Why Microsoft’s Surface Tablet Shames the PC Industry

On June 18, Microsoft (MSFT) beckoned 200 or so members of the media to a grimy, industrial part of Hollywood for what it described as a can’t-miss affair. Dutiful reporters met at the appointed hour—3:30 p.m.—at a film and art studio Microsoft had rented out and emptied for the day. While beads of sweat formed on the foreheads of the people waiting to get in, aspiring actresses walked by in tight jeans and high heels on their way to a T-Mobile commercial casting call at the building next door.

Microsoft usually begs for attention. On this day, it played the cool maestro. In fact, the company played the Apple (AAPL) role, using pomp, circumstance, and constructed anticipation to make us believe that something really fantastic would appear. Perhaps the whole thing worked: Something that did seem rather fantastic arrived at about 4:20 p.m. It was the Surface tablet—a computer that had all its software and hardware made by Microsoft. In that moment, Microsoft became not just a competitor to Apple but also a rival to such longtime PC manufacturing partners as Hewlett-Packard (HPQ), Dell (DELL), and Acer (2353:TT).

Steve Ballmer, Microsoft’s chief executive officer, tried his best to soften this affront to the company’s partners. When he arrived in 1980, he said, Microsoft’s best-selling product was the SoftCard, a hardware device that would plug into Apple computers so they could run extra software. “Let’s take a little bit of a look back at the role of hardware at Microsoft,” Ballmer said, as a marketing video spun up to show mice, keyboards, and, of course, the Xbox.

Let’s be clear, though: Microsoft making hardware is not a natural action. It’s what the company does in times of desperation. With the release of Windows 8 looming, Microsoft was indeed desperate for a hardware company to do something to blunt Apple’s runaway tablet machine. The Surface tablet represents an indictment of the entire PC and device industry, which has stood by for a couple of years trying to mimic Apple with a parade of hapless, copycat products.

Rather than complaining, PC makers ought to take note of what Microsoft has produced. It has one tablet—a 9 mm thick, 1.5 pounder—that will run on low-power ARM chips and arrive around October. The black device has beautiful, beveled edges; its shell is made of what Microsoft calls vapor-deposited magnesium, or VaporMg. (Brushed aluminum is so last year, Apple.) It also has a built-in kickstand. Best of all, the device comes with a cover that locks firmly in place, unlike Apple’s flimsy iPad protector, and which functions as a proper keyboard. Both the kickstand and cover-cum-keyboard seem such obvious ideas now that we’ve seen them, yet the great army of PC makers failed to think up anything so clever over the past two years.

Later, a slightly bigger Surface tablet will arrive to run on an Intel (INTC) chip, with a stylus and an even-sturdier keyboard/cover. Workers will be able to run all their Windows 8 software and previous Windows applications on this device, while the thinner one will support a more limited set of software—it uses a chip architecture more common to smartphones than PCs.

Steven Sinofsky, president of Microsoft’s Windows division, did much of the oohing and ahhing over the Surface devices, which will be sold by Microsoft at its retail and online stores. Perhaps sensing the importance of the moment, Sinofsky’s voice shook and his hands trembled at times to the point that he could not finish demonstrating the tablets’ functions. Still, he managed to demo enough of the product and its industrial design to generate a few screams of ecstasy from the audience. (Whether these were overjoyed Microsoft employees or rapturous press was not clear.)

It was Panos Panay, general manager of Microsoft’s Surface products, who really did the Steve Jobs impression. He went on and on about the engineering marvels—200 custom parts, no less—that it took to make the Surface. When it goes up, the kickstand makes a sound as crisp as the way a luxury car door closes, he said. “And when you need it, it’s there.” Like Superman, I suppose.

Panay then talked for a long while about how the Surface devices feel and look like books. (To me, they looked like sleek computing devices, but what do I know?) “We designed this organically like a book,” he said. “It is light enough and it feels just perfect.” How perfect, Panos? “I am seriously in love with it,” he said of the keyboard/cover. “Outside of my wife, the Touch Cover is No. 2. I never want to take the Touch Cover off.” Okey-doke.

Microsoft, in many ways, helped create this mess that Panos et al are trying to fix. Along with Intel, it sucked all the profits out of the PC industry, leaving HP and Dell to rely on manufacturing companies in Taiwan for their innovative twists. The result has been the Great Stagnation, during which PC makers have been throwing smartphone and tablet designs over the wall, only to see them ignored en masse. With Windows 8 coming this fall, Microsoft could not afford to let that happen again. Needing a strong response to the iPad, it decided to build one.

Yet, I’m not sure how committed Microsoft is to this hardware-making thing over the long haul. It showed this technology off months before the arrival of Windows 8, has yet to release pricing details, and says it will deliver these beautiful products only through Microsoft channels. This does not sound like a full-on break with the PC makers. Rather, it sounds like Microsoft giving them a wake-up call: You can make something different and sexy with a bit of effort, guys. “We took the time and effort to get Surface and Windows 8 right,” Ballmer said. Now it’s the rest of the industry’s turn. That is, if they still want to have an industry in a few years.


The bottom line: The Surface may be more a way to goad PC manufacturers than a sign of Microsoft’s long-term commitment to making hardware.


source : Bloomberg Businessweek

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