Why the integrated approach to mobile devices is winning
Until last week's announcement of the new Surface tablet, Microsoft had taken the same approach to mobile devices that they had with PCs: build the software themselves and let partners build the hardware.
Context & Ripple Effects
Dixon's argument lands two days after Microsoft unveiled Surface, its first self-built tablet, breaking the PC-era arrangement in which Microsoft shipped software and partners like HP and Dell built the machines. The corpus frames Surface as an attempt to escape two earlier failures — a moribund Tablet PC effort and the still-born Courier project — both of which died inside the old partner-dependent model.
The timing matters because the claim cuts against what Microsoft was saying publicly the same week: executives categorically denied plans for company-branded smartphones, insisting the Surface strategy would not extend to phones. Dixon is betting the integration logic proves stronger than the denial, while Microsoft also moved on adjacent fronts the same day, agreeing to acquire Yammer for $1.2 billion and pushing Windows 8 toward an unconfirmed release window.
First-order effects
- Microsoft's Windows OEM partners, who built their businesses on licensing software rather than competing with the licensor, now face Microsoft as a direct rival in tablets.
- Surface puts Microsoft in head-to-head competition with Apple's integrated model, conceding that the partner-built hardware approach lost the mobile race.
Second-order effects
- Partner hardware makers must choose between differentiating their own Windows designs and drifting toward Google's Android ecosystem, eroding the distribution base Windows licensing depends on.
- If the integrated approach keeps winning, pressure builds on Microsoft to apply the same logic to phones despite executive denials — putting it on a collision course with the handset partners currently shipping Windows Phone.
Third-order effects
- The PC-era division of labor — one company writing the OS, many companies building the hardware — becomes structurally untenable in mobile, splitting the industry into integrated stacks and licensed-OS camps.
- If Surface succeeds where the Tablet PC and Courier failed, other software-first companies face the same logic and must consider owning hardware to control their own platforms.
The trend: Mobile computing is consolidating around vertically integrated hardware-software stacks, pulling even the archetypal software-licensing company into building its own devices.