mass-market phones and certainly that was one reason Microsoft was attracted to them. Presumably, the promise of the relationship was to insert Windows Phone into the Nokia development and distribution pipeline, squeezing out costs and filling up channels.

Screen Shot 2013-07-22 at 7-22-3.24.21 PMThe problem for the brand has been that although priced at Android levels, volumes are nowhere near and the gap is widening. At current activation rates, Android is selling 16.5x faster than Windows Phone (assuming 90% of Windows Phones are Lumia).

So Nokia’s problems become Microsoft’s problems. As bad as Nokia seems to be doing with Lumia, it’s doing a lot better than Microsoft with hardware. Here the story of the great Surface write-off should give pause. Microsoft announced that it would write off $900 million of Surface.  In terms of write-offs this is pretty significant. Compare it with the debacle of the PlayBook write-off when BlackBerry (then known as RIM) wrote off $485 million for tablets it could not sell. Or with Microsoft’s own write-off for the Kin which took $240 million out of its shareholder’s pockets. The only charge for hardware that I found higher was Microsoft’s own Xbox 360 which cost it $1 billion for the “red ring of death”.

But this is not an unusual situation at Microsoft. Besides Xbox, Kin and Surface, Microsoft also declared victory in (read: shut down) SPOT watches, the Smart Display, Tablet PCs and the Zune. This is why when I heard about the Surface I asked who would be Microsoft’s Tim Cook.

By the way, $900 million write-off could amount to over 3 million devices, more if Microsoft is assuming some residual value in the inventory. Misjudging demand to such a degree that more units are disposed of than sold implies a basic failure of understanding of hardware businesses.

Which brings up the question of what Microsoft will do. They are likely to double down on hardware (also signaled by their re-org) simply because in a device world (read: post-PC) the economics of licensing Windows and Office are evaporating. The price points of EULAs simply don’t hold and there are good enough alternatives in use by the hundreds of millions of iOS and Android devices out there already. By withholding Office from iOS and Android, Microsoft has shown a billion people that they can live without it and they already knew they could live without Windows.

So rather than fight, Microsoft chose to switch. Switching from software to hardware, however, is proving very hard. I’m sure quite a bit harder than management  thought.

  • Jürgen Pöschel

    “The only charge for hardware that I found higher was Microsoft’s own Xbox 360 which cost it $1 billion for the “red ring of death”.”

    Well, I don’t have the numbers but I think Apple had a similar write down on inventory of macs in the late 90s

    • Kizedek

      Be that as it may, what this goes to show is that:

      1) is that Apple (vis-a-vis the discussion on HighDensity #2) has actually been well run as *as a business* for 15 years (products, supply chain, marketing and retail).

      2) despite its experience *in business*, it would seem MS has another whole business yet to learn: hardware

      I guess we could paraphrase: “these software guys [who happily benefited from a monopoly rather than hard work] aren’t just going to walk into the hardware business”.

      What’s interesting is that people just assume MS can walk into hardware; that anyone can copy Apple (because there is supposedly no substance there); or that for Apple to get where it is today, it didn’t have to go through a near failure in ’97 and build a great hardware business with the iPod — or that Apple didn’t make a start with ARM technology and multiple processor families 30 years ago. Never mind integration between software and hardware (apparently that’s just RDF and doesn’t really exist).

      It will be curious to see how the restructuring of MS takes shape or evolves. When two companies launch off into a new era of technology, both more or less starting in a garage at more or less the same time, then signing a deal with a company like IBM makes a real difference to history…

      Now, however, it will be interesting to see how big a deal “PostPC” really is: how much can MS play on their position in software, and how much must they really redefine themselves in some very real ways (corporately and culturally); how much will their experience aid them in this era, vs the experience that Apple has gained in becoming a much different company over the last 20 years? Because, if Apple had a similar write-off in the late 90′s, we know that Apple immediately became a very different company and has built on it ever since.

      • handleym

        I’d put it even more simply.
        There are two things wrong with MS:
        - an internal culture of mutual sabotage rather than assistance (driven by “stacking”, how profits are allocated, and how individuals are promoted)
        - an inability to distinguish between Windows as a brand, Windows as a UI, and MS as a company (which leads to an insistence on putting the Windows UI everywhere, even when it makes no sense)

        In spite of Steve’s grand reshuffling, I see no evidence that either of these has REALLY changed.

      • fivetonsflax

        I don’t know why you’d expect to see any effects from a reorganization announced just a few days ago. Even in the best case, these things take time.

      • Kizedek

        Well, in the rambling multi-page memo, we could have seen some more focused points that provided a little reassurance that these kinds of concerns and issues were part of the whole rah-rah-re-imagining of MS.

        Steve could have taken one paragraph or one sentence to scrap the team review system (that would address the first of handleym’s points and put the company culturally on the path to a collaborative, functional organization).

        And when he was talking about the “one company, one vision, one message” kind of stuff, he could have said, “and in order to better serve our customers functionally as one company with one vision, now is therefore the time to focus our products and give them their own identities and strategic roles in fulfilling our one vision, which is _____.”

        Instead, he let the confusion around the ambiguity of Windows continue, with its various incarnations and intended or unintended customers.

      • JohnDoey

        The reorganization that was just announced was the 4th or 5th in the last 10 years, and they have been making their own ARM hardware for almost 10 years also.

        Announcing yet another reorg doesn’t make all your mistakes go away.

    • handleym

      Apple reported a loss of $700 million in Q2 1996. The exact write down value is not given, and only that it is for “bloated inventory” which could refer to raw parts as well as Macs (and printers and whatever else they were making back then, like QuickTake, that 1st gen digital camera.)

      http://online.wsj.com/article/SB868490956869493000.html

    • JohnDoey

      But that was the non-Jobs Apple which nobody argues was not going out of business without a miracle reinvention. That comparison doesn’t make Microsoft’s write-down look routine, it makes it look much, much worse.

      • John Kneeland

        You know what else is a non-Jobs Apple? Apple since 2011.

  • echotoall

    Curious to see how google fares as well. They can produce interesting hardware, but for a niche. (Even then, they had issues with nexus 4 distribution.) Microsoft proved its better to underestimate hardware demand. But if the Moto X, or “your-design” strategy doesnt work, goog may have a far larger write-down coming.

    • obarthelemy

      poor Google are walking a tightrope. They can’t give the Nexus devices to Moto if they don’t want an OEM revolt, yet if they want to fix some of Android’s issues (disparity of UIs and lack of updates) they pretty much *have* to have Moto make Nexus devices. I’m guessing the new “Nexus version” program (Galaxy S4, HTC One, probably others) is a way to disarm the issue by offering OEMs the ability to do what Moto will be doing: bare ‘droid, timely updates.

  • obarthelemy

    Hey, you forgot HP’s $1b Touchpad joke.

    As for WinPhone being “priced at Android level”, it really depends on what Android you’re talking about: Android is not solely low-end as Nokia/Winphone seem to be. I know WinPhone is supposed to be resource-efficient, but it suffers from a very narrow range of products. No stylus, I’m not even sure keyboard models are still around, no phablet, no midget,… Winphone seems restricted to cheap and basic (cameraphones notwithstanding) the same way Apple is restricted to luxury. Android straddles both, and more.

    Hardware notwithstanding, the software is bad, too. I’ve played around with one device, it seems to combine the worst of everything (no skins, bad notifications, very strict hardware requirements, undiscoverable interface, confusing interface…). The veneer of glamour afforded by Live Tiles is very thin, because the OS is buggy, Apps are buggy, Live Tiles are often bad when not alltogether missing… This applies to tablets too, and even Metro on the desktop. Windows 8 in all its incarnations is just bad: buggy, incomplete, badly designed.

    I’m sure MS will iterate for a few years. Whether this ends up a Zune or an xbox is still very much in the air. Going into hardware will probably be a requirement, because I’m not sure Nokia can hang around while MS try to clean up their act, nor that any other OEM cares at all.

    • asp

      Priced at in terms of ASP, obvious in context given the iPhone number. Some significantly more expensive, but the majority cheap.

    • Walt French

      You raise the interesting question of WP’s trajectory: XBox or Zune?

      Part of the Zune problem was that to most appearances, the Zune was a perfectly good music player, but the (ex-post-facto, extremely real) risk of orphaning, plus all the concerns about breadth of ecosystem, made the choice risky for little benefit. Microsoft entered after the failure of PlaysForSure (which it knifed in the cradle), and Apple had a commanding market share.

      In contrast, gamers got passionate about specific features of game boxes, and Microsoft managed to stay fairly well up on the power curve. A three-horse race, with costs hidden to some extent — as the games paid back a device subsidy.

      Lock-in would seem to be similar.

      I’m sure Microsoft thinks the XBox model can be closer to WP. But they’ve certainly entered a market with developer burn-out — many will choose to watch WP go by — and the ecosystem is further damaged by disparate development tools versus their (also, awful-selling) tablets. And the standout features are, like Zune, few and far between. Microsoft failed to make much of a dent by its flashy speed contests, because, unlike gamers, phone buyers want an easy learning curve much more than bragging rights over a few nanoseconds of results to an expert.

      Gassée seems to have the answer: merge WP and Surface immediately. I would add, price for zero margin—free tablet with phone contract—and/or figure some disruptive way to justify buying into the market with the damn things.

      • Tatil_S

        Zune the device may have been pretty good, but the companion Zune software on PC, the counterpart to iTunes, was not. I downloaded the version 3.0. It was not a copy of iTunes. It had a different, cleaner UI, so kudos to MS for originality, but the overall quality had more of a beta feel. Buggy, slightly clunky, I guess not so different than the other consumer grade MS products. I thought MS would have fixed those by version 3, but I was disappointed by MS yet again.

      • JohnDoey

        The Zune device was not good. It got some halfway decent reviews, but nobody bought it. There was never any compelling reason to buy it. It’s as big a failure as a product can be. They spent millions marketing it and sold nothing. Call it what it is.

      • Nangka

        Brown

      • JohnDoey

        Zune, obviously. Windows Phone is Zune Phone. We’re talking about pocket-sized ARM mobiles with touch interface, both of which are clones of Apple products meant to encroach on established Apple markets.

        Xbox is an entirely different animal, a big desktop PC box for the living room and niche gamer market. Part of Xbox’ success has been Sony’s failure. And Xbox has not really made any money.

      • destroyed

        By all estimates, the XBox has only destroyed money for Microsoft. I would hope they’re aiming a little higher than that.

    • JohnDoey

      Android is strictly low-end. A very small number are dressed up and pretend to be high end but they are not. You can’t have your app platform totally open to viruses and be high-end. You can’t have no color accuracy and a pentile screen and be high end. Especially not when the high end is defined by iPhone at 3x the price.

      • obarthelemy

        or not. You can’t have a tiny screen and be high end. You can’t have no SD card and be high end. You can’t have a non-Full-HD screen and be high end. You can’t be locked in to a censored App Store and be high end. You can’t have partial USB, BT, LAN, … stacks and be high end. You can’t have no FM nor NFC radio and be high end.

        Also, pentile and non-playstore markets are both choices offered to customer,s and are by no means mandatory. Weird concept, huh ?

        And finally, price, nor casing, do not make something “high-end”. Sorry.

      • Kizedek

        Well, apparently you can, because Apple is actually selling iPads.

        Once again, you are talking about things that OEMs are adding in order to one-up the competition in an effort to sell tablets. These OEMs still don’t have real solutions in place; they still don’t know the first thing about hardware and software integration.

        Sure all those things you list point to “high-end” (FM radio? Again? Come on, there are apps for that)… “high-end” in the sense of a crotch-dragging motor-head’s tricked-out car with airbrushing, spoilers, lowered-suspension, allow rims, bling etc. But the first bump you hit, or the first time you need to do anything practical like go to the grocery store or pick up the kids, then you realize just how impractical and inappropriate it is.

      • obarthelemy

        Well, it’s about jobs to be done. One of my phone’s main jobs is to entertain me, and when walking/traveling in the back country, FM radio quickly becomes the only live connection, nicely supplementing the hundreds of songs and podcasts I have on my 50€ 64GB SD card. Then again, I could go “luxury” and make do with no FM and no SD, indeed. But get shiny.

        As for the bling part, and the fragile part, you’ll have to excuse me while I guffaw at your own goal.

      • Kizedek

        I think you are confused about the “shiny” part. It’s bling when you put a gold badge on a fibre-glass body. It’s not bling when you make a titanium car and don’t paint it (but it is shiny, I’ll give you that).

        Things like the MS click-keyboard are fragile bling (reminds me of a spoiler, actually). I think FM tuners come under that, too. I can’t think of many Apple examples since Apple is about as utilitarian as it gets.

    • Johnny

      We get it. You love Android and hate MS and Apple. Move along to your favorite business focused Android website, if one exists?

  • sscutchen

    “By withholding Office from iOS and Android, Microsoft has shown a billion people that they can live without it”

    This is a very interesting perspective. One might have thought MS approached the market in a viable way. They had no need to do a grass roots product. They had an infrastructure baseline with Windows and Office which could be leveraged. Like MacOS to iOS, they just needed to find a way to convert it.

    Instead of sharing subsystems between similar but dedicated OSs, MS decided to attempt to make the two the same from a UI perspective, Was this the flaw? That a mobile OS designed to mimic the PC must be so resource intensive that it becomes non-viable? That UIs could be mimiced by software operability, use of Windows apps on ARM architecture, could not? One can argue that MS also corrupted the PC side, what with the conversion to the finger-operable ribbon UI in Office. What a horrible, non-intuitive UI.

    Was this common UI decision the fatal flaw? Or has the mobile universe simply gotten to the point to where the two viable ecosystems have established an unassailable duopoly? Have we reached a point where a third entry is impossible? Where any challenge to iOS and Android must do so via disruption rather than engagement?

    • http://www.isophist.com/ Emilio Orione

      Microsoft missed use cases.

      Surface can’t be used only touch so it can’t be used sitting on a couch and can’t be used only mouse and keyboard on a desk.

      There is not an optimal usage, only suboptimal, confusing, duplicated ways of doing things.
      They also missed the execution, all the user interface principles of making an easy to use operating system have been failed, but before that they missed the device goal and that’s an error that no execution can fix.

      • JohnDoey

        That is a complete failure of design. They think design is making the product out of magnesium and caring what the corner radius is, but good design is creating solutions for actual users. If Surface were thicker and uglier but actually worked — no keyboard/mouse required, powerful touch office apps — then it would sell better.

        Notice Surface is designed for a desk. It is a 1980′s use case computer. You have a mouse and Office and you might as well have an Ethernet jack under the desk. The key difference today from the 1980′s is users are bathed in wireless Internet 24/7. Not just at a desk, but also couch, hallway, airport, restaurant, train, plane, everywhere. iPad is the missing link between those Internet-irradiated users and them using the Internet. iPad is like a surfboard that lets you surf the wireless Internet around you, all day long. To design an iPad competitor that is made for a desk is to just supremely not get it. Especially when there are so few desks that don’t already have an Intel-based PC on them.

      • obarthelemy

        I actually think it’s a smart differentiation. They’re not aping the iPad, they’re trying to make a Pro tablet, one which will be primarily used as a laptop, with kb and mouse, but can also work standalone.

        The issue is, as a tablet, anything is better (iOS or Android), and as a laptop, any laptop is better. And for the price of one surface, you can actually get both.

      • Kizedek

        That’s a handy assertion, and what MS wants us to believe.

        Unfortunately, rather than a “smart differentiation”, we suspect they took more of a myopic and lazy approach:

        A) they have been working on such devices for 20 years without success, and yet insist that this is what everyone wants.

        B) they are adamant about “Windows Everywhere”, whatever the cost, even if that means compromising it in the worst ways and bizarrely claiming that it is “without compromise”.

        And these are just philosophical mistakes. Their legacy technologies, design by committee, lack of hardware expertise and poor execution are something else again.

      • obarthelemy

        Well, for the first time they’re changing the UI wholesale, instead of trying to tweak it for touch. They *were/ right about tablets and smartphones being the future, though they were very wrong about how to go about making good product.

        I don’t think the “same UI everywhere” concept is basically wrong. It’s wrong with the old Desktop UI, and for Modern as it is now, but Modern could be tweaked to become good: just bring back buttons, and add hints about hotspots/scrolling/menus, at least as an training wheels for beginners. Let’s face it: all desktop UIs, be it from MS or Apple, now look antiquated and cumbersome.

        The Modern approach is anything but myopic and lazy: it’s a lot of work (which they didn’t all do), and very forward-looking, as converging mobile and desktop, though more complicated, can turn out to be hugely useful.

        Right now, I think Android is a better Desktop OS than Metro, and iOS doesn’t even try. And both iOS and Android are better as Touch OSes. But it’s not entirely impossible that Metro could become good in both use cases. I’m bemoaning Google not goind after Desktop more aggressively, and betting than in 2-5 years, Apple will “magically” start pushing desktop/laptop iOS devices.

      • Kizedek

        “I’m bemoaning Google not goind after Desktop more aggressively, and betting than in 2-5 years, Apple will “magically” start pushing desktop/laptop iOS devices.”

        Ah, and at that point you would say that Apple has “copied” Google, and possibly MS?

        What if the “Modern Approach” is not so “forward-thinking” and “hugely useful” (to use your words), as quite a pedestrian vision of “the future”. For MS (or Google) to push touch- and mouse-based computing, *together*, in one device seems a bit passé. It has been done. MS couldn’t sell it. What this is, is an attempt to claw back the PostPC era. That’s quite lazy and myopic, and not at all “forward thinking” nor “hugely useful”.

        Nobody wants Gorilla Arms. Nobody wants to switch in and out of operating paradigms and modes during tasks. Nobody wants to put down their mouse and reach out and point at the screen instead; it’s wasted effort. Apple discounted it and introduced gestures on track pads instead. I have used a track pad with gestures with my desktop for a couple of years; I find it “hugely useful” and won’t go back to a mouse.

        So, whatever Apple starts “pushing” as “magical” in the future, I don’t think it will be to start clicking the same things on the same apps on the same device with both finger and mouse/trackpad, with mixed and unexpected results. That boat has sailed. We are past that.

        At the moment, Google has some kind of Java. MS has three things: a legacy desktop OS, a mobile OS, and a UI that is supposed to pull them together. Apple has a highly adaptable, modular OS that has given us two different paradigms.

        Apple will start with its same modular core OS and give us new paradigms or new combinations of paradigms: a UI we can talk to; a UI we can gesture at; a UI we can touch, talk to and gesture at, all quite naturally (Magically?). And it will be a lot of work; but unlike with MS or Google, it won’t be work “which they didn’t all do”.

        It may be that gestures-in-the-air will complement both mouse/trackpad-based computing and Touch computing, bringing cameras into play on both desktops and mobile devices; just as Voice complements touch now. So, there will be combinations of input paradigms, both new and old.

        Whatever the case, “convergence” is less of a concern than “emergence” — the emergence of new and different paradigms that aren’t awkward, lame attempts to convert one thing into another or bolt some extras on; each suited to a purpose or type of device. You can buy a hovercraft or an amphibious vehicle; and it might be “hugely useful” to some of the people some of the time for some particular purpose; but the fact is, neither of those two things makes either a good boat or road vehicle. It’s an obvious thing, but MS hasn’t accepted that yet. Yes, they did a lot of work, but its junkyard tinkering work, not re-imagining work.

      • obarthelemy

        I don’t think the dichotomy between tactile and keyboard+mouse is so strong as to require Yet Another Shell. I’ve got a non-touch Android desktop, and it works well enough with a regular (2 buttons+wheel) mouse, and recent keyboard with volume, home, menu and on/off keys. What is missing is, from the touch side multitouch gestures (only zoom/unzoom is supported); and from the keyboard side, CUA- style shortcuts. The multitouch issue can solved with a trackpad, or one of the new mice that include a touch top surface. The CUA issue can be solved be shouting loudly that we want our alt-ctrl-cokebottle. Frankly, even right now, neither issue is very grave… I’m not sure I’ve ever used multitouch for anything but zooming, and I can live without ctrl-S.

    • handleym

      “Was this common UI decision the fatal flaw?”
      Yes, yes and yes.

      This has been another episode of “Simple Answers to Complex Questions”.

    • rational2

      Desktop and notebook users aren’t in it for the fun. They just want something to get their job done and move on. Microsoft should have recognized it and left the Windows 8 UI relatively untouched (compared to Windows 7) and focused their UI re-imagining efforts on the phone and tablet.

      Microsoft felt a need to think of desktops, notebooks, tablets, and phones as a continuum with the same look and feel, but Apple and Google had already demonstrated that there is a cutoff. Listen to users, not to your internal strategists.

      • obarthelemy

        Especially since Win8′s Metro UI is so bad that it’s actually turning people off Windows phones and tablets.

      • Walt French

        Long ago I read — maybe, in the book, Taking Charge of Change? — that a certain percentage of any population, say 20%, will follow some new mantra/paradigm, purely from the love of change, innovation, variety. 70% will need to be shown the benefits, but will come along on well-designed changes, but 10% will irredeemably refuse to move from the tried-and-true, no matter what.

        In such a large camp as “Windows users,” even 10% can be a huge number, and the 10% will be vocal.

        After trying to adjust for this known perception bias (I’d already put myself in the category of “willing, but dissatisfied”), my tiny experience with Win8 is that it is fine, at least in concept, for smartphones and should be OK for simplified tablet users, although there were rough edges — things that ought to have rotated into landscape, but didn’t, for example.

        But for the power user who Microsoft has cultivated over the years, it is a disaster. We need a consistent M.O. for our operations, not a choice of menu, ribbon bar, keyboard, …, that keeps changing according to whatever the software itself seems to think you’ll most want. These users are up in arms because Microsoft tried to cram an unsuitable interface down users’ throats.

        Apple’s bifurcation of OSX and iOS was a surprising move from the perspective of the company that made public statements about the cost, even impossibility of maintaining multiple OS’s. But now it looks like Apple, having learned users’ needs and preferences over a wider range of use cases and device sizes, will merge them as they see a way—it’s still costly to maintain different OSs, and it’s confusing for users that want to do similar things on an iPad and Mac.

        Microsoft’s problem was that it thought the use cases were so similar that they could just put out a one-size-fits-all solution. This is especially damnable from a design standpoint, because it put the business convenience ahead of a good understanding of users’ needs.

      • obarthelemy

        I originally thought that *not* bifurcating the OS, not even bifurcating the UI, was a ballsy and smart move for MS. Having the desktop shell for Legacy, and Metro for new apps, could have been the best of both worlds, or at least a top-end touch interface and a passable retrofit of Touch to the desktop to tide us over during the transition.

        I think the issue is not so much with the concept: since Metro is all new, it can be as good as the iOS shell, the various Android shells… and Legacy can be handled via keyboard+mouse, or even by bad touch in a pinch (do I get extra credit for that one ?). Tech heads can use any number of utilities that switch Win8′s UI back to a Win7 look-alike on Wintel PCs (I’m using Classic Shell with great success).

        The issue is with execution. Leaving aside the lack of 3rd party apps, the OS itself is flaky (install bombed on me twice in Metro), features are missing, and MS haven’t eaten their own dog food and metro-ized much of their tools (arguably part of the OS: Notepad, Explorer, Control Panel…) nor apps (Skype for Metro doesn’t work, Office for Metro doesn’t exist, IE for Metro has a weird UI…), and the new MS metro apps are mostly unusable. Even Live Tiles, one of the highlighted features, are so bad that I could only keep 3 out of 12+ tiles: useful tiles are not there, and many tilesjust don’t work (either technically, or ergonomically). It’s kind of puzzling that MS dropped the ball that hard… Maybe panic has something to do with it, maybe they’ll fix it eventually, but darn, they know how to make a bad first impression.

        I think they also messed up Metro a bit. After decades training users to click on buttons and menus, altogether doing away with those is puzzling… for industry watchers as well as users. There’s a darn menu key on all keyboards still ! I understand that menus are not very touch-friendly, but buttons, not so much. Also, as with iOS and Android, there are no hints when something is scrollable, compounded by the fact that scrolling is done in any random direction, depending on which app you’re in.

        As it is, Metro on the desktop, which they’re forcing on everyone, is so bad that it’s actually turning people off WinPhone and Surfaces. They’re pissing off the 10% (who don’t like change at all, Windows w/o menus icons and buttons is not “their” Windows), the 70% (who want something better, not something worse) and the 20% (who try it, find it very lacking, and move on).

        I think it illustrates how Apple did contribute to IT: Win8 makes it very obvious that no exec with yelling/veto/chair-throwing privileges ever sat down to use it, or that if they did, they didn’t care.

      • JohnDoey

        They designed Windows 8 for what they saw as their own needs. They should have designed it to meet their user’s needs. Then users would find it valuable. As it is, Metro is a Microsoft marketing brochure.

    • JohnDoey

      Finding a way to convert [Windows Office to tablet Office]” is easier said than done.

      iOS from the beginning was a mobile Mac OS X with mobile Mac OS X apps. Porting Keynote from Mac to iPad was straightforward because every part of the iPad was designed to make that straightforward. Everything Microsoft did on mobile before Windows 8 was baby software. And the Metro apps are still baby software, even on the NT core of Windows 8. And to top it all off, Microsoft’s Office division looked down their noses at mobile and did not cooperate.

      So you really hit on a key advantage of iPad. It’s designed to replace the Mac entirely, to run your Mac apps like Safari, Mail, Keynote, Pages, iMovie, GarageBand. Microsoft’s strategy on mobile is PC accessories — some widgets you can use while away from your “real” PC. It’s not just marketing — the whole infrastructure is different, and infrastructure takes years.

  • r.d

    $900 Million / $150 = 6 million devices.
    price reduction is $150.

    Microsoft will try to make an 8 inch RT device
    because they have reduced the price by that much.
    They are assuming that Apple won’t reduce the mini price
    any further. So one inventory draws down or they dump
    them to Eduction which they are selling for $200.
    And gave away 10,000 as well.

    really if Microsoft wants premium price for their hardware
    they shouldn’t be advertise the price reduction. That is poison
    in the mind of consumer. consumer will just wait for the price
    reduction again.

    • JohnDoey

      That is what happened with Zune. I remember one Zune intro where they went on and on about how they were $40 cheaper than iPod for the same storage and I thought “still not worth it,” and then a month later Apple introduced a new line of iPods that were all $50 cheaper so that Zune was now $10 more expensive.

      Microsoft has the disadvantage that they are following Apple, playing Apple’s game, therefore always late.

  • Walt French

    “Switching from software to hardware, however, is proving very hard. I’m sure quite a bit harder than management thought.”

    The complaints of obarthelemy notwithstanding, I’ll guess that there were two key parameters in setting the number of devices produced:

    1. the belief that Office and/or the Microsoft brand was a disruptive change to the tablet marketplace, and
    2. the belief that getting a foothold in the mobile space was much more important than immediate profits.

    The first derives from what I think is a stunning misunderstanding of the Job To Be Done for mobile. I believe that if Office were available for Android & iOS a year ago at $19.95 — not an unreasonable price vis-à-vis Apple’s much less feature-laden iWork suite — there would be a distinct lack of sales, likely below the modest units that Apple racks up. I have essentially NEVER felt the desire to fire up some of my more intricate spreadsheets on my iPhone and if a mobile worker DOES need to update significant amounts of corporate info systems, they’ll want either a dedicated app to capture/analyze the data, or a full-bore laptop. I’ve shifted from believing that it was the lack of availability that taught us to get along without Office; it’s that those of who NEED Office have a working copy of it just a laptop or desktop away, versus some horribly cramped, anti-ergonomic version… and most of us don’t even do anything on the go that comes close to using it.

    The second premise might have been sufficient to have driven the Nokia quasi-purchase, and maybe would’ve been important in the Surface over-ordering. Android has utterly disrupted the licensed OS business. BlackBerry couldn’t sell theirs for much of anything (it’s too incomplete) and ditto for Microsoft. (Seems that their deals with both Samsung and HTC have come to almost exactly zero.) I think Microsoft made a concerted effort to produce a solid, capable and attractive product in both businesses—quibbling aside, what feature could Microsoft have included to make them more attractive? *—but couldn’t create the ecosystem/network effects of apps, accessories and media, nor the buzz of something paradigm-shifting.

    So the outcomes charted here are expensive, to be sure. But I think once Microsoft got to 2010 without a response to the iPhone, and to 2012 without a response to the iPad, their game-theory payoff matrix was destined to look pretty ugly. Hardware is a business that you don’t just learn overnight, but the problems seem to originate much earlier and the hardware failures are just proxies for the collapse of hopes for a consumer/mobile software business.

    * yes, the answer is easy: a greatly reduced price could have gotten some enthusiasm going, although it looks a bit late to say, “we’re practically giving them away, so you’ll get to know them!” Because competitors are virtually giving away their phones.

    • Tatil_S

      If MS is lucky, tablet and smartphone users share the same sentiment that they don’t need to do an office suite on their mobile devices. Otherwise, MS is selling an Office suite that does not work on two thirds of computers being purchased. IT departments may get asked to find a solution that works on a wider range of devices. Fortunately for MS, nobody else has brought a revolutionary office suite that is particularly optimized for touch based OS. We are still expecting to see something that has bigger buttons and scrolls as quickly as the ones on a laptop despite the slower CPU and limited RAM, rather than something that was designed to be touch based from the ground up.

      • JohnDoey

        Keynote, Pages, and Numbers already work on everything:

        - iPads
        - iPhones
        - Macs
        - Chrome OS
        - Windows PC’s with Chrome browser
        - Windows PC’s with IE browser
        - Linux PC’s with Chrome browser

        I’ve seen many users move from MS Office to Keynote, Pages, and Numbers and 100% were happier and made better work output. They were thrilled, actually. The Apple tools are what most people want from office tools.

        If your company has everybody in iPhones, iPads, and Windows PC’s, you would have to look at standardizing on Keynote, Pages, Numbers at this point. Because you pay $10 for the iPhone/iPad version and it runs on your Windows PC for free, and it saves you time and effort and makes better work output.

      • aftoy

        Tell us how to run Pages, Numbers and Keynote on a Win8 PC. Are they not for Mac only until they release iCloud version of iWork, I notice it is in beta right now and some users were invited to try the iCloud versions.

      • http://www.noisetech-software.com/Home.html Steven Noyes
      • obarthelemy

        You need stuff that can run off-line, for laptops while in transit.

    • obarthelemy

      The “nobody wants to use Office on such a cramped anti-ergonomic environment’ applies to my Netbook too. Yet I’m still carrying it because sometimes you *need* Office in a pinch. If I could have Office on my Tablet, however painful to use, I’d look into how to get my netbook’s 1TB HDD w/o taking my netbook, and then I’d get rid of the netbook, probably. Remoting (for Office) and 4-hr Wifi HDs don’t count.

      Another issue with not having Office on Mobile is that it kills the Network Effect. Once internal devs have to create apps to feed/consult/update the company’s Information System, why bother with Office ? Especially if the apps are developed in multiplatform languages ?

    • Kizedek

      “I have essentially NEVER felt the desire to fire up some of my more intricate spreadsheets on my iPhone…”

      iPhone or iPad, I think you are right about “intricate spreadsheets” on mobile devices. Numbers remains the one iWork app I haven’t purchased for iOS.

      “I’ve shifted from believing that it was the lack of availability that taught us to get along without Office; it’s that those of who NEED Office have a working copy of it just a laptop or desktop away, versus some horribly cramped, anti-ergonomic version… and most of us don’t even do anything on the go that comes close to using it.”

      You are correct about this too… there are those of us who found we don’t really NEED Office, even on the desktop; so, we certainly don’t need it on a mobile device instead.

      However, I do use Pages and Keynote on an iPad quite happily, and I don’t find the experience particularly cramped or anti-ergonomic — and the reason is this: Apple, and pretty much only Apple, insisted on a 4:3 ratio for its iPad screens. That means that in portrait orientation, Pages enjoys a true “page” ratio; and in landscape orientation, there is enough depth to comfortably use the soft keyboard with both apps and still see something on the screen.

      That MS didn’t also insist on this screen ratio is something I really don’t understand. We have been debating how MS is confusing itself by vacillating between consumer and enterprise targets. Perhaps that should at least have been an obvious differentiator between Surface RT and Pro (widescreen for RT, but 4:3 for Pro). But if MS really expected Office to be the USP and draw of both Surface RT and Pro, and since MS has always criticized the iPad as a media consumption device… then why the heck did they jump on the media consumption bandwagon and give the Surface a wide-screen format? It is pretty much unusable for anything other than watching videos.

      To answer my own question, I guess you are expected to get the 119-dollar keyboard and not use a soft keyboard (too narrow in portrait, not enough depth in landscape). Though it also sounds like their touch technology and integration with the Office UI is pretty half-baked anyway, so that would be another reason to have the hard keyboard.

      • JohnDoey

        For me, Numbers on iPad was the first spreadsheet app I ever mastered and the only one I have used voluntarily. But I’m the furthest thing from an accountant. But so are most people.

      • Kizedek

        Then I might give it a go, thanks.

    • JohnDoey

      “Much less feature-laden” is an advantage of Apple’s apps, especially on mobile.

      $10 office apps for a mobile touch PC is a very different business than desktop PC office suites. It’s not a matter of pricing. You have to create a whole new app. Apple’s Mac-based office apps were already lightweight and fast and made with Cocoa — they ported easily to iPad. Microsoft Office is heavy, Intel-bound, and features a 747 dashboard of tiny mouse-specific buttons and mouse menu after menu of inscrutable commands that nobody has patience for and hardly anybody used. Before iPad, many people pretended they were necessary. Now they don’t. Mobility trumps havin every tool on the bench. Business users are giving up a work bench of 1000 office tools for a mobile kit with a universal screwdriver and 5 other mini tools that cover 99% of their tasks, 24/7, anywhere they are. Microsoft has yet to prove they can even build a mobile toolkit, let alone compete with Apple.

      • Walt French

        yeah, i chose “-laden” for a reason. I can barely tolerate the current Windows Excel, have no idea why I can’t set up indirectly named ranges for printing to capture exactly the number of rows I have with today’s data, etc. I used to be an expert and now it’s hunt-n-peck thru the gawdawful ribbons which hide some of the features some of the time.

        The thing is a bloated pig on the desktop; i can’t see how it’ll work on any tablet.

  • http://www.isophist.com/ Emilio Orione

    They will double down on hardware because it is the only thing they can do, that’s sad.
    They could also stop consumer’s products and focus on enterprise side and maintain a foot on consumer’s side only by making consumer’s apps for windows iOS and android.

    • Walt French

      If the internet meme is correct — that a shark has to keep swimming or die — then Microsoft needs to keep growing, keep working on the periphery of its core Enterprise domain, if only to slow down others such as the free Office suites from chipping away at its domain.

      I haven’t seen any savvy comments here about Enterprise software needs, and can’t say much myself, other than to note that Oracle has moved from generic database tools, into providing complete solutions. I’m not sure that Microsoft isn’t the sole big company making money primarily from selling software. Seems it was a decade ago they started trying to move everybody to a subscription model (same deal; different terms) and now they’ve announced their “devices and services” orientation. Pretty sure the services, some of which are very good, are very young and nowhere near the size of the old software company, though.

      And we know how the devices biz is going so far: they’re going to have to go thru a couple more iterations on Surface: faster chips, better battery life, new form factors, further encroachments into competitors’ opportunities to break out of the generic laptop and desktop biz, financed by internally pricing the OS at $0.00. Sounds more like a recipe for negative growth.

      • rational2

        The services story isn’t great either. Microsoft was in the services business since ’95 (MSN) and internet search since ’98 (MSN Search). No profits and market share so far while dozens of companies that were born after 1995 have become multimillion companies with consistent profits. So Microsoft has a challenge on both the device and the services fronts.

      • obarthelemy

        I think software companies (I worked at Novell right before it bombed), software houses always follow the same Software -> Consulting -> Integration path. MS are doing it already, competing with their own VARs/Integrators, and creating a joint venture with, I think, Accenture.

        On the hardware side, OEMs have proved rather bad at adding any value on top of “hey, it runs Windows”. Logistics and breadth of offering are indeed a concern (I’d hate to have a choice of only 5-ish laptops, 5-ish desktops, and 0 servers, all of them in the luxury segment, Apple-style). Maybe cutting down on the number of OEMs would help. I’m not sure that’s feasible though, monopoly and all.

      • Walt French

        Actually, the first time I heard of this transition model was as a description of Sperry Univac.

        Since the 1986 marriage of Burroughs and Sperry, Unisys has metamorphosed from a computer manufacturer to a computer services and outsourcing firm…

        Or maybe it was Control Data, the original playground for the great Seymour Cray.

        …after the CDS spinout, all that was left of CDC was its services business, and it became known as the Ceridian Corporation. Ceridian continues as a successful outsourced IT company focusing on human resources.

        Looking thru Wikipedia, I was surprised that Amdahl stayed in the hardware biz as long as it did. But the same story there:

        Reliance upon a single product, within the complex business of mainframes and their equally valuable peripherals, doomed the hardware part of the company when market forces shifted to Intel based processors. This had been foreseen leading to an increasing emphasis on software and consulting services.

        I think it’s notable that the once all-important mainframe business has been reduced from a thriving, competitive landscape with 9 major players (each with some interesting features), to a single behemoth that is no longer terribly important to computing in most people’s minds.

        Methinks when indeed there are only 5 players in X86 boxes, it will be because the benefits of different technological approaches are swamped by the “clients don’t want incompatible or sole-source tweaks” because of the mature market and the economies of scale from a monolithic approach. Intel faced a fair amount of resistance to USB (my HP desktop still prefers the DIN style mouse & keyboard plugs) and is now experiencing a lot of resistance to Lightning. The “market for innovation” will have moved elsewhere, which is pretty much the path for X86 already.

  • rationalchrist

    Microsoft think copying Apple both on vertical integration and organizational structure are easy. Samsung think copying Apple on user experience is easy by just mimicking the external look. Wall Street think competitors can easily copy what Apple do and make better product (at least spec wise) with lower price. That is why Wall Street depress AAPL stock since they view what Apple do are easily copyable and replaceable. In the same token, Wall Street think what Google and Amazon do are hard to copy and replace, therefore Wall Street reward GOOG and AMZN.

    • Jessica Darko

      Unfortunately, at a superficial level, copying Apple is pretty easy… all these phones now are touch driven UIs with appstores, etc.

      I think the real question is, will Apple’s superior quality, and the fact that it actually works when Apple ships it (rather than not really doing the same thing, despite looking similar with the competition)….be enough for people buying devices to make the choice to buy Apple’s products?

      • obarthelemy

        Probably not, especially since the dynamics has moved to Apple copying Android. For aluminum lovers, Sony even seem to be getting back on their feet.

        BTW, touch phones w/ appstores existed before the iPhone, heh ?

      • Walt French

        It’s an historical FACT that Apple had the high-end smartphone business all to itself from 2007–2010. Nokia’s competition was neither multi-touch, driven by a 32-bit OS capable of the UI, nor known in the US as anything other than a pretend computer-in-your-pocket, a geek toy.

        I’m pretty sure that pinch-and-tap being an obvious answer to point-n-click was the defining difference: people could see in an instant that the device could be useful, even for something as crowded and busy as NYT.Com.

        No, nothing like that existed before. And the sales figures bear it out.

      • obarthelemy

        Well, it is a historical FACT that there were phones before the iPhone that were touch-driven and with app stores. Being hugely successful in a segment doesn’t mean you invented it.

        Indeed , phones before the iPhone were severely lacking in usability and commercial success. It doesn’t mean they didn’t exist though.

      • JohnDoey

        Superficially copying Apple products doesn’t lead to the same results in usage, customer loyalty, platform building. You only get one opportunity to fool someone into buying your iPhone clone. They don’t come back.

  • Pingback: After acquisition by Apple, HopStop drops support for Windows Phone | Mac4Schools

  • r.d

    Horace,

    You prediction of 26 million iphones.

    Verizon reported 3.8 million iphone activations.

    if that 34% (CIRP data) then total iphone sold in US in 11 million.

    11 million/35% = 31 million iphones
    11 millon/30% = 36 million
    11 million/40% = 27 million

  • neutrino23

    ” By withholding Office from iOS and Android, Microsoft has shown a billion people that they can live without it and they already knew they could live without Windows.”

    I find this shocking. How could they allow this many customers to find alternates to Office and to learn that they don’t need office. Moreover, because many of those carrying iPads are executives they are teaching the corporate culture that it is OK not to use Office. In the 90s you would be ostracized for not using Office. Now it is becoming tolerated.

    My guess is that they were conflicted about all possible solutions so they couldn’t act. After three years of iPad sales they produced the Surface which filled a need for MS, but not for the customer.

    Both the iPhone and iPad seem classic examples of the Attacker’s Advantage. Existing companies don’t innovate because they are protecting the current business. The Attacker introduces a new product which has some key advantages but is not able to directly challenge the mainstream product. The established companies denigrate the new product. Meanwhile the Attacker continues to improve the product, market share grows and when the established companies finally try to respond it is too late.

    • sscutchen

      They are allowing that many customers to learn they don’t need Office on mobile devices. Significant, but I’d bet a Coke a huge percentage of folks still do their heavy office suite lifting on laptops and desktops, not phones and tablets.

      • obarthelemy

        Well that’s a given, since there are no heavy duty office suites on mobile. The snag is that very few people need heavy duty functionality. What everyone does need is interoperability, but once 10+% of users are off MS Office, that starts playing *agains* MS.

      • JohnDoey

        News flash: most people don’t do any “heavy Office lifting” at all. That is one of the reasons so many people moved to iPads as their primary business computer and did not miss Office. Keynote, Pages, and Numbers already have more features than most people ever use. In years of consulting work I never met an MS Word user who knew how to use Styles, which is the MOST BASIC FEATURE of a word processor.

        So “no MS Office” is an advantage to iPad for almost all users. And then their Salesforce and all their other key apps get better on iPad also, because on Windows they are IE apps and on iPad are native.

        Even where you hear the few really committed MS Office users asking for Office for iPad, they are just asking for Keynote, Pages, Numbers clones — focused, lightweight, approachable, fast versions of the Microsoft Office apps. But they have been asking for those for 15 or 20 years now. So even those really committed MS Office users have iPads.

      • sscutchen

        ” I never met an MS Word user who knew how to use Styles”

        Hi.

      • obarthelemy

        Indeed. I was using styles in MS Word’s DOS version, back when I was a student in the 90s. And headers/footers, indexes/ToCs… BTW, Word was much more friendly than WordPerfect, especially because there were no control codes, instead styles were properties embedded in the object they pertained to: character, paragraph, section, document…

  • stefnagel

    Mobile hardware has its two big players and the sector is into pricing contraction. With shifts to hardware, both Google and Microsoft are skating way behind the puck. Meanwhile Apple will deliver an iCar or some such thingy.

    • claimchowder

      That would be untypical of Apple. Typically they would reduce the need for driving by introducing some unsuspicious (at first) product or service.
      But I agree. They will deliver something big, and I suspect it will be a combination of ID management and payment.

  • Jessica Darko

    “At current activation rates, Android is selling 16.5x faster than Windows Phone”

    Activations are not sales, they’re not audited and google won’t tell us how they are calculated. Activations are a made up number. Garbage in, garbage out.

    • James Deng

      um activation are prettly clearly defined on the dev page … they’re people who’ve logged into play apps from a new device

      • Tatil_S

        Is it clear whether a user who logs into “Play” on a phone that used to be owned by somebody else count as a new activation? There were some claims activation meant any new user or a user logging in on a different hardware than what he was using before.

  • symbolset

    For Christmas this year they will introduce a new 8″ tablet at a lower cost. And put it up against their own deeply discounted 10″ tablet they have flooded the channel with. Brilliant!

    • http://bergie.iki.fi/ Henri Bergius

      I doubt that will work. The problem Microsoft has in the tablet world is that there seems to be very little good Windows software that fits the tablet form factor.

      On the larger tablets they can cope a little bit by falling back to the traditional desktop applications, but that wouldn’t really work on a 8″ device.

      This is sort of opposite of Android’s tablet problem. There they have a lot of good software available for phones that scale up quite nicely to the 7″ tablets like Nexus 7, which together with the low pricing contributes to why they sell well.

      On larger tablets there is much less good Android software available, and that is why Nexus 10 sucks for many of the use cases iPad has. I use mine as a web browser and mobile terminal where these issues are less crucial.

      The smaller Windows tablets *might* work if they could access the WP8 app ecosystem instead of the desktop Metro ecosystem. That is still a lot poorer than Android or iOS, but I believe better than what you have on Metro.

  • James King

    This move to hardware and devices is a necessary but really bad move.

    You go from being an almost purely software business with relatively low capex and near 90% gross margins to inventory management, supply chain, higher capex, etc.

    It’s a reactionary move and one that wouldn’t have been necessary if Microsoft had actually built OPERATING SYSTEMS rather than building WINDOWS. Microsoft’s business model was perfect: build the OS, sell it to OEMs, reap massive margins while they cut their throats killing each other for volume. But the problem is a simple one: WINDOWS SUCKS. Yeah, I know there are going to be a few “technologists” who read this and swear otherwise but, anyone that has any knowledge of UI or UX knows that Windows has long been on borrowed time. Rather than investing in creating better user experiences designed for a variety of form factors, Microsoft tried to shove “the Windows experience” onto every form factor it could find. Smartphones, tablets, ultra-mobile PCs? Microsoft was way ahead of Apple and Google in those areas, at least in initial development. But, if you wanted to use any of them, you had to use Windows or some bastard off-shoot. Everything that stunk about Windows was shoehorned into these form factors.

    Microsoft’s refusal to innovate is what cost it the future. You can only live on past glory for so long. Sooner or later, the world catches up.

    • aftoy

      What could have been if Steve Jobs took a different strategy with the Mac. Steve Jobs had the disruption knack back then, except for the execution.

      • Kizedek

        To be fair, Steve *was* trying to execute a different strategy with the Mac, before he was ousted in ’84. You can’t really execute if you are out on your ear :

        He thought the days of the Apple I and ][ were over, and that Apple shouldn’t milk them.

        He separated the Mac team away from others because he thought the rest of the company was not focused enough.

        He thought the Mac should retail at far less than it did.

        He thought that Apple should get into universal networking and enterprise protocols rather than inventing its own every time.

        He thought that all Apple computers should have the new hi-res screens and mouse-driven UI’s with typographic capabilities….

        Having said all that, I guess he did alienate the rest of the company that wasn’t in his hand-picked Mac team.

      • JohnDoey

        The Mac OS was licensed during the mid-90′s and that almost killed Apple and was what led to Jobs return. And Jobs himself licensed the NeXT OS also and that didn’t work.

        Trying to convert Apple to IBM in the late 80′s and Microsoft in the 90′s almost killed Apple. Trying to convert Microsoft into Apple today is similarly not going well for Microsoft.

        So we already know what could have been. It didn’t work. Device making for consumers and OS making for OEM’s are entirely different businesses, with different customers, technologies, constraints, skills, infrastructure. The only thing they have in common is “uses computing.” You might as well ask what would happen if a cow had wings.

      • aftoy

        The Mac was released in 1984, 6 years before MS released Win 3.0. Steve priced himself out of dominating GUI/Windowing computing.

      • http://www.noisetech-software.com/Home.html Steven Noyes

        Steve Jobs was fired from Apple in 1985, 5 years before MS released Win 3.0. He had no control of the price for those 5 years.

      • BoydWaters

        I ran NeXTStep on an Intel 486 PC.

  • aftoy

    “Who will be Microsoft’s Tim Cook?” posed a 20% – $80 margin for the Surface. $150 discount? Have to wonder how much OEMs will now be paying for RT/Win8 on tablets. Looks like MS back to playing the old IE/Netscape strategy. Sorta give it away to get market share. For as big a company that Microsoft is, they definitely need to up their amateurish how to get consumers to buy strategy.

    iPad/Surface comparison ads? Old school desperation? Withholding Office from iOS and Android? Can see this strategy a mile away. Typical for MS. Thinking their dominant Office position will get them tablet market share. Duhhh, why buy a tablet that doesn’t have Office? Unfortunately a missed opportunity for Apple developing a better iOffice app.

    • JohnDoey

      Their Surface vs iPad ads are terrible. They won’t move product. The comparisons are ethereal and ridiculous:

      - they talk about an SD card slot that almost nobody wants, and which iPad supports via USB SD card readers, just like people are used to with PC’s

      - they show a guy not being able to edit a presentation because iPad “doesn’t run PowerPoint” when there are 10′s of millions of iPad users running Keynote (the original touch presentation client) for years now, and which is $10 and installs with one button on any iPad

      … that is what is known as “weak tea.” You may fool a few people who don’t have iPads, but are those really tablet customers? If an SD card and presentation editing was going to sell you a tablet, didn’t you already buy an iPad 3 years ago? Haven’t you already loaded 10,000 photos off SD (iPad is the only tablet that supports all Raw formats also) and edited 100 presentations by now? iPad has always had those features. Isn’t there something more compelling about Surface than that?

      • obarthelemy

        Not quite though.

        - external dongles are a pain. They get lost, they break off, and they are ugly. Internal SDs are a great deal better, especially since they can be used not only as media storage, but as apps and data storage. Ditto for USB and HDMI.

        - most employees of middle-to-large companies still *need* Powerpoint: when docs have to go back and forth between several people, importing/exporting them doesn’t cut it, and most probably desktops and laptops will be on PPT, so tablets need to be too.

        Also, fact check: Win8 tablets also support RAW like desktops, and Android has apps that support oodles of RAW variants. My guess is only WinRT tablets have issues with RAW, but that’s the least of their issues.

        I think the main issue with Surface (the Win8 one, not the RT one) is that it is more expensive than an ultrabook PLUS a tablet, and rather heavier (except for the underpowered Atom models), smaller screen, less battery…

      • Tatil_S

        - Yes, dongles are a pain for SDs, but USB port is probably not that essential anymore. Most people don’t use USB ports other than charging gadgets, occasional file sharing, backup, printers. (I always have a hard time finding a USB cable or thumb drive when I need one at work. They cannot be that popular.) All these functions can be offloaded to wireless: WiFi printers, automatic cloud backups and over-the-air P2P sharing. If cameras with good wireless connections become popular, even SD card slots may become optional, but obviously we are not there, yet.

        - What if another presentation making app becomes popular? It can quickly turn into “tablets run on that, so laptops should be on it, too”. This is a dangerous game for MS.

  • james braselton

    hi there they show 30 million phones per quarter having windows 8 phones means 3 os vs 2 os