First and Third

So I had planned on writing about the future of Microsoft branded hardware and its PC partners when Neowin reported a possible refresh to the Surface ARM lineup.

So I guess it’s a sign.

With the accession of Satya Nadella to Iron Throne of Redmond many wondered what he would do with the hardware Microsoft has accumulated. Many analysts have argued the margins and costs for hardware are not worth the time and effort the software giant has invested. Unlike Bing (the other money pit) many investors cannot see the benefit to Microsoft in any way. The hope was Nadella would jettison hardware (and in turn the entire consumer market) and move the company firmly into enterprise software and services. The anti-devicers were buoyed by Bloomberg news revealing Nadella’s hesitation in buying Nokia’s Hardware group. I mean Nadella comes from the Cloud/Enterprise side and hates buying Nokia; devices out in 3..2..1..

Not So Fast

Satya Nadella has been said to have been against the Nokia deal, but he also came around to it (though this is often left out). Also with recent pronouncements he has made clear he will keep Microsoft producing first party hardware. Like his predecessor, Nadella will walk the tightrope that is the Surface and Lumia.

As of now Microsoft seems intent on positioning its branded hardware as to not compete with its third party hardware partners. So don’t expect fire sales or prices that undercut HP or Dell. With the Surface, Lumia, and Xbox Redmond is working on building brand name, aspirational products. There is a reason Microsoft compared the Surface Pro 3 to the MacBook Air and not a PC. There is a power in the Apple logo and a prestige in owning one. Its like wearing a limited addition pair of Air Jordan’s or Adidas; you’re buying more than just the shoe.

To date there is no Apple equivalent in the PC space. And I’m not talking about a Samsung, which is close, but something that truly can/does represent the best of the PC. The PC market doesn’t have a brand that is lusted after; that is aspirational to own. 

And that is the deal with Microsoft’s first party brands.

So no the Surface Pro 3 isn’t the Yoga or the Zenbook, or the Series 9; its not something most techies would consider. But it is attractive and it makes you imagine that place you’d put it if you did have it.

On a more basic level, having branded hardware also ensures you have devices running your software in a NICE package. Think about Windows Phone and the lack of interest paid to it by HTC and Samsung and its former partners in Windows Mobile. Imagine trying to build a platform with no physical representation of it, then tell me to rely on third parties.

 

The Third party OEMs, Microsoft’s partners in crime, are not to be left out. The emergence of Microsoft branded hardware has changed the partner model; as has the emergence of Google as an OS provider. If you check out the Laptop and tablet section you will see this shift.

The last decade has seen PC makers shift from just Windows to multiple operating systems (basically Goggle’s Android and Chrome OS). With the appearance of the iPad and the predictions of a tablet takeover hardware makers began experimenting with anything that could move them in the Post-PC age. Hewlett-Packard bought Palm and put out the TouchPad while others flocked to then still young Android platform. All of this was met with mixed results but it all changed the PC market. And lest someone thinks I’m biased, there is also the fact Microsoft created the Surface brand (which must have caused all kinds of grief). There was, likely still is, animosity about the software vendor moving into their hardware domain. Some cite the Surface as the main reason OEMs went in on Chrome OS.

Despite the emergence of the Surface and devices running things other than Windows, PC makers still partner with Microsoft.

 Now having discussed a bit a background on first and third party hardware, what’s in it for you the buyer? With competition from Google and Apple along with the growth of mobile computing, Microsoft has had to make changes. For one thing, Redmond is now offering Windows and Windows Phone for free or reduced cost.

They also offer a discounted version of Windows (Windows with Bing) for zero dollars on laptops. Microsoft is also working with certain manufacturers on tablets and laptops in the $99-199 range, taking on low cost Android and Chrome devices. Specifically noted is the Toshiba Encore 7, a seven inch tablet going for $99. Hewlett-Packard is also getting into the game with the HP Stream; a 11 or 13 inch laptop costing $199. The Stream is interesting because it will include tablets and looks like it will be rebranded Android and Chrome devices. On the Microsoft side, indications are clear that the Surface and Lumia lines will be concept designs we can buy. I expect the Lumias will showcase imaging and the Surface line to be about covering new form factors and experiences.

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