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Microsoft has many problems staring them in the face right now. They can't seem to win or even make much ground in the search war, have become an also ran when it comes to browsers and are losing ground on the OS front while essentially being a no show in the mobile space as Nokia, their chosen partner in that dance is progressing rapidly towards insolvency.
Meanwhile Apple has transformed itself from an also ran to a "We're going to run you down" tech giant over the past decade or so and Google has managed to carve out a pretty effective niche while also making Apple sweat a little bit (albeit mostly on the low margin end of the market where Apple doesn't care much) in the phone and tablet space.
So why Surface, and why now? I don't buy Acer founder Stan Shih's theory that it's just a ploy to sell Windows 8. That sounds like wishful thinking to me. Microsoft has helped generate a lot of money for companies like Acer and the thought of having to compete with them on the hardware front can't be comfortable. Particularly if Microsoft has some success here which I think they are capable of. The Surface looks like a well thought out product and Windows 8 has gotten a lot of good buzz. Also keep in mind that it's not as if Microsoft are complete strangers to the hardware business. XBox 360 ring any bells? Add in keyboards, mice and the Kinect and it's clear they aren't moving that far out of their comfort zone here.
Apple makes boatloads of money because they make revenue on everything. Hardware, software and media. Microsoft makes licensing fees when a copy of their OS is sold but they make zilch off the hardware itself. Also keep in mind that Apple is eating into those Windows licensing revenues by cannibalizing the low end of the laptop market with their iPad and eating away at the high end with their MacBook line. Desktop computers are rapidly becoming a niche market so the fact that Apple doesn't seem to care much about that segment can't be very comforting to Microsoft.
So, what is an aging software giant to do? The old saying "If you can't beat 'em, join 'em" comes to mind. Microsoft can't turn itself into Apple but they can start creating experiences that are more integrated. Inserting themselves in more places along the value chain also increases their opportunity for revenues and profits and that is always attractive.
How will it all end? I think there is a fifty/fifty chance that Microsoft pulls off a successful launch of the Surface. They have a lot of very smart people working there and the buzz is good but they need to avoid missteps like not allowing tech journalists to actually examine the surface after the press conference that announced it.
I try to be agnostic when it comes to platforms but I do like competition. I don't want one company dominating. Google has done an OK job of keeping Apple honest but having Microsoft continue as a viable alternative is going to be very important going forward so we can continue to have more than one choice when it comes time to buy our tech toys.
