On the Surface

Click to learn.

Click to learn.

If you follow me on Twitter, you've probably noticed I'm not bullish on the Microsoft Surface. Let's be clear: I don't think it looks bad. The Surface is beautiful, and there are some really interesting ideas in it. I admire Microsoft for taking a lot of risks with it. Non-iPad tablets have failed to make much of a dent in the marketplace, and those considered successful, including Amazon's Kindle Fire, have carved out small niches for themselves rather than going head-to-head with Apple. Microsoft is not following Amazon's example. Call it confidence, call it hubris, but Redmond has Apple squarely in its sights with this product. That said, I'm far from convinced it's going to make the commercial splash many pundits are predicting. I have four big concerns about the Surface, including the lack of information about its price and release date, lingering doubts about Windows 8, how Surface will affect Microsoft's value chain, and whether or not Microsoft is organizationally capable of making this product a success for multiple generations.

Let's start with what Microsoft didn't announce: pricing and release date. Until we know these two pieces of information, the Surface is a tech demo, not a product. Release date may not matter much as long as it hits the market this year, but price is going to be critical. Remember how stunned everyone was when Steve Jobs announced that the iPad would retail not for $999, but for just $499? It made the product. The market wouldn't bear a $1000 tablet, but it fell in love with a $500 iPad. Fast-forward to 2012: an entry model 3rd generation iPad will still only set you back $499, and if you can live without the Retina display, you can get an iPad 2 for $399. That's the price curve that Microsoft has to deal with, and to date, no one has been able to produce a competitive 9" or greater tablet for less than $399. If Microsoft can bring the base model for Surface (the ARM-based Surface for Windows RT) to market at less than $399, it will be setting itself up very well. If it hits $499, it may still be able to gain a foothold. Any higher and it's in trouble. Until we know the price, we can't predict success.

Second, I have serious concerns about Windows 8 as an operating system, a commercial product, and a philosophy of computing. Although Metro is gorgeous, it's also a huge departure from Microsoft's target customers, who are among the most conservative of computer users. There's at least a possibility that traditionalist corporate CIOs - some of Microsoft's biggest customers - are going to hold off on buying, rather than train their entire office to use a PC without a start button. Despite the fresh coat of paint, I also worry that many of the same problems that have plagued Windows users for decades will persist through Windows 8 - unwieldy user configurations, complicated install procedures, an overwhelming file system, registry problems, driver problems, and, of course, viruses. Windows 7 is an unspectacular operating system. I worry that Windows 8 will be an unspectacular operating system that looks spectacular. Worse, I worry Microsoft's insistence on a "no compromise" experience will undercut all of the good work it's done making Metro look so great. The dual-interface system, where users can switch back and forth between Metro and a Windows 7-like experience, might make it easier to run legacy apps, but at the cost of a smooth and consistent user experience. The Windows 7-like environment is not going to work well on touchscreen devices, whereas Metro was never designed to be used with a mouse and keyboard. Yet users are going to be expected to switch back and forth between the two to do "real work," and the result is going to be a compromised user experience. I believe, as Apple clearly believes, that mouse-and-keyboard computing and touchscreen computing are fundamentally different experiences. Microsoft disagrees. The market will be the final arbiter, but I'm skeptical that having spent three years with the iPad and five with the iPhone, users are going to revert to a more complicated setup. Microsoft's execution on its vision may be exceptional, but I think the vision itself may be wrong.

Third, Surface will completely disrupt Microsoft's relationship with its OEM partners, specifically HP and Dell. In the long-term, that might not be a bad thing - why in the world would anyone want to be relying on HP and Dell to bring their products to market? But in the short-term, it might be disastrous. Microsoft still depends on its partners to produce its desktop and notebook PCs. If these OEMs believe the Surface indicates Microsoft is moving away from them, that's going to seriously complicate the working relationship that Microsoft needs to maintain until that move is complete. At this moment, Microsoft doesn't have the resources to bring its entire desktop and notebook hardware groups in house. It needs time, and if OEMs respond negatively to the Surface, which undercuts their own tablet plans, things could get very ugly before Microsoft has what it needs to successfully complete the transition.

That note on resource demands leads into my fourth concern: that Microsoft just isn't ready as an organization to make the commitment it needs to making the Surface a success for multiple generations. Let's be clear: the Surface may sell some units this year, but it won't be until the Surface 2 or the Surface 3 that we really get a sense of its staying power. To keep up with the market (read: iPad), Microsoft is going to need to produce a great new update to the Surface hardware every twelve to eighteen months. That's going to be tough for a company that's produced only two Xboxes in the last decade. Even worse, Microsoft is going to have to rapidly increase the Windows development cycle if its going to release OS updates with each new device iteration - something that seems essential to remaining competitive in the tablet and smartphone space. That's not a pace that Microsoft has even tried to achieve in the past, and it'll be a huge challenge if, as expected, the company plans to maintain compatibility with legacy products going back to the first release of Windows. And is the company that made its fortune licensing and selling its OS going to charge users $100 for a new version of its OS every year? Is it capable of bringing itself to do otherwise?

Is Microsoft, the epitome of conservative, incremental progress in mainstream computing, ready to completely turn its business model on its ear, commit to the change 100%, and do what it needs to do to make the Surface a success? I don't know. And even if it is, it may not matter for all the reasons listed above. I'll say it again: I admire Microsoft for taking the risks it's taking with Windows 8 and with the Surface. But I have serious doubts about it as a product, and I am not confident that Microsoft as a company is going to do what it needs to do over a long enough period of time to make it what it needs to be.