Ask HN: Why did Microsoft develop their own tablet?

Case in point, Apple.. People don’t queue up for a launch waiting to get their hands on iOS, they want the iPad! It’s the device that interests people and gets them invested in an ecosystem, not the other way around. What Apple has always had, and what seemingly all its competitors have lacked, is a focus on developing and marketing products that people really, really want (and the ability to actually do it). Doing so gives ultimate mindshare.. You may not have an iPhone and may not even want one, but I’d bet you know more about it and all its iOS goodness, than any other phone out there (bar the one in your pocket, maybe); the average consumer certainly does and that alone provides for a significant lift to Apple's ecosystem.

That’s what Microsoft wants, and why we have Surface. Windows Phone is awesome (my opinion), but no one knows about it; the launch of the Nokia’s Lumia phones are helping, but not really in a big enough way. Microsoft can’t let that happen with Windows 8/RT tablets going up against the iPad; because, and I think rightly so, they see that the market is heading towards convergence between what we traditionally think of as PC’s and tablets/smartphones.

And I’d add that it’s certainly not about increased profitability here.. Microsoft’s margins are the highest in the industry and one of the highest of any Fortune 500 company (Apple ranks 24th on the list by this measure) [1]. I don’t think Microsoft wants to be in the hardware business, it wants to be in the platform/ecosystem business, and part of that business is having devices that drive adoption. Simply put, it’s about getting people to want a device, a device that runs Windows.

[1] http://money.cnn.com/magazines/fortune/fortune500/2012/perfo...

To go into full bombastic and Cassandra mode: the PC market is vaporizing. People are now fully expecting to have a 24/7 connection to YouTube/Google (Maps)/Wikipedia/Facebook/Hulu/What-have-you. They want media-consumption/entertainment devices (Google's Chromebooks: just an internet browsing device). Before, the only way to access those things was through the home-kitchen-garden PC most people had: a bulky big thing sitting in some corner of the living room or their bedroom. Then laptops became more popular because you can move around with those (though they're still somewhat bulky and cable-y). Then came smartphones and tablets and suddenly you have a light, more portable entertainment device you can carry with you anywhere! Then of course comes the question: why still have a computer in the first place if all you're doing is easily replacable by shaking/tapping the screen? (Yes, for gamers and workers alike, PC's are more than internet-devices and require keyboard/mice-input that's better than a touchscreen, but they're a minority.)

The problem for Microsoft is, of course, that they're missing the boat. Ever since that holy(?) union many aeons ago between the IBM PC and Microsoft, they have been in 90%+ control of the market. That golden era is now at an end since, in the coming years, most people will stop buying a PC and just go for a tablet/smartphone option instead. Apple and Android (and a lot of others with their own OS) have already colonized vast swaths of land in that New World, and Microsoft is now in trouble: if the PC market is going to shrink that means their total domination of that market (and all the benefits that brings when developers want to build things) means less and less. While they're sure to be in total control of heavy-duty-use-computers (that is, computers intended for office work and gaming) for quite a while to come, that means nothing if the future (kids who are growing up and will eventually join the workforce) is being made in a non-Microsoft land. (The main reason why Microsoft is so eager with its academic licenses and so little interested in combatting OS piracy: if people are used to working with X, they'll want to work with X. If the New World becomes the biggest (most profitable) World, whoever's in control of that might one day launch a reverse-colonization of the Old World of said heavy-duty-use-computers...)

None of what I'm saying is really new or shocking (or even correct?). So what does this mean? It means that Microsoft has to focus on a future tablet-dominated market, which means it has to bring out a new OS built/ready for that (Windows 8). But there is no IBM with a PC (tablet) this time Microsoft can hook on to and get a free ride to market domination, so they have to build their own (which they now have) and pray that they can reverse the coming tide that threatens to sweep them as it did IBM so long ago: into being just a huge (but no longer dominating) software company that focuses on work applications. Hopefully the market will stay shattered and no one can establish a quasi-monopoly, since it seems to lead to lack of competition and thus lack of innovation. In the Game of Software, you either innovate or you die. :)

(And now I'm going to click that button and see that in the time it took me to write all that five other people have written the same in a more succinct and funnier way, ah well!)

The next generation of Windows is crucial to the success of MS long term. Their OS must be seen to be not just relevant to the next generation of hardware - but seen to shine in that role.

I think it is entirely sensible for MS to produce a new product that show the world how they think things should be done - with complete control over every aspect of the design. [has risk of course]

Other manufacturers (the traditional PC companies I suppose) will be free to offer their hardware vision alongside the one from Microsoft.

1. Windows Phones - while competent, and people who use them like them, never managed to make any impact in terms of marketshare or market buzz. This is because Windows Phones is just one of many OSes handset makers - Samsung, HTC etc - support. Therefore, there is not dedicated marketing to push it. Nokia, who is now exclusively on WP, did a lot of marketing but still couldn't cut through the noise. Microsoft has use use its clout to generate the necessary buzz and excitement on Windows tablets or risk a 1% market share once again. With Ballmer on stage, they are effectively signalling they are "all-in" with the plan.

2. Google has successfully kick started interest in Android through developing Google Phone as a reference design for other phones to follow. Otherwise, there will be an inevitable fragmentation of screen sizes, capabilities and price points. By setting an "aspirational" target, other manufacturers will be able to build Surface clones that customers can compare against.

3. The Surface is big on product bundling. It is no longer a pure tablet, and the magnetic snap on keyboard is not an option, but rather part of the product. This makes it easier to sell at a slightly higher price-point than an iPad.

4. The reference magnetic dock, and placement of USB points etc sets the stage for all third party manufacturer of cases, speakers, etc in such a way that kick starts the ecosystem.

5. In the worst case where OEMs abandon manufacturing Windows slates, Microsoft is able to ensure that their investment in Windows 8 isn't entirely lost. They might turn this into a long term play just as they have with XBox. Unit cost of slates are around the $250-mark at present. Microsoft could take the ball home and do it all themselves if OEM find Windows slates difficult to push into the market.

In the current market, tablets appear to be similar to game consoles - consumers are willing to accept a closed ecosystem (e.g. iPad, Chromium, Kindle). So Microsoft may be assuming that a branded tablet is a reasonably sound strategy, particularly given the lackluster interest among consumers in Android and Linux based tablets from mainline electronics manufacturers.

I'd still peg Microsoft as a software company, although now they seem much more willing to praise the hardware side of their business. It's likely the hardware division's primary goal is not profit, rather to maximize potential software sales.

If Microsoft was really designing their own hardware and engineering prototypes, we would've already heard about it through the rumor mills.

That's not to say Nokia or Samsung etc won't be putting out an exceptional Win 8 tablet, they may well do - but then again, they may not.

In terms of profit - I think MS will price the hardware as low as they can, to fight off Apple. Their profit will come elsewhere