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Why Microsoft should make its own tablets (and phones and PCs)

It looks like Microsoft plans to build and sell its own tablets, competing with its own partners. Great idea!

June 16, 2012 07:01 AM ET

Computerworld - The All Things D site reported this week that Microsoft on Monday intends to announce its entry into the tablet hardware business.

While Microsoft does make hardware -- mice, keyboards, Xbox, Kinect, Zune, Surface and other products -- it has not yet made desktop PCs, laptops or tablets, opting instead to embrace a partner strategy of third-party OEM manufacturing.

Pundits will no doubt say that Microsoft has a case of Apple envy and suggest that the company is finally embracing the highly successful "Apple model," in which the operating system maker also makes its own hardware.

In fact, Microsoft's announcement will be more in line with the "Google model."

The Google model is to have it both ways -- making hardware, but also licensing your OS to hardware partners who make products of their own. Google partners with OEMs for smartphone handset and tablet hardware. But it also acquired Motorola, which makes Android hardware.

The Motorola acquisition isn't Google's first foray into hardware sales and direct competition with hardware vendors. Google launched its Nexus One smartphone handset in early 2010. Although that phone was technically manufactured by one of Google's partners, HTC, it was sold by Google and branded as a Google phone. As it turned out, Google didn't like the support part of the hardware business and decided to exit that line of work for a while, but it had let its partners know that it was willing to compete with them.

Traditionally, the assumption has been that you must either partner with hardware companies to manufacture systems for your operating system (the Microsoft model) or not allow other companies to make hardware for your platform (the Apple model).

A hybrid approach has been considered suicidal because competing with your partners puts you in a gray area where you have hardware competition and fragmentation, but you also have a smaller number of partners who are also less committed and more distrusting.

But times are changing.

Microsoft's application of the Microsoft model to mobile hasn't worked out. A big partnership with Nokia has been a flop. The software vendor has fared badly in the mobile market, far outpaced by Apple, which uses the Apple model, and Google, which uses the Google model.

When Google announced its bid to acquire Motorola -- effectively declaring its intention to compete with its hardware partners -- many pundits predicted disaster for the company. But the disaster never happened. Google is getting away with it. Android OEMs are continuing to churn out more innovative and exciting hardware, and they don't seem vexed by the prospect of competing with the company that makes the operating system they use.



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