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  • Microsoft Surface: A Wise Move?

    Microsoft unveiled a new tablet “Surface” last week. This is Microsoft’s first major foray into developing serious computer hardware and a serious attempt to stem the rising dominance of Apple that holds a commanding 62% share in the tablet industry through its iPads. Surface is to run on either Windows RT or Windows 8 that promises a seamless experience from the desktops to the mobile devices including smartphones and tablets. Surface also has a keyboard and a kickstand that makes it easier to prop the tablet on the table and work.

    Microsoft did not allow technology reporters to touch and feel the tablet. So we do not know about the actual functionality of the product. Assuming the product will work as touted, Surface is attempting to change the bases of competition from “convenience” and “fun” to “productivity.” Existing tablets are just tablets but Surface promises to be a tablet that also works as a PC. If this is indeed true, then the product has the potential to expand the market size for tablets dramatically. Of course, the price has to be lower than a ultrathin laptop for this model to work.

    Why a tablet? Apart from the PC-type functionality, Microsoft has a lot of content (music, books, apps, textbooks etc.,) to offer due to its partnership with Barnes & Noble. Microsoft has interesting products in its arsenal including Office, Skype, Lync and SharePoint and hence it can design a total customer experience. This tablet then becomes the device that enables Microsoft to compete with Apple in the tablet market.

    However, this integrated systems approach also appears to be a confusing strategy. What is likely to happen to Microsoft's ecosystem of partners that have long helped Microsoft become the behemoth it is today? Why did Microsoft move forward to becoming a competitor to its collaborators? Already the OEMs in the PC industry are struggling and were looking at Windows 8 to help restore profitability. It is possible that Surface may cannibalize existing PC sales. As such, this move shifts the profit pool to Microsoft thereby making the OEMs vulnerable. Would the gains accrued due to the strategic entry of Microsoft into the tablet market outweigh the weakening of its ecosystem? Only time will tell.

    _________________________
    Raj Echambadi
    Professor of Business Administration and
    James F. Towey Faculty Fellow and
    Executive MBA Academic Director