Steve Ballmer and crew gathered at Milk Studios in Los Angeles to publically unveil their very own tablet, called Surface. This is what we know so far:
- There will be two versions, one running an Intel processor and Windows 8, the other running an ARM chipset with Windows RT. They will come in 32/64 GB & 64/128GB versions, respectively.
- Along with Surface Microsoft announced the Touch Cover, which duals as a cover and multitouch keyboard with trackpad. It magnetically snaps on and off Surface, much like the Smart Cover and iPad. No word on whether it comes bundled or as an additional purchase accessory.
- In addition to the Touch Cover will be the Type Cover. While a little thicker than the Touch Cover this will include a real keyboard with actual moving keys.
- Surface includes a built-in stand that lets the tablet sit upright horizontally. Combined with the Touch Cover or Type Cover, this makes for a pretty handy laptop replacement.
The press and techies everywhere are pretty excited about the new tablet design. I’ll take that one step further and say people are excited Microsoft is willing to try new things to stay relevant and not just roll over dead over the next 20 years.
Business Model Change
While designing and selling hardware isn’t entirely new to Microsoft, the business model of tablets is. Their only real big success in hardware to date is the Xbox. But the gaming console business model much more closely follows the software licensing model that Microsoft is used to than, say, the model that Apple follows with the iPhone and iPad. For consoles Microsoft sells Xboxes at break even (or even at a loss) and then reaps the profits of not only first party but also all third party game sales. The hardware pushes software sales.
In the case of Apple, they make the vast majority of their treasure from hardware sales. While they do get some revenue from the App Store and the iTunes Store, the primary purpose of software is to push more iOS device sales. This is of course completely backwards from Microsoft’s Windows and Xbox business.
In addition to the new business model, Microsoft also finds itself competing with its longtime partners. And if you think tablets are the future of computing, then this isn’t just a one-off project that Microsoft wanted to try their hand at. This is just as confrontational as if they had started making their own computers 15 years ago.
If they want to stay in the personal computer business, eventually Dell et al. will have to create a tablet and license an OS. But instead of competing on the same playing field as other OEM’s, Dell and others will have to compete against the creators of the software themselves. Microsoft will have a competitive advantage because its hardware will work better with its software, benefiting from the tight integration that Apple has long advocated. Like the famous Alan Kay quote says, “People who are really serious about software should make their own hardware.”
All that being said, it’s too early to say how well Surface will sell, or how many third party apps will be created. For pricing Microsoft would only go as far as to say that it will be priced competitively. No word on a release date.
Regardless of whether you like Surface, iPad, the Nook, the Fire, or any tablet at all, introducing a tablet from another powerhouse will increase competition and keep everyone on their toes, to the benefit of consumers everywhere. I’m excited to see where this takes us.