Saturday, June 23, 2012

Scratching the (Microsoft) Surface

Microsoft announced this week a new line of tablet computers running Windows. The announcement event had more than it's share of balky demos and unresponsive machines. The most curious thing, however, was the most distinctive feature of the Surface devices -- the embedded keyboard/cover. Although Microsoft had "hands-on" event, none of those present were actually permitted to try the keyboard. Add to this the fact that no pricing was announced and it just gives the entire event a forced feel -- like the products just weren't quite ready to announce.

John Gruber has perhaps the best analysis of this: "I presume Microsoft timed this event to jump ahead of anything Google might be announcing at their I/O conference next week — and the consensus seems to be that Google is going to announce much the same idea: their own Google-branded, Google-designed tablet that will put them in direct competition not just with Apple but with their own OS licensees."

Contrast this with Apple's announcement of the iPad. There were certainly plenty of rumours that Apple had been developing a tablet device. They had been circulating for years. In fact, the Apple rumour mill had gotten very tired of this story by the time of the announcement in January 2010. But Apple's announcement event was smooth and polished, full pricing information was given and pre-orders were taken within 60 days.

There's no doubt that the iPad has been a complete breakthrough product. And despite a host of challengers introduced in the last two years, none have really made an impact. Currently, there is no "tablet" market. Not yet. There's only an iPad market. 

I welcome Surface, just as I've welcomed the other iPad competitors. Competition is a good thing. When Windows Phone Series 7 was introduced during PDC '10, I thought it was a good thing. Frankly, I'm disappointed that it hasn't done better in the market. It's natural for any market to have three or four strong competitors, all pushing each other to produce better and better products and more attractive prices.

On this note, the personal computer market was a complete anomaly for over two decades. At first, it was dominated by the IBM PC. However, due to bad management, IBM had leaked enough technical details to allow their product to be copied, so the market became dominated with PC "clones." IBM tried to remedy this situation by introducing the Micro-channel Architecture, which required vendors to license certain technology in order to produce clones. (I fondly remember walking around COMDEX in the late 80's, finding some cool ISA hardware board, and then asking them if they had an MCA version available) But the market had already been wrested from IBM's hands, and placed in those of Microsoft, who's MS-DOS ran on all those clones.

Microsoft leveraged that OS monopoly into another, with Windows. Soon Microsoft dictated the hardware requirements to the clone makers, and stifled any upstart OS that threatened to emerge. Sure, there were competitors, such as Apple, who made arguably better computers, but they held an insignificant portion of the market. But it didn't last.

The problem with monopolies like this is they tend to stifle innovation. The best example is Microsoft itself -- with Internet Explorer. Microsoft recognized in late 1994 that the internet was a threat to their OS monopoly. They bought the Spyglass browser and turned it into Internet Explorer 1 in August 1995. There ensued a frenzy of innovation effort which brought us to IE 6 within six years. And then -- nothing for over five years. By 2001, Microsoft had achieved complete market dominance with an 85-90% market share in the browser space. Only when competition appeared again in the form of Mozilla and WebKit-based browsers did they again release new version of Internet Explorer. 

And, today, the browser market space is dominated by four strong competitors, each with 20-25% market share. That's a normal market.

There's too many writers in the computer press who are used to the anomaly -- with one competitor completely dominating the market. After all, it makes their job eaiser. All they have to do is follow the market dominator.

You'd think the press would embrace Apple's dominance in the tablet space. But no, it can't possibly be Apple. Apple was too long the beleaguered also-ran. By 1997, the press had given them up for dead. And there was certainly a lot of evidence for that. 

Apple proved it could successfully dominate the market with the iPod, another product many competitors tried unsuccessfully to compete with. Yet the press still looks to Microsoft.

After Apple announced the iPhone, Palm's Ed Colligan said, "PC guys are not going to just figure this out. They're not going to just walk in." Of course, the funny thing is -- they did. And not just once with iPhone, but a second time with Android. There's always room, even in a crowded market, for innovative products.

So, while I welcome the Surface to the market, I'm not really considering buying one. But I welcome the innovation it brings -- because this benefits all consumers. If nothing else, I can't wait for the next iPad...

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