A last-minute invitation giving journalists and analysts just four days’ warning; a US West Coast unveiling of “a major product” touted as “something you won’t want to miss”; a presentation of an own-brand device by the company’s chief executive, touting its design aesthetic and magnesium-sintered parts in exploded view. You could easily have mistaken Monday night’s unveiling of Microsoft’s Surface tablet range for an Apple event – though you would never mistake Microsoft’s bombastic Steve Ballmer for a charismatic Apple executive.
Yes, Microsoft is getting into the iPad space; after sitting on the sidelines for years, it has now started running after the fastest-growing sector of the computing market with its Surface.
The fascinating thing about the announcement, though, was how dramatically it shows the Apple-ification of Microsoft. The company that brought the world Windows, and got rich on it, has for years had serious Apple envy. When Bill Gates was still working full-time at the company, he would fume during visits to London at Apple’s Regent Street store, opened in late 2004. “We need to have those!” he would complain, to the despair of his minions, who would forbear from pointing out that Microsoft didn’t really make things like Apple did; it made software. Apart from the Xbox, a Microsoft store at that time would have been a showcase of lots of boxes of software, and a few mice and keyboards. The laptops and desktops on which Windows ran were all made by other companies, such as Dell or HP.
And that was a good arrangement for Microsoft: software is wonderfully profitable, because once you’ve made one copy, the next billion or so cost nothing to copy. It made Microsoft the most valuable company in the world by the end of 1999.
Yet now Microsoft is not just snubbing those companies that made it rich by making PCs that ran Windows; it’s positively apeing Apple, making something the same size as an iPad, putting its own name to it, deciding the price, and selling it through its own stores, both physical and online. (Gates will be happy.)
But is this just some bizarre financial bromance? Or something deeper? “Why would Microsoft hedge against what it has, the most brilliant business model of the 20th century?” muses Horace Dediu, a former Nokia executive who now runs the Asymco consultancy. “Because,” he answers, “it doesn’t work any more.”
He says that’s because of the rise of mobility – the fact that increasingly we use smartphones and tablets to work anywhere and any time, where just 10 years ago we would have had to sit in front of a desktop, or unfold a laptop. Now iPads are used to create art or hold flight manuals for pilots; meanwhile, nearly a million Google Android smartphones are being activated every day.
Mobility is big. Smartphones have been outselling PCs since autumn 2010; and though the tablet business is only two years old, a total of 108m are expected to ship this year (against about 400m PCs); the research company IDC upped its forecast ahead of Microsoft’s announcement. IDC has consistently lowered its forecast for future PC sales while it keeps pushing it up for tablets.
“The rate of growth in these platforms is almost vertical,” says Dediu. “Microsoft’s for Windows is pretty much flat.”
Google is following the same path: it has bought Motorola Mobility, the US smartphone and tablet maker, and later this month is expected to announce an own-brand 7in tablet. (Larry Page et al won’t be pleased at Microsoft stealing their thunder; Ballmer, who hates Google, will be delighted; it might also explain the last-minute nature of the announcement.)
The Appleification of Microsoft is happening because the company has got no choice. The smartphone and tablet pose what Benedict Evans, an analyst at Enders Analysis, calls “an existential threat” to Microsoft: if it can’t get a credible foothold there, then its growth just stops. So far it hasn’t managed it in smartphones. Tablets suddenly look like a necessary product.
Of course, this adventure could go horribly wrong. Think of the Zune – a Ballmer-ordered product (he literally snapped his fingers in a top-level meeting and said: “We need one of those!”) that came far too late in 2006 to compete with the iPod, which had already passed its glory days; Apple already had its eyes then on the iPhone, which has supplanted and far exceeded it for profitability. Zune never went anywhere (literally; it was never sold outside North America) and was quietly killed last year.
Then again, the Xbox 360 games console has done well, cementing the company’s position in millions of living rooms around the world. Except when you look at the numbers: total sales are put at 67.2m since 2005. Next year is expected to see a new generation – the Xbox 720 – for which a leaked internal document forecasts 100m sales in 10 years. Dediu laughs: “A hundred million? That’s equivalent to a hundred days’ of Android activations. And that’s their ambition for 10 years?”
Nobody’s expecting that Microsoft is going to stop Dell or HP selling Windows computers – or that they’re going to stop doing so immediately. But the signs of strain are there already. Last summer, HP said it would quit the PC business because the margins are razor-thin (it dumped its chief executive and recanted); Dell keeps trying to push into services, and makes nothing on consumer PC sales.
But in making the first big move into the Windows tablet market, Microsoft has shown that it realises the need for reinvention. The old Microsoft would have let a thousand PC makers build tablets – big, small, great, awful, pricey, cheap. The new one will control the apps that run on the Surface, via an online store, will decide the price and the models. It’s a long time since 2004, when an ebullient Ballmer came to London and told an audience of journalists (then prodding him about the iPod): “With great respect to Apple, there’s no way anything gets to critical mass with Apple, because Apple just doesn’t have the volumes.”
Even then, the iPod was outselling Microsoft’s then mobile offering, Windows Mobile. If you can’t beat them, join them – and ideally, steal their clothes too.
guardian.co.uk © Guardian News & Media Limited 2010
Seit 1996 bin ich freier Mitarbeiter der Salzgitter-Zeitung, als Experte für das Geschehen im hiesigen Kreisfußball. Daneben sind meine Kolumnen seit 2005 fester Bestandteil im Lokalteil der Salzgitter-Zeitung. Zusammen mit Frau und Tochter sowie zwei gefräßigen wie faulen Stubentigern versuche ich das zu meistern, was das Leben, das Universum und der ganze Rest an Absurditäten für uns bereithalten.