Microsoft does not want to sell hardware, not in the way you imply. Surface is akin to Google's Nexus; a 'northstar' product intended to lead OEMs in the right direction.
Microsoft is not, and never will be, a hardware company. Please don't go off saying "what about Xbox or mice & keyboards".
First Xbox, while finally turning a profit, is a shining example of how far Microsoft needs to go to truly be excellent at hardware supply chain management. The RROD debacle cost MS many $B and there is no evidence that they have truly learned.
I know the people who drove the Xbox360 hardware design and supply chain management. They are now war scared seasoned experts. The type of people you want working on the next big thing. None of them even knew about Surface until it was announced. Typical Microsoft organizational silos.
Designing and building hardware is easy. Easy relative to SELLING hardware. Retail, hardware supply chain management, support, etc... are huge endeavors that Microsoft has very little capability for. The DNA of Microsoft is that of a software company.
Second, a tiny, tiny percentage of Microsoft's profits come from direct sales of products to consumers. Like less than 5%. In order for MS to seriously get into the hardware business it would need a model that enabled something close to the +40% gross profit margins Apple is seeing from its vertically oriented model. It would take a decade or more of radical change for Microsoft to make such a change, and while MS has demonstrated it can turn the ship (more like a fleet) before, I simply do not think this is a direction it can go.
I do not believe Microsoft will try to compete with Apple on Apple's terms (vertically integrated, high-margin hardware with up-front payment). I believe Microsoft will try to end-around Apple by continuing with a predominantly horizontal play, enabling annuity revenue streams from 'experiences' delivered across all of a user's devices, regardless of whether they run Windows or not (including Apple's devices).
Microsoft does not want to sell hardware, not in the way you imply. Surface is akin to Google's Nexus; a 'northstar' product intended to lead OEMs in the right direction.
Microsoft is not, and never will be, a hardware company. Please don't go off saying "what about Xbox or mice & keyboards".
First Xbox, while finally turning a profit, is a shining example of how far Microsoft needs to go to truly be excellent at hardware supply chain management. The RROD debacle cost MS many $B and there is no evidence that they have truly learned.
I know the people who drove the Xbox360 hardware design and supply chain management. They are now war scared seasoned experts. The type of people you want working on the next big thing. None of them even knew about Surface until it was announced. Typical Microsoft organizational silos.
Designing and building hardware is easy. Easy relative to SELLING hardware. Retail, hardware supply chain management, support, etc... are huge endeavors that Microsoft has very little capability for. The DNA of Microsoft is that of a software company.
Second, a tiny, tiny percentage of Microsoft's profits come from direct sales of products to consumers. Like less than 5%. In order for MS to seriously get into the hardware business it would need a model that enabled something close to the +40% gross profit margins Apple is seeing from its vertically oriented model. It would take a decade or more of radical change for Microsoft to make such a change, and while MS has demonstrated it can turn the ship (more like a fleet) before, I simply do not think this is a direction it can go.
I do not believe Microsoft will try to compete with Apple on Apple's terms (vertically integrated, high-margin hardware with up-front payment). I believe Microsoft will try to end-around Apple by continuing with a predominantly horizontal play, enabling annuity revenue streams from 'experiences' delivered across all of a user's devices, regardless of whether they run Windows or not (including Apple's devices).