With a couple of days to digest the news that Microsoft is launching – and, more importantly, building – an iPad competitor, a consensus seems to have emerged: Microsoft has learned from Apple.
The most obvious thing about the news is that Microsoft is kicking its OS licensees in the face. As John Gruber writes, although the move was driven by Apple, it is actually an attack on companies like HP, Dell and Asus which previously worked with the company and now find themselves in competition with it. Microsoft has made tablet operating systems since before Apple, and have always been in competition with the iPad; it just hasn't done a very good job of it.
After 37 years, Microsoft agrees with Alan Kay: “People who are really serious about software should make their own hardware.”
As Jason Kottke points out, to succeed in the tablet ecosystem requires more than Microsoft could promise as the provider of software only. An entire ecosystem needs to build around the tablet, from content provision and sister devices to an OS built for a specific hardware setup, rather than one-size-fits-all software, and that was something that the company simply couldn't guarantee without building its own.
Not that there is that much risk in pissing off their erstwhile allies. When it comes to tablets, Microsoft has seen that it's "own the OS or bust", so aren't particularly concerned about the prospect of competition from OEMs running generic OSes; and when it comes to PCs, there remains no alternative.
But there remains a sense that Microsoft has finally accepted what a "post-PC" era means, and – although three years late – are preparing to retool their business towards that. Frankly, it's just a case of following the money. Horace Deidu does the maths:
If we simply divide revenues by PCs sold we get about $55 Windows revenues per PC and $68 of Office revenues per PC sold. The total income for Microsoft per PC sold is therefore about $123. If we divide operating income by PCs as well we get $35 per Windows license and $43 per Office license. That’s a total of $78 of operating profit per PC.
Now let’s think about a post-PC future exemplified by the iPad. Apple sells the iPad with a nearly 33% margin but at a higher average price than Microsoft’s software bundle. Apple gives away the software (and apps are very cheap) but it still gains $195 in operating profit per iPad sold.
Microsoft has shown that it knows where to head. But, as the video starting this post demonstrates, it's not yet clear that they have the competency to get there. Beyond hedging their bets on things like launch dates, pricing, and specs, they didn't allow journalists much hands on time (only a couple of minutes), and none at all with the keyboard cover which appears to be one of their largest selling points. They now need to spend the time until launch ensuring that they can live up to the promises made there.