As Microsoft’s Steve Ballmer took to the stage for an announcement a few weeks ago, many tech onlookers felt like fans at a Maple Leafs hockey game: history had taught them to keep their expectations low. But what Ballmer announced was cause for cautious optimism. Called simply Surface, the sleek Windows 8 tablet with an innovative touch-keyboard cover was a surprisingly alluring gambit by the lumbering giant of Redmond, Wash.
When Google unveiled its line of Nexus hardware products just a week later (another tablet, plus a media hub), it became apparent that Microsoft’s veer toward designing physical devices was no aberration. Instead, it’s clear that the boundaries that once separated hardware, software and web companies have collapsed. Call it the age of “everyware,” in which companies design all aspects of a gadget’s experience from end to end. And surprisingly, Microsoft’s first real foray into this field looks like it will finally offer a solid alternative to Apple and the iPad.
It’s Apple, after all, that is at the heart of this shift to physical products. For nearly two decades, Microsoft happily raked in billions by selling PC makers licences for their ubiquitous Windows and Office products. But as Horace Dideu at Asymco reported, Microsoft makes a gross profit of $78 per PC, while Apple now clears $195 on every iPad it sells. Moreover, as PC sales start to dip, tablets like the iPad are becoming exponentially more popular. Clearly, the era of software as a cash cow is waning, and Surface is a key part of Microsoft’s reaction.
Though its long-term goal may be to directly compete with Apple, it’s unlikely the software giant yet has the supply chains to make tens of millions of tablets a year. However, Microsoft will achieve two important goals by producing a halo device like Surface.
First, it will encourage beleaguered partners like HP, Dell and others to meet the challenge posed by Apple’s design and software expertise. When PC hardware became commoditized, margins evaporated, and design and cachet are the only way to push them back up again. Microsoft showcased a Pro model of Surface that switches between a tablet interface and a more familiar mouse-and-keyboard capability that looks like the first truly compelling all-in-one alternative to both the iPad and the Macbook Air.
Second—and more important—Surface will be a proving ground for Microsoft’s all-in bet on Windows 8. For the first time, Microsoft’s operating system will provide a unified experience across PCs, tablets and phones. That means it’s likely the Windows 8 app ecosystem will develop very quickly, as developers can easily create software that works on all a user’s devices.
It is the holistic, unified nature of Microsoft’s new approach—controlling the hardware, software, and app market just like Apple does—that has enabled this new competitiveness. That’s the true battle here, in which Apple, Microsoft and Google fight to make their walled gardens the ones users spend their time in. If Surface is any indication, Microsoft may do very well in this, the new age of everyware.
Navneet Alang is a Toronto-based blogger and technology critic.