How Hardware Missteps Led to the Microsoft Surface (and Why The Tech Needs to be Licensed)

An article from The New York Times describes the “hardware missteps” that led to Microsoft taking control of their tablet hardware with the new Surface. It’s an interesting read that reinforces my previous claim that Microsoft should license their Surface technology.

The NYT tells the tale of Microsoft, after “losing faith” with their hardware partners, striking out to show them how it’s done right. One reason given is the frustration they felt as the HP Slate 500 was “completely ruined” by the procurement process. This contrasts against how “stunned” Microsoft was at how far Apple was willing to go to obtain materials for the iPad. Also mentioned is how the “hefty” fees from Microsoft and Intel have restricted manufacturers’ ability to match those and other innovations.

Overall, it seems there’s more than enough frustration and blame to go around for the failures of Windows tablets to date. One passage in particular caught my eye though as it ties into an idea I promoted last week.

A second former H.P. employee said the company and other computer makers needed more innovation from Microsoft than it was delivering. He said computer makers viewed the licensing fee they paid for Windows as a subsidy for Microsoft’s research and development, an investment that would enable them to have competitive products.

Incentive vs. Reward

I first promoted the idea of licensing the Surface innovations, such as the Touch Cover and peripheral venting, as incentive to offer tablet manufacturers as part of a “win it all” strategy. I again mentioned it as tool to mend relationships after throwing their hardware partners under the bus. Now, the New York Times is reporting that their hardware partners might view that innovation as a reward for the money they’ve already invested in it.

Makes sense to me. I previously claimed that Microsoft’s licensees “basically paid for the research and development that went into making Surface” and that they’ll be questioning the wisdom of continuing to fund that research if they’re not going to benefit from it. As the NYT now reports, sharing that technology may not simply a goodwill gesture from Microsoft to vendors, but expected compensation for the billions they’ve already paid to the company.

Incentive or reward, how one views the prospect of licensing the Surface designs is irrelevant. What matters is that it should be licensed, just as the Windows software is. Licensing fees paid for the research that led to the new Surface. Licensing technology is Microsoft’s proven path to success, earning them billions of dollars every year. If Microsoft’s intent for Surface is to “jump-start” the Windows tablet industry, as a management professor at MIT, Michael A. Cusumano, claims, then it is incumbent on them to give their partners every possible advantage. It makes little strategic sense to do anything less.


  1. This is so wrong on so many levels, I almost don’t even know where to begin.

    I think it’s ridiculous that hardware OEMs want to see the table design as a “reward”. That’s like saying a Car company complaining that Goodyear should give them their tires as a reward, instead of buying them for each new car they make and sell because they’ve spent billions on tires over the years to put on their cars – and that they see that money spent as “R & D work” to the tire company.

    How long has Apple been trying to make great hardware products? Now how long has HP, Dell, and other companies have been trying to make great hardware products on the same level that Apple has been doing this? This has nothing to do with the Licensing fee and Intel fee they pay to make great hardware. Why? Because when comparing computer to computer from Apple with the same specs to HP or Dell, you will always pay almost twice as much for an Apple. So Apple themselves, have shown that price doesn’t get in the way with great hardware design, but what does get in the way, is competing with other OEMs.

    In the World of Apple, there are no other authorized OEMs that make and sell Apple computers, but them. So Apple competes with no one else with their hardware. Since Apple has high standards and only release products they believe are of great quality, they’ve set the standard and when consumers see their products, they buy into that vision since Apple doesn’t really make crap hardware and thus they get by charging whatever they want – and it’s working for them!

    In the world of Microsoft, HP competes with Dell, Acer, Sony, Asus, and so on. So even if HP makes a high end model, if they don’t market this very well, it will get lost with other cheaper hardware with crapper designs that have similar specs from Dell, Acer, and so on.

    In reality, this isn’t Microsoft’s problem per say. It’s the hardware OEMs problem for not trying to separate themselves apart from other Hardware OEMs and not spending the advertising to convince the mass public differently. Looking back from 2011 and the last 5 to 10 years, what hardware actually competed against anything from Apple? If there was anything, did you see any commercials to market the hardware like Apple has done during that time period? No.. so thus the problem with the hardware OEMs. It’s no secrete that it has been the hardware OEMs that have held Microsoft back, more than Microsoft has done do screw their own prospects. Vista’s bad rep came because of the Hardware OEMs. Windows 7 is already years ahead of anything Apple has done with their OS, already being fully touch capable with voice recognition, but what hardware OEMs is pushing these features with their designs? Anyone remember USB in Windows 95b? How long did it take for the OEMs to implement USBs? OEMs have shown they are less interested in “innovations and change” from Microsoft then they are just trying to stay within the thinking of the “box” and make a quick sale. Thus… I think if Microsoft losses a few hardware partners, than oh well. Microsoft should oversee most of the hardware requirements and design for the platforms their OS products will reside in and license that out. IMO if Microsoft doesn’t control this going forward, they will never win over the mass public opinion and will always be seen as a complicated mess (much like how the android OEM market as a whole was looked at in 2010) and will be seen as second class to Apple.

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