Was Microsoft's Surface tablet an act of desperation? Yes, says a report in the New York Times.
Microsoft and the PC hardware industry were failing miserably at taking on Apple's iPad, forcing Redmond's hand, according to the report.
How critical was the situation becoming? Some assertions from the article:
- Apple's control of key materials: Materials like high-quality aluminum were purchased in such large quantities that Apple virtually cornered the market. Because PC makers were not responding to threats like this, Microsoft feared PC players were falling further and further behind Apple.
- Shortcomings of the Microsoft-Intel business model: Microsoft and Intel -- so-called "Wintel" -- sucked up much of the profit, leaving PC makers with limited resources to innovate.
- Lack of trust between Microsoft and PC makers: device makers lost faith in Microsoft. Despite demanding hefty licensing fees, Microsoft was not delivering the touch capability that was necessary to be competitive. HP "fumed" at Microsoft's inability to craft decent touch software sooner. For example, the Windows 7 touch experience was subpar, hardly measuring up to Apple.
- Failed Hewlett-Packard tablets: HP's Intel-based Windows tablet -- first shown at CES in 2010 -- ultimately suffered from mediocre chips, buggy software, and HP's decision to use merely "sufficient" components. And HP's strategy of buying Palm and creating the TouchPad failed.
And it probably wouldn't be a stretch to say that the rift between Microsoft and its hardware partners was a subtext of Monday's Microsoft Surface announcement: we're doing a tablet because we think we can do it better than our hardware partners.
And it's also not a stretch to say that Microsoft's foray into the tablet business will not improve the strained relationship with its hardware partners, who are now forced to compete against not only each other but Microsoft too.