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Microsoft’s tablet: simply too

expensive to swallow...

I’ve created this chart from data shown at Google’s Press launch on the 24th July 2013 where they introduced the second version of the Nexus 7 tablet.  The data was only on-screen for twenty seconds, however I thought it warranted some closer examination because it perfectly demonstrates what is happening in computing at the moment.  More specifically what has been happening at Microsoft.  Just over a year ago I wrote an article about tablet devices where I predicted that when Microsoft’s Surface RT tablet finally arrived, it was likely to be far too expensive.  Sadly this proved to be the case.  In fact so many remained unsold that on the 18th July 2013 Microsoft announced a $900 million "inventory adjustment" charge for its Surface RTs, parts and accessories.  The next day Microsoft’s share value dropped 11% on the news.  I also predicted in an article in August last year that when Microsoft shareholders realised how Microsoft, under CEO Steve Ballmer’s watch, had missed out on the biggest change in computing for many years, he would have to exit the company.  Ballmer has now announced that he will retire as soon as a replacement is found.  A month before that announcement, Ballmer had declared a top to bottom re-organisation of Microsoft that to my mind had all the appearance of desperation.  The chart above, uses IDC, Gartner and Google’s own internal data to provide the background to Microsoft’s problem.   Microsoft began their “tablet pc” project back in the late nineties and first used the name “tablet pc” in 2001.  They saw what would happen sometime in the future – but, like nearly everyone else, not precisely when.  As you can see from the graph line on the chart, sales of “tablet” computers didn’t really take-off until after the April 2010 launch of Apple’s iPad.  Apple’s coup was in creating an appealing, easy-to-use tablet that was light, yet powerful enough for many common tasks, and with a battery that would last all day before needing charging.  To accomplish this Apple relied on an ARM micro-processor.  Within two years following iPad’s launch, sales of tablets were approaching those of desktop/laptop computers.  And, according to the well-informed estimates used for this data, in 2013 the sales of tablets will surpass desktop/laptop computers by some margin.  Although initially those tablet sales were nearly all iPads they were closely followed by a host of Android devices from Samsung and other manufacturers.  And eventually last year, two tablets from Google as well.  Having seen the early potential for a future tablet device, why did Microsoft get things so horribly wrong?  At the literal core of the answer to that question lies the fact that mobile devices rely on batteries for their power.  Microsoft’s operating system only ran on Intel micro-processors.  Historically Intel always considered the speed of the micro-processor to be far more important than battery life.  The company has only changed that priority recently and, as a consequence, Intel missed out on making micro-processors suitable for smartphones and tablets. It was only this year after a change at the helm that they admitted their mistake The majority of smartphones like the iPhone, and tablets like the iPad, use micro-processors designed in Britain by ARM which has always designed chips using miserly amounts of power, hence their popularity in mobile devices.  It’s going to take Intel no small effort to catch-up with ARM, mainly because ARM produces processors that can be tailored to fit any manufacturers’ requirements.  This is an area of manufacture in which Intel hasn’t any experience.  Microsoft thought the solution to its problem would be to produce a version of the Windows operating system designed to run on ARM microprocessors.  It’s called Windows RT, (the RT probably stands for “runtime” although Microsoft hasn’t been too clear about this), and Microsoft’s software engineering team has been making a supreme effort during the last few years producing this “ARM” version of the Windows operating system.  As you’ll appreciate, developing software never comes cheap and although it hasn’t yet been disclosed in Microsoft’s accounts, and it’s certainly not yet been written down, it has clearly cost Microsoft a massive amount of money. Unfortunately, despite all the concentration and the cash, the Microsoft Surface RT has not been well received.  Performance is sluggish and limited, and even at a lower price tag, the computer press is still not recommending the Surface RT.  Only a few existing software programs run on Windows RT and they are primarily Microsoft’s products.  Even Microsoft Office hasn’t yet got a Windows RT version of Outlook for email, although that’s due shortly.  To add further irritation - when you use the bundled Office software, the licence doesn’t legally cover business use.  We could blame poor marketing, but I think the primary reason for this sorry situation is due to the complexity of the software engineering needed to create a new operating system.  It’s a measure of Microsoft’s panic that in order to get Windows running on ARM in a reasonable time frame, the company decided to omit any form of backwards compatibility.  This means Windows RT computers are excluded from using the many thousands of Windows programs, produced by independent developers over the years.  It is this rich and creative eco-system of software that makes Microsoft’s Windows operating system so useful.  This was something that Steve Ballmer seemed to understand when he gave his famous “developers, developers, developers, developers,” speech at a 2009 conference Today that strategy has changed: Microsoft has locked Surface RT computers down so that only approved apps can be installed via Microsoft’s own Windows Store.  So Microsoft is now copying Apple’s “exclusivity”marketing methods, as well as simultaneously making a complete break with the all the independent developers who have supported Windows so reliably in the past.  Unlike Apple, Microsoft is allowing some other manufacturers to produce Windows RT hardware, but under severe restrictions which go right down to having to use specific components.  The few manufacturers which followed Microsoft with Windows RT products have lost money on the venture.  Samsung launched the Ativ Tab running Windows RT in the UK and then, sensing problems, it wisely withdrew from launching the product in Germany and the US. If Samsung, which spends significantly more money on global advertising than anybody else in the electronics industry, cannot manage to make and, more importantly, sell Windows RT products successfully, who can?  No other company installs more ARM microprocessors in mobile devices than Samsung, so it’s useful to understand the reasons behind their quick withdrawal of support for Windows RT.  As Mike Abary, the Samsung senior vice president in charge of the company's PC and tablet business in the US, explained in January this year that having two versions of Windows was a confusing story for customers; trying to market an explanation for that would be an expensive task; initial sales were modest; and retailers were not very positive.  On top of those issues, ARM devices are typically cheaper than Intel devices, and even Samsung with all their manufacturing muscle couldn’t build Windows RT computers cheaply enough to meet the low price point that was needed.  Like Toshiba, Samsung had already foreseen that by late 2013 the market would be awash with comparatively low cost Windows 8.1 computers running on a new generation of Intel micro-processors that could compete with ARM on battery life and price.  In fact, Samsung has launched Ativ Tab 3 which uses a new generation of low cost Intel Atom that does exactly this, and has full Windows software backward compatibility. Ten or even 20 year old software programs will still run on an Ativ Tab 3 because it is using a new Intel processor with better battery life. So should Microsoft have developed Windows RT?  It has been an enormous drain on its programming resources at a time when its core Windows operating system desperately needed to be improved.  With hindsight it is easy to see that the company has compromised Windows, one of its principal revenue streams, to build a touch-centric operating system which can run on ARM and Intel processors.  This strategy has confused developers, manufacturers and customers alike.  None of the real computing work that most people want to do can be done using a touch screen, which are really only good for mobile devices that interface with cloud services, although even they have their limitations.  Using Microsoft’s own telemetry data: when using word processing software, the most common functions are 1) Paste, 2) Save, 3) Copy, 4) Undo and 5) Bold.  Given that this is the case, just try selecting an area of text from a web page on a touch device and copy, then paste the text into a new document.  Whether you do that on a Windows RT, Android or Apple iOS device it is a frustrating and difficult process.  A relatively simple action becomes prone to the vagaries of the device’s screen sensitivity. It also relies on the device being held virtually motionless, and the accuracy of the hand-eye co-ordination of the human involved.  Yet this function can be easily accomplished with precision in just a few seconds using a keyboard and mouse.  Don’t get me wrong, I love using my Google Nexus 7 tablet, although when I want to copy text from a web page, I take the timesaving route of emailing the link to myself to pick it up later on my Windows 8.1 laptop, where I can, of course, use a keyboard and mouse.  My laptop is also running essential software that has taken many years to create and therefore it will not run on Windows RT.  Backward compatibility for Windows is a necessary strength, not a weakness. Microsoft’s mistake was to compromise their existing desktop operating system in order to incorporate touch capability.  The company is still following the strategy of having one operating system to rule all devices - an idea unlikely to work.  Are the Microsoft watch, the wearable computer or my Internet-connected TV all going to be running similar but different versions of Windows like my laptop?  If so they won’t be a pleasure to use - they will be far too complex.  And if any Microsoft product isn’t easy to use, then it won’t be used by many people.  If the company insists on one interface which unites touch, keyboard and mouse, with two operating systems, it’s inevitably going to cost Microsoft more expensive write-downs in the future.  Does the company really think that Windows RT, with no backward compatibility, is the answer to Android?  Could this be Microsoft’s defensive move as Google develops improved Office type functionality into Chrome and Android?  Microsoft has always been a high margin company (as has Intel) but competing with free operating system like Android makes a Windows RT tablet far too expensive to swallow.  The company now has some vital but basic choices to make on its future strategy: keep confusing the market and lose money by continuing to develop Windows RT; kill Windows RT and go back to having only one version of Windows that runs solely on new battery- saving Intel micro-processors; or create backward compatibility for ARM (unlikely).  Whatever Microsoft’s decision, its venture into tablets is certainly proving expensive on all levels.  Asus (Asustek) Chief Executive Jerry Shen explains: "It's not only our opinion, the industry sentiment is also that Windows RT has not been successful,"  Ballmer chose to take a much simpler view, he said: "We built a few more devices than we could sell." September 2013
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Microsoft’s tablet: simply

too expensive to swallow...

I’ve created this chart from data shown at Google’s Press launch on the 24th July 2013 where they introduced the second version of the Nexus 7 tablet.  The data was only on-screen for twenty seconds, however I thought it warranted some closer examination because it perfectly demonstrates what is happening in computing at the moment.  More specifically what has been happening at Microsoft.  Just over a year ago I wrote an article about tablet devices where I predicted that when Microsoft’s Surface RT tablet finally arrived, it was likely to be far too expensive.  Sadly this proved to be the case.  In fact so many remained unsold that on the 18th July 2013 Microsoft announced a $900 million "inventory adjustment" charge for its Surface RTs, parts and accessories.  The next day Microsoft’s share value dropped 11% on the news.  I also predicted in an article in August last year that when Microsoft shareholders realised how Microsoft, under CEO Steve Ballmer’s watch, had missed out on the biggest change in computing for many years, he would have to exit the company.  Ballmer has now announced that he will retire as soon as a replacement is found.  A month before that announcement, Ballmer had declared a top to bottom re-organisation of Microsoft that to my mind had all the appearance of desperation.  The chart above, uses IDC, Gartner and Google’s own internal data to provide the background to Microsoft’s problem.   Microsoft began their “tablet pc” project back in the late nineties and first used the name “tablet pc” in 2001.  They saw what would happen sometime in the future – but, like nearly everyone else, not precisely when.  As you can see from the graph line on the chart, sales of “tablet” computers didn’t really take-off until after the April 2010 launch of Apple’s iPad.  Apple’s coup was in creating an appealing, easy-to-use tablet that was light, yet powerful enough for many common tasks, and with a battery that would last all day before needing charging.  To accomplish this Apple relied on an ARM micro- processor.  Within two years following iPad’s launch, sales of tablets were approaching those of desktop/laptop computers.  And, according to the well-informed estimates used for this data, in 2013 the sales of tablets will surpass desktop/laptop computers by some margin.  Although initially those tablet sales were nearly all iPads they were closely followed by a host of Android devices from Samsung and other manufacturers.  And eventually last year, two tablets from Google as well.  Having seen the early potential for a future tablet device, why did Microsoft get things so horribly wrong?  At the literal core of the answer to that question lies the fact that mobile devices rely on batteries for their power.  Microsoft’s operating system only ran on Intel micro-processors.  Historically Intel always considered the speed of the micro-processor to be far more important than battery life.  The company has only changed that priority recently and, as a consequence, Intel missed out on making micro-processors suitable for smartphones and tablets. It was only this year after a change at the helm that they admitted their mistake The majority of smartphones like the iPhone, and tablets like the iPad, use micro-processors designed in Britain by ARM which has always designed chips using miserly amounts of power, hence their popularity in mobile devices.  It’s going to take Intel no small effort to catch-up with ARM, mainly because ARM produces processors that can be tailored to fit any manufacturers’ requirements.  This is an area of manufacture in which Intel hasn’t any experience.  Microsoft thought the solution to its problem would be to produce a version of the Windows operating system designed to run on ARM microprocessors.  It’s called Windows RT, (the RT probably stands for “runtime” although Microsoft hasn’t been too clear about this), and Microsoft’s software engineering team has been making a supreme effort during the last few years producing this “ARM” version of the Windows operating system.  As you’ll appreciate, developing software never comes cheap and although it hasn’t yet been disclosed in Microsoft’s accounts, and it’s certainly not yet been written down, it has clearly cost Microsoft a massive amount of money. Unfortunately, despite all the concentration and the cash, the Microsoft Surface RT has not been well received.  Performance is sluggish and limited, and even at a lower price tag, the computer press is still not recommending the Surface RT.  Only a few existing software programs run on Windows RT and they are primarily Microsoft’s products.  Even Microsoft Office hasn’t yet got a Windows RT version of Outlook for email, although that’s due shortly.  To add further irritation - when you use the bundled Office software, the licence doesn’t legally cover business use.  We could blame poor marketing, but I think the primary reason for this sorry situation is due to the complexity of the software engineering needed to create a new operating system.  It’s a measure of Microsoft’s panic that in order to get Windows running on ARM in a reasonable time frame, the company decided to omit any form of backwards compatibility.  This means Windows RT computers are excluded from using the many thousands of Windows programs, produced by independent developers over the years.  It is this rich and creative eco-system of software that makes Microsoft’s Windows operating system so useful.  This was something that Steve Ballmer seemed to understand when he gave his famous “developers, developers, developers, developers,” speech at a 2009 conference Today that strategy has changed: Microsoft has locked Surface RT computers down so that only approved apps can be installed via Microsoft’s own Windows Store.  So Microsoft is now copying Apple’s “exclusivity”marketing methods, as well as simultaneously making a complete break with the all the independent developers who have supported Windows so reliably in the past.  Unlike Apple, Microsoft is allowing some other manufacturers to produce Windows RT hardware, but under severe restrictions which go right down to having to use specific components.  The few manufacturers which followed Microsoft with Windows RT products have lost money on the venture.  Samsung launched the Ativ Tab running Windows RT in the UK and then, sensing problems, it wisely withdrew from launching the product in Germany and the US. If Samsung, which spends significantly more money on global advertising than anybody else in the electronics industry, cannot manage to make and, more importantly, sell Windows RT products successfully, who can?  No other company installs more ARM microprocessors in mobile devices than Samsung, so it’s useful to understand the reasons behind their quick withdrawal of support for Windows RT.  As Mike Abary, the Samsung senior vice president in charge of the company's PC and tablet business in the US, explained in January this year that having two versions of Windows was a confusing story for customers; trying to market an explanation for that would be an expensive task; initial sales were modest; and retailers were not very positive.  On top of those issues, ARM devices are typically cheaper than Intel devices, and even Samsung with all their manufacturing muscle couldn’t build Windows RT computers cheaply enough to meet the low price point that was needed.  Like Toshiba, Samsung had already foreseen that by late 2013 the market would be awash with comparatively low cost Windows 8.1 computers running on a new generation of Intel micro-processors that could compete with ARM on battery life and price.  In fact, Samsung has launched Ativ Tab 3 which uses a new generation of low cost Intel Atom that does exactly this, and has full Windows software backward compatibility. Ten or even 20 year old software programs will still run on an Ativ Tab 3 because it is using a new Intel processor with better battery life. So should Microsoft have developed Windows RT?  It has been an enormous drain on its programming resources at a time when its core Windows operating system desperately needed to be improved.  With hindsight it is easy to see that the company has compromised Windows, one of its principal revenue streams, to build a touch-centric operating system which can run on ARM and Intel processors.  This strategy has confused developers, manufacturers and customers alike.  None of the real computing work that most people want to do can be done using a touch screen, which are really only good for mobile devices that interface with cloud services, although even they have their limitations.  Using Microsoft’s own telemetry data: when using word processing software, the most common functions are 1) Paste, 2) Save, 3) Copy, 4) Undo and 5) Bold.  Given that this is the case, just try selecting an area of text from a web page on a touch device and copy, then paste the text into a new document.  Whether you do that on a Windows RT, Android or Apple iOS device it is a frustrating and difficult process.  A relatively simple action becomes prone to the vagaries of the device’s screen sensitivity. It also relies on the device being held virtually motionless, and the accuracy of the hand-eye co-ordination of the human involved.  Yet this function can be easily accomplished with precision in just a few seconds using a keyboard and mouse.  Don’t get me wrong, I love using my Google Nexus 7 tablet, although when I want to copy text from a web page, I take the timesaving route of emailing the link to myself to pick it up later on my Windows 8.1 laptop, where I can, of course, use a keyboard and mouse.  My laptop is also running essential software that has taken many years to create and therefore it will not run on Windows RT.  Backward compatibility for Windows is a necessary strength, not a weakness. Microsoft’s mistake was to compromise their existing desktop operating system in order to incorporate touch capability.  The company is still following the strategy of having one operating system to rule all devices - an idea unlikely to work.  Are the Microsoft watch, the wearable computer or my Internet-connected TV all going to be running similar but different versions of Windows like my laptop?  If so they won’t be a pleasure to use - they will be far too complex.  And if any Microsoft product isn’t easy to use, then it won’t be used by many people.  If the company insists on one interface which unites touch, keyboard and mouse, with two operating systems, it’s inevitably going to cost Microsoft more expensive write-downs in the future.  Does the company really think that Windows RT, with no backward compatibility, is the answer to Android?  Could this be Microsoft’s defensive move as Google develops improved Office type functionality into Chrome and Android?  Microsoft has always been a high margin company (as has Intel) but competing with free operating system like Android makes a Windows RT tablet far too expensive to swallow.  The company now has some vital but basic choices to make on its future strategy: keep confusing the market and lose money by continuing to develop Windows RT; kill Windows RT and go back to having only one version of Windows that runs solely on new battery-saving Intel micro- processors; or create backward compatibility for ARM (unlikely).  Whatever Microsoft’s decision, its venture into tablets is certainly proving expensive on all levels.  Asus (Asustek) Chief Executive Jerry Shen explains: "It's not only our opinion, the industry sentiment is also that Windows RT has not been successful,"  Ballmer chose to take a much simpler view, he said: "We built a few more devices than we could sell." September 2013
Click here to download the PowerPoint chart: Click here to download the PowerPoint chart: