Microsoft’s announcement that it is launching its own first-party hardware for a family of Windows tablets is welcome news: If you want a job done right, do it yourself. While Asus, Lenovo, Nokia, Samsung, and Toshiba are expected to launch their own Windows RT products this year, other major OEMs are notably absent from the list, either because they’re focused on x86 devices first or because they were locked out of the launch like HTC. Microsoft's Surface tablets will run on both chipsets.
Microsoft has so many assets to bring to its own hardware: Smartglass, a “Kinect camera,” Skype, Barnes & Noble Nook content, Microsoft Office (although that won’t be exclusive to Windows), just to name a few. While skeptics rightly criticize past Microsoft hardware failures like the Zune player, Xbox is a more recent example of resounding success. With the next generation of the Xbox “720” due out soon, Microsoft will have ample opportunity to bundle and promote the two products together and sell its tablets through the same consumer retail channels — although to start at least, the Surfaces will only be available at Microsoft Stores and online, which certainly limits adoption potential.
This product line marks a crucial pivot in Microsoft’s product strategy. It blends the Xbox first-party hardware model with the Windows ecosystem model. It puts the focus on the consumer rather than the enterprise. And it lets Microsoft compete with vertically integrated Apple on more even ground.
BUT — and you knew there was a “but” coming — Microsoft will be its own worst enemy in this market. More so than Apple or Google, the worst thing that could happen to Microsoft’s Windows RT tablets is Windows 8 on x86. Selling x86-based tablets in the same retail channels as Windows RT tablets will confuse consumers and sow discontent if consumers buy x86 and think they’re getting something like the iPad. Microsoft and its partners need to articulate a compelling strategy for how they will manage consumer expectations in the channel. Consumers aren’t used to thinking about chipsets. Choice is a key tenet of Windows, but too much choice is overwhelming for consumers. Apple gets this, and limits iPad options to connectivity, storage, and black . . . or white.
Like Microsoft’s “Signature” PCs, a Microsoft-designed tablet sets the standard for other OEMs to follow. But Microsoft won’t abandon its profitable Windows licensing model; there’s little risk that the future of Windows is total vertical integration. This is an experiment emboldened by the Xbox success. But in the game console market, Microsoft doesn’t compete against itself.