Microsoft admits the obvious -- its Surface tablet may anger manufacturers, endangering Windows 8

Microsoft has finally admitted in a required government filing what most everyone believed all along: by manufacturing Windows 8 Surface tablets it will compete with manufacturing partners, and it could endanger the Windows 8 tablet platform.

That admission came in Microsoft's annual report to the U.S. Security and Exchange Commission. In the report, Microsoft noted:

"...our Surface devices will compete with products made by our OEM partners, which may affect their commitment to our platform."

That admission was first reported by the New York Times Bits blog, which noted that Microsoft CEO Steve Ballmer and Steven Sinofsky, president of Microsofts Windows division, have so far refused to say that, and in fact have even discounted it publicly. Nick Wingfield, who writes the blog, notes that at the Surface launch announcement, when he asked Sinofsky whether developing the Surface will hurt Microsoft's relationship with its partners:

"Sinofsky...gave me a little push in the direction of some Surface tablets and told me to 'go learn something.'"

Computerworld's Gregg Keizer reports that when the Surface was revealed, Gartner's Carolina Milanesi said:

"With Surface, Microsoft has just made it even harder for every ODM [original design manufacturer) out there to compete in the tablet market -- except for Apple, that is."

Keizer notes that not all analysts agree, and cites IDC's Tom Mainelli as saying:

"Partners aren't going anywhere. Most of them have tried Android tablets, but without any success. So although this might irritate them, Microsoft knows that [the OEMs] need them."

I don't agree that the OEMs need Microsoft, at least when it comes to Windows 8 tablets, because that assumes that there's going to be a tremendous demand for the tablets, and so everyone will be able to get a piece of a big pie.

Given the iPad's success, and what looks to be Google's hit with the Nexus 7, the pie for Windows 8 tablets might not be so big. And so Microsoft, with the Surface, could end up with a very large piece of a very small pie.

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