Microsoft’s Big Gamble Surfaces

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Posted on June 21, 2012 by Bruce Stewart Posted as Blogosphere Discussion

The tablet market has taken a shift, with Microsoft’s announcement of the Surface this week.

Learning from Apple about the virtue of integrating hardware with software design, Microsoft has chosen to build its own product to go to war with the iPad.

War it is, too. The future of Microsoft lies in the balance.

Although the announcement in Los Angeles made great note of the entertainment and information consumption capabilities of the Surface, what really makes the Surface key to Microsoft’s future is that it runs Office.

Office is Microsoft’s core. It’s where the money is. It’s why the renewal of Office licences in your company is the vehicle by which Microsoft introduces other products, such as SharePoint.

For the enterprise market, everyone runs Office.

Break that connection, and Microsoft becomes just another vendor competing on price.

You may recall the $50 per year retail price Google Apps has set. Or, for users who switch to Apple’s product line, the $79 for iWork for Mac, or the $60 for iWork for iOS.

What makes the iPad so threatening to Microsoft is that Office isn’t a part of it. They’ve had a choice: make Office available for the iOS environment, or hope iWork and other apps in the App Store, plus Google Apps, don’t take too much away from Office on PCs.

The trouble for Microsoft is that iPads are flooding into enterprises. With them comes pressure to get off of Office — not just Excel, PowerPoint and Word, but Outlook, SharePoint, the lot.

Surface is Microsoft’s move to stem this tide. That’s why it comes with the keyboard. That’s why Microsoft is willing to risk desktop resistance to Windows 8 (due to the challenges of adopting the Metro interface).

If Apple’s right about this market, information consumption will drive sales. If Microsoft’s right, what we want are better laptops to work on. That’s what Surface really is.

Microsoft just bet the company. In a year, we’ll know who’s right.

If your 2013 Office licence renewal comes with deeply discounted mandatory Surfaces, you’ll know how much they fear losing.

Bruce Stewart is an internationally-recognized expert on IT governance and the future of technology. You can learn more about him, and connect to him on the social networks or via email, by visiting here.

Bruce Stewart Bruce Stewart (98 Posts)

Bruce Stewart is a 39 year veteran of IT management and above. He is an executive advisor serving CIOs and senior executives in areas of governance, strategy, complex architectural transitions, portfolio yield and value generation.


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  • DonSheppard

    Wonder what we’ll be saying at Blogging Idol this time next year?

    I wonder if we’ll get to the point of having too many choices?

    I still go back to the ecosystem requirement – the need to have an iTunes equivalent for updates, new app and also an integrated storage capability.  Things need to get simpler overall. 

    • Bruce Stewart

      Simpler is always better, although those who make their living from complications don’t think so.

  • http://twitter.com/chrispycrunch Chris Lau

    Apple makes $200 per ipad sale and nearly 0 on software. The app sales add to margins and to profit. Microsoft makes nothing on hardware and everything on OS and office sales. Having used Google Apps office, I’ve since switched back to MS office. The features of desktop software are missing on cloud Office.

    The Surface tablet represents a big shift for MS but a bigger one for the vendors. MS will need to take a big loss or end up having a line-up like that of Zune.

    Here are two more viewpoints on MS Surface
    http://daringfireball.net/2012/06/surface_between_rock_and_hardware_place

    http://www.asymco.com/2012/06/20/who-will-be-microsofts-tim-cook/

    • Bruce Stewart

      Much as when Internet Explorer was unleashed to turn the tide of Netscape and given away through an expensive and rapid development cycle, Surface must also be almost given away in order to establish a position while there is still time.

      I agree with you that the office applications on the machine are superior to Google Apps (I use MS Office, iWork Mac, iWork iOS and Google Apps regularly). Offering Office for iOS would no doubt have been well received by the market, but the price points required would have been crippling for Microsoft, and would have done nothing to preserve its desktop/laptop franchises. Hence the strategy that we’re seeing: blast away the vendors (there must be one Surface and it must work as expected, with no gimmicks and no mismatches).

      What Microsoft hasn’t done, based on the announcement session, is make the hard choices about what Surface should be. On screen keyboard only, soft key keyboard, harder key keyboard, yes all are there. The pad/tablet market needs clarity: these are closed environments from a hardware point of view. The provision of too many options may make for people buying the “wrong one” and blaming the product instead of their choice.

      On the other hand, you can see the “inside the firewall” expectation, given that it’s a WiFi only device. I think I’d have made one cover/keyboard decision, and added 3G/LTE instead, if options are required.