Why Microsoft's Surface Tablet Should Shame the PC Industry
On June 18, Microsoft (MSFT) beckoned 200 or so members of the media to an industrial, grimy part of Hollywood for what it described as a can't miss affair. The dutiful reporters met at the appointed hour—3:30 p.m. …
Context & Ripple Effects
Two years ago Microsoft was still content to let partners carry its tablet ambitions — it and H.P. lined up a Slate PC reveal timed ahead of Apple's iPad. On June 18 it crossed the line its OEMs had long dreaded: Surface is a Microsoft-designed PC family, shown running Windows 8 and Windows RT, unveiled with no price and no ship date attached.
The story traveled unusually wide for a hardware reveal — Reuters, AllThingsD, The Verge, ZDNet, PC World and Gizmodo all carried it within a day — and the reaction split cleanly: Gizmodo declared Surface made the MacBook Air and iPad look obsolete, while analysts quoted by Reuters called it no threat to the iPad. Business Week's framing cuts past both: the indictment is aimed at the PC industry itself, which spent the two years since that 2010 Slate effort shipping compromised tablets while its own platform supplier watched from the sidelines.
First-order effects
- Microsoft's OEM partners — H.P., Dell, Lenovo, Asus, Acer — now compete head-to-head with the company that licenses them Windows, with Ballmer positioning Surface as fitting inside the PC ecosystem rather than replacing it.
- With no pricing or availability announced, retailers and enterprise buyers planning Windows 8 refresh cycles have nothing concrete to evaluate against the iPad.
Second-order effects
- PC makers face a hedging decision on Windows RT hardware that would compete with Microsoft's own device — a choice that pulls tablet investment toward Android and Chrome OS alternatives.
- Microsoft's confirmed $300 million Barnes & Noble investment this quarter points to the same playbook extended to content: first-party devices paired with owned distribution for digital goods.
Third-order effects
- If Surface gains traction, the PC industry's division of labor — Microsoft writes software, partners build the boxes — erodes, pushing every platform owner toward Apple-style vertical integration and reducing traditional OEMs toward commodity assembly roles.
- A Microsoft that bundles its own hardware with Windows hands regulators the same vertical-leverage questions that dogged it during the browser era, since Surface starts every race with an advantage its licensees cannot match.
The trend: Platform owners are absorbing the hardware layer of their own ecosystems, as Microsoft adopts Apple's integrated model and converts its OEM partners into competitors.