The winners and losers are already being sorted out following the decision by Microsoft Corp. (Nasdaq: MSFT) to launch its own tablet PC. Many industry observers say the software giant's OEM customers will be the direct losers. Others say Microsoft itself may regret its move, which is likely to irritate its PC partners.
Whatever the case might be, the decision obviously has strong implications for the electronics component procurement and manufacturing segments. After seeing rivals like Hewlett-Packard Co. (NYSE: HPQ), BlackBerry (Nasdaq: RIMM; Toronto: RIM), High Tech Computer Corp. (HTC) (Taiwan: 2498), and even Samsung Electronics Co. Ltd. (Korea: SEC) fail to make a dent in Apple Inc.'s domination of the tablet market, component vendors are bound to hope a new competitor would be more successful in taking on the world's most valuable consumer electronics company.
If Microsoft's Surface tablet succeeds, it may erode some of Apple's marketshare. However, my personal opinion is that it may actually help expand the total addressable market, making devotees out of folks who may want to buy a tablet but don't like the iPad, don't want to pay the premium Apple demands for the device, or are dissatisfied with the slate of alternatives.
Enterprise users may also benefit from Microsoft's entry into the tablet market. Many CIOs are finding that the days of companies dictating what platforms employees can use are coming to an end. In many cases, employees (especially senior executives) have fostered the bring-your-own-device phenomenon. They tell their companies the devices they would like to use (and have already purchased) and then request access to corporate IT systems. That's how the iPhone sneaked into enterprise messaging. Top-level executives simply showed up with the smartphone and asked CIOs to hook them up with the internal messaging system.
Surface users may find it easier to gain enterprise acceptance. I suspect, in fact, that companies could purchase the device for employees if it can be loaded with Microsoft Office applications. Many of us may dump our notebook PCs if the Surface can be easily hooked up to a bigger screen and keyboard in the office and taken on the road with a portable and ultra-light keyboard. In a press release, Microsoft discussed the keyboard that will come with the device.
The 3 mm Touch Cover represents a step forward in human-computer interface. Using a unique pressure-sensitive technology, Touch Cover senses keystrokes as gestures, enabling you to touch type significantly faster than with an on-screen keyboard... Touch Cover clicks into Surface via a built-in magnetic connector, forming a natural spine like you find on a book, and works as a protective cover. You can also click in a 5 mm-thin Type Cover that adds moving keys for a more traditional typing feel.
I already want one. If Microsoft wins customer acceptance for the Surface, many companies in its ecosystem will be the direct beneficiaries. These will include whichever company is selected to assemble the device. Microsoft is unlikely to manufacture the Surface itself, so it will be using a contract manufacturer. In addition, component suppliers and logistics services providers will see increased patronage from Microsoft. Already, Intel Corp. (Nasdaq: INTC) is expected to play a role. So will the IP licensing company ARM Ltd. (Nasdaq: ARMHY; London: ARM), which Microsoft said will provide the engine for one of the two variants of the Surface.
Logistics services companies can also expect to gain some business from shipping and delivering the Surface. Microsoft has indicated it would sell the device only online or through its own branded stores. This means freight companies will be pressed into service delivering the Surface to homes and businesses.
On Wednesday at 10:00 a.m. EDT, EBN will host a live chat on Microsoft's foray into the PC hardware market with Rick Merritt, an industry veteran and EE Times electronic systems analyst. Rick will answer questions on the potential impact of the Microsoft Surface on the electronics supply chain. He will also discuss the likely winners and losers and whether this move is even in Microsoft's best interest. Click here to join us.
We are all drooling for more details about surface. With the lack of facts many of us are trying to fill in the lines.
Perhaps this is the way it was planned. The Microsft event may have been a trial balloon. If so it was successful. What better way to ping your potential users to find out where the issues are?
It was early enough to allow reaction time for final polishing of the design, setting the prices, and developing marketting plans.
Most of the flack has been directed against the RT version. The laptop user response to the MP-08 version has been positive.
This will be a hit with the workers needing a light compact MS Office platform.
The facebook, electronic book, and social networking market will require lots of work.
This is really two, very different products. An ultralight laptop and a tablet. Apple is already established in the tablet market.
Sales over the internet is the way to go. Brick and mortar Stores for electronic devices are disappearing. Direct sales by Microsoft and use of EBAY and AMAZON should work nicely. I would limit physical store sales to the big box retailers: Sams, Costco, Walmart, and Target, etc.
Feedback has been mostly positive, with attached wish lists. Microsoft would be wise to listen and polish the real debut.
They need an out of the gate winner. They have the money, the talent, and the time to make it work. I hope this is an XP and not a Milenium or Vista.
I am delaying buying any tablet or slate until I see how this one turns out.
lbacker, I like your assessment. First, the company indeed announced two products, an upright laptop and a tablet. Second, the product is not here yet so we are free to speculate and whip up opinion and speculation, helping to drive interest ahead of actual debut.
This strategy worked for Apple and it's being effectively used by Microsoft. Finally, many of us who don't already have a tablet PC but are looking will hold off until the Surface hits the market. That will put a damper on competing devices (maybe not the iPad). I didn't want to say this before but I will admit I am waiting until I see the Surface to buy a PC slate.
That's good to hear. I hope MSFT can solidify itself as a competitor with Apple in all realms. It will bring back the fever rush that existed when the two giants were battling it out in the mid-90s. I hope it works out for them...
I agree it would be good to see more competition in tablets.
Frankly I think Samsung has been the best and fastest to market competitor so far with its Galaxy Tab that was pretty good if a little clunkly in the sw.
There is plenty of room to choose unique hardware and write unique sw but I think the industry has been slow to deliver a wide range of options
I think it's because for the most part, most of the platforms are identical fo rthe time being. Maybe within the next few iterations, someone will come up with some new innovation that makes a huge splash.
If both intel and arm can be pleased with surface then it would be a great success for Microsoft. As you explained the enterprise is the easy target for Microsoft.
I think that innovation can not go beyond what we could accomplish with our laptop computer. In the long run, the difference between laptops and tablets will just be about the size. I am sure most laptops (or computer displays) will have touch screen capabilities.
Agreed to a point. But it's also about convenience too. If a tablet and laptop side by side do the same thing and are approximately the same size, it might just feel better to go with the tablet because it looks cooler to walk around with nowadays than a laptop (an not everyone has one... yet like laptop). It's sort of liek a status symbol of sorts.
@Pocharle, I think this is a strategic move on Microsoft's part to enter the tablet market and a good one. And I hope it succeed. I'm of the view that this will certainly stand up to the hype having read the review. Like you said, I hope it impact the market significantly to bring back the rush we witnessed in the 90s between the two companies (will it?). Certainly Microsoft surface will see a return on investment. The question is if surface tablet succeeds, can Microsoft keep up the momentum?.
It's good reporting suggests both Microsoft and HP failed to get competitive Windows Anything tablets to market working more or less together and frustrated MS execs decided to go it alone.
They suggest if OEMs pick up the Surface design, or the pace of their own innovations, Msoft may staep aside. But that's a big if.
Just as you noted, it's a big "if" for Microsoft to step aside if HP, Dell and other OEMs get active in the tablet segment with products that are competitive against the iPad. I don't see it happening. Microsoft didn't step aside in the gaming market and there are no reasons for it to do this in the tablet market. You have to drive your own fortune and that's what Microsoft is doing.
It'll be a first--sorta--if Msoft works the bugs out of the product before the launch. OK, I'm still bitter about Vista. I'm game if the product is good enough...
Flyingscott, Any new product, however it matches against the competition, will dent the market share of the leading device. In this case, remember there are people who don't want to be a part of the Apple family and are holding back on purchasing a tablet. Companies like Microsoft will also have to sell their products at a lower price than the iPad because of Apple's leading position. That will eventually erode its No. 1 position and drive down its market share.
Bolaji, will the entry of Google in tablet market make sense. Google has stayed away from the high profit consumer hardware till now. But there are rumors about the Google table.
Android has quite sucessfully eroded the iPhone's market however Windows has not be able to make any impact. Will MS be more cautious about the tablets?
@himanshugupta: If Google does enter the tablet market with it's own hardware, it can certainly take advantage of Android for success. For instance, it can restrict the new Android releases to be only available on Google's tablet and not any other tablet. This will force the users into buying the Google tablet.
There will certainly be winners and losers from the intrduction of Surface, although it's haed to predict who will be in which column. A lot may depend on the product features and acceprtance. It certainly highlights, however, how competitive the industry is.
"There will certainly be winners and losers from the intrduction of Surface,",
The Surface has a bright future as it is designed as a ready-for-business device with its embedded physical and virtual keyboards as well as the built-in usb port. I don't really think that Microsoft will ever regret that move. Let's not forget that Windows is still the number one OS used in the enterprise and Windows enthusiats will be happy to own a tablet that will offer almost the same features that a conventional laptop or a desktop PC can offer.
"But Can this truly break Apple? What's your view?",
Obviously no tablet or smatphone has been able to break Apple so far. The Microsoft Surface may not be an exception. But when we talk about tablets we will no longer think of the iPad. Some days ago I was using my iPad and a lady who apparently was impressed engaged me in the following conversation :
The lady: Is that an iPad?
Me: Yes it is
The lady: What brand it is?
Me: What brand? Oh, it is an Apple tablet
And she carried on telling me how she would love to have one, how interesting it might be to use it...
My feeling was that for her a tablet = iPad. I hope people will understand the difference with more competive products release.
@Hospice, Interesting you said that. I suppose ipad is more popular than tablet pc it's easy to mix the two. I don't own either, my laptop pc works well for me,but I have sampled a ipad at my local PC world retail outlet - thanks to my teenage boys who are gizmo freaks. Again for some it'll take time getting to know the difference.....
I think that before starting the guess game we should really look at the pro and cons of Surface. We should compare the surface with other tablets from Apple, RIM, HP, HTC etc to find out what makes this tablet unique and winning formula. The biggest hurdle for MS will be the pricing and MS has already clarified that the pricing will be similar to iPad. Loading tablet with just Office suit is not going to win hearts.
"..before starting the guess game we should really look at the pro and cons of Surface. We should compare the surface with other tablets from Apple, RIM, HP, HTC etc to find out what makes this tablet unique and winning formula."
@Himanshugupta: I agree. I think the biggest success factor for Microsoft would be if they have a Windows based tablet which integrates seamlessly with their desktops and laptops. It should give Microsoft a slight edge over it's competitors.
I think the biggest success factor for Microsoft would be if they have a Windows based tablet which integrates seamlessly with their desktops and laptops.
@TaimoorZ, I totally agree with you. I think Microsoft tablet's compatiblity to microsoft tools such as MS office will give this tablet a huge advantage over other tablets.
If there is compatibility between Laptop and tablets, then obliviously the laptop/desktop sales may comes down. Actually that's not the factor, W8 is going to be the key factor, where enterprise is eagerly looking for.
Microsoft is staying true to longstanding practice. Now that the iPad is in its third release, the MS camp is convinced this is a business challenge that won't go away.
As with GUI displays, Microsoft is emulating an existing offering, but matching Apple's pricing is a new and seemingly uncompetitive move for MS. This is even more questionable when we see Google releasing its Nexus tablet at a price of $199. In terms of underscoring its first-mover status, one of the main beneficiaries would have to be Apple with this turn of events.
Bolaji, I don't think there is any winner or loser because surface prices are fixed like that. According to the early news, they are fixing the prices between $699 and $800 for various models, which is almost equivalent or greater than Ipad price. That means they are targeting only enterprise level customers, which contributes only less than half of the total tablet sales.
By moving to the core of the industry and offerings services that keep the system humming, a group within the electronics market has rendered irrelevant the question of ownership and control of the supply chain.
EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
Archived Dialogues
Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Euro-Crisis: What It Means for High-Tech Firms Join EBN Editor in Chief Bolaji Ojo and Contributing Editor Jennifer Baljko on Thursday, July 12, at 10:00 a.m. EDT for a Live Chat on high-tech and Europe's economic difficulties.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
While no one really can accurately predict the future, we can take guidance from another Drucker saying which is the best way to predict the future is to create it.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.
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