Microsoft's Surface and Windows 8: Winners and losers

Microsoft has launched its latest operating system and new tablet: Windows 8, and Surface. Who will gain and lose out from Thursday's event?

Sarah Tew/CNET

"All in," Microsoft said today at an event in New York as it launched the latest offerings from the company: the new Windows 8 operating system, and its debut into the tablet market, the Microsoft Surface.

Today's event was a non-event, to be fair. It was more of a recap than anything else. Besides some shiny new numbers and a few demonstrations of the new hardware and software, we saw nothing new.

However, interestingly there wasn't much focus on the Surface during the event, despite it featuring as the software giant's debut into the tablet fray. The onus on Microsoft was to nudge out Windows 8 -- the "make or break" product that will either see Microsoft chief executive Steve Ballmer walk the plank or not, according to analysts -- to the wider market.

But out of the event, rounding up from the previous news, let's see who wins and loses out of the announcements. Here's what we have.

Winners
Microsoft: The software giant is obviously a winner here. Windows 8 and the Surface tablets can't fail as such. Microsoft can see poor sales based on its own projections and analysts forecasts, but either way it goes Microsoft will see strong uptake from PC manufacturers licensing the next-generation operating system. Why? Because PC makers don't have anything else to put on their new PCs. 

Similarly, Surface has drummed up enough support from reviewers and analysts alike to suggest the tablet debut may actually dent Microsoft's partners' sales in the tablet space. 

Bring-your-own-device employees: The beauty of the Intel-powered Surface and ARM-powered Surface RT tablets are that they are designed with one kind of person in mind: the bring-your-own-device (BYOD) worker. The tablets themselves aren't locked down to purely work-mode, they're also "work from home" devices, and "home" devices all at the same time. Whichever mode you're in, the tablet will fit the user's need.

There is a caveat, however. Business users who want to bring their Windows RT-based tablet to the office must buy a commercial-use license, giving Microsoft yet another scraping of cash from each ARM-based tablet sale. ZDNet's Mary Jo Foley has more on this.

Dell, Lenovo: Both Lenovo and Dell, the first and third place holders in the worldwide PC vendor rankings according to Gartner (IDC disagrees and says second and third place respectively), are perfectly happy with the Microsoft Surface tablets. 

The Surface is the only bring-your-own-device (BYOD) tablet that fits into both the work and the home life.

Even though Dell failed in its Streak tablet endeavor , it's had enough time to lick its wounds and learn enough to compete with a new range of devices. Dell simply isn't concerned because it believes it has nothing to worry about.

Lenovo, however, laughed at the Surface, as its chief executive Yang Yuanqing said his firm would simply make "better hardware." It was a rather overt dig at Microsoft's new hardware because Lenovo, the PC market leader, believes its own products are better. But arrogance may get in the way of Lenovo if its tablets fail to take off. Will Lenovo be eating Microsoft-provided humble pie?

ARM: British chip designer ARM will benefit greatly from the introduction of ARM-based tablets. While ARM designs the chips that run Windows RT tablets, Qualcomm actually builds the chips -- which can also be counted as yet another winner in the list. ARM already has confirmed product announcements from Asus, Dell, Lenovo, Samsung, and Microsoft with its Surface RT tablet -- all powered from ARM's chip designs -- even in spite of nobody quite knowing what Windows RT is actually for.

Losers
HP, Acer: Despite competing research firms reporting different figures -- in worldwide PC vendor rankings, Gartner says HP and Acer are in second and fourth place respectively, while IDC says first and fourth place -- the two firms continue to lose market share. Ultimately that's all it boils down to.

Sterne Agee analyst Shaw Wu believes HP will not be saved by Windows 8, writing in a research note earlier this month. Acer's chief executive JT Wang went one step further and called on Microsoft to "think twice" about releasing its own branded tablet. ZDNet's Larry Dignan called the move "laughable," as did the rest of the world, but Acer stamped its feet and threatened to "find another platform." We'll see how well that works out for you, Acer. 

Apple: The Cupertino, Calif.-based iPad maker is now being squeezed from both sides of the tablet market by both Android and Windows, and in light of its recent iPad Mini launch there is little Apple can do about it now -- and it knew this a long time ago.

Apple has to contend with the full-sized tablet market -- which it's creaming everyone in -- as well as the smaller, 7-inch tablet market, which the firm has only just entered with the iPad Mini. But now it faces an enterprise squeeze as well, primarily from business-focused users.

Apple may lose the most in the long run, despite its lead in the tablet market, as it's now being squeezed from both sides of the tablet crush.

The growing enterprise trend will push users likely towards the Surface and rival Windows 8 and Windows RT-powered devices. Just looking at a quick comparison of Apple's share price versus Microsoft's: Apple dipped by 1 percent and slowly recovered, while Microsoft rose by close to 1 percent before levelling off. It's clear that the market isn't feeling too secure with another iPad rival in the mix.

What's also more interesting is that there are many, many more Windows developers than there are iOS developers, particularly in the enterprise space. It's easier for Windows developers to upgrade existing, legacy applications to the newer, ARM-powered Windows RT devices (as well as Intel x86 tablets) than it is to port the entire application to the iPad. Enterprises will want to keep what they can without spending any more than they have to.

The Surface and other Windows 8 and Windows RT tablets doesn't mean that Apple has lost out completely. Apple will certainly start to feel the squeeze in the coming months.

Android in the enterprise: Google has still not released an enterprise-focused Android product. It's as if the search giant turned tablet maker doesn't even recognize anything beyond its small-minded view of "consumers, consumers, consumers!" Google is already making razor thin profits on its latest Nexus 7, according to analysts. 

Surface is a middle-ground tablet for both fun and play. Google is just for fun. Maybe that's why it called its application store "Google Play?" The Surface breathes life into the BYOD space, whereas Android is pretty much solely for the consumer market. In ignoring the enterprise, it's Microsoft that will generate the profit on its business-focused tablet while Google continues to scrape the profit barrel on its tablets.

The wildcard
Intel: The chip giant both wins and loses. For the win argument, Intel now gets its x86 chips in 'proper' tablets. Before they were in those clunky, 'relic of the millennium' tablets that were actually fiip-and-twist laptops. They were heavy enough to crush a small European nation. If you dropped the Windows XP-powered IBM ThinkPad X41 on Luxembourg, "goodbye Luxembourg." Intel now gains market share in Windows 8-powered tablets and pushes out the competition, notably AMD, without having to resort to nasty anti-competitive activities (hint, hint). 

Yet at the same time Intel wins, Intel also loses out. Windows 8 likely isn't going to stop the stagnation of the PC market as we know it. The post-PC world is ever growing and tablets are becoming more of the norm unlike anything that we have seen before. Windows 8 is more of a stay of execution than anything else.

This item first appeared on ZDNet under the headline "Microsoft launches Windows 8, Surface: Winners and losers."

 

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