Microsoft Tries To Flatten Competition With Surface (Part 1)

Company to produce its own tablet while stepping on partners’ toes

PC makers have come and gone, but there's one thing that hasn't changed since the beginning: Microsoft makes the software and the OEMs make the hardware. Each stays out of the other's business and everyone is happy.

Unfortunately, that delicate balance was thrown into disarray when Microsoft introduced its Surface tablets in an Apple-like unveiling that had the tech media swooning and PC builders quietly gritting teeth. Although Microsoft has eaten around the edges of its customers' businesses before with game consoles, keyboards, mice, and even networking equipment, the software giant has never directly offered a PC until now. And that's what seems to have put OEMs in a snit.

Microsoft plans to offer both an ARM version of its sexy Surface running Windows RT and an x86 version running Window 8

‘It's obvious to me that they don't care at all about us or other OEMs, and I think that could be a problem for them with some customer groups and bigger OEMs alike,’ said one PC maker, who described OEMs as getting ‘screwed.’

‘I expect we will now be forced to go toward entry level to offer an affordable alternative to what we think will be a too-expensive Surface product portfolio,’ the OEM said. ‘But it would have saved us many, many R&D dollars had we just been told what to expect from them.’

That's apparently the feeling from many other PC OEMs, according to analyst Patrick Moorhead with Moor Insights & Strategy. Moorhead spent some time taking the pulse of OEMs after the unveiling of Surface, and people are pissed. Moorhead said several PC makers who normally work very closely with Microsoft felt blindsided by Surface. Some OEMs had even shown Microsoft their designs, to then watch as Microsoft gave them a big thumbs down by introducing the Surface.

Perhaps more dangerous is what happens if Microsoft intends to stay in the PC business. Long term, Microsoft cannot compete directly with their OEMs

It didn't help that the Surface design seems legitimately well received, with its magnesium body and unique integrated keyboard cover. Although no prices were announced, Microsoft said two versions will be available: The thinner 9.3mm Windows RT version will run on ARM and be price competitive with other ARM tablets. The second one is slightly thicker at 13.5mm, will use an Intel x86 chip, and run Windows 8 Professional. Both will sport 10.6-inch ClearType Full HD Displays.

Moorhead said PC makers have told him they're rethinking their Windows tablet strategies or running back to the arms of Google, which they had previously fled after seeing Android designs go nowhere. Chrome OS, Android, Tizen, Bada, and even WebOS could see new designs now.

Perhaps more dangerous is what happens if Microsoft intends to stay in the PC business.

‘Long term, Microsoft cannot compete directly with their OEMs. Microsoft needs to license technology, provide carve-out market opportunities beyond the cheap provider, stop selling PCs, or OEMs will flee Microsoft,’ Moorhead said. ‘If too many OEMs start to flee the Microsoft ecosystem, decrease innovation more, or embrace Google strategically, I fully expect Microsoft to start selling notebooks. A Core i5 Surface is a notebook when you dissect it. At that point, Microsoft will have won the battle but lost the war. Apple and Google will have then won.’

WD Enters Router market

This June, Western Digital announced its new line of... routers? Though WD is mostly known for its hard drives, the company has previously expanded into home media streaming and storage with its WD TV Live and My Book Live product families. The My Net routers use software called FasTrack to detect and prioritize streaming video and game traffic to any device on the network to avoid picture or frame-rate degradation. The dual-­band Wireless-N routers also include standard advanced features like QoS and port for­warding, as well as guest networks, remote file access, and a streamlined setup process.

Router Market

WD is shipping several versions of the My Net, including the N600 with dual 300Mb/s bands; the N750, with 300Mb/s and 450Mb/s bands, Gigabit Ethernet, and USB 2.0 ports; the N900, with dual 450Mb/s bands, a dedicated FasTrak coprocessor, seven GigE ports, and UPnP and DLNA; and finally the N900 Central, which contains the dedicated proces­sor, four GigE ports, one USB 2.0 port, and 1- or 2TB of internal storage.