Microsoft's Entire Windows Strategy Is Based on This Premise
Oct 19th 2013 2:30PM
Updated Oct 19th 2013 2:32PM
Microsoft's recent overhaul to Windows 8, Windows 8.1, isn't getting the sort of response Microsoft hoped for. On Thursday, Microsoft's communications chief, Frank Shaw, took to Twitter to slam New York Times reviewer David Pogue, who had criticized Microsoft for its continued use of a hybrid operating system. Unlike Apple and Google , Microsoft uses one operating system for both traditional PCs and tablets. Pogue believes Microsoft would be better served splitting the two systems up -- and Shaw disagrees.
The belief underlying Microsoft's strategy
Fundamentally, Microsoft's entire Windows strategy can be traced back to one belief -- there's value in having one operating system across both PCs and mobile devices. Shaw told Business Insider that Microsoft believes that offering a hybrid operating system is a "value proposition that will be proved over time."
Certainly, that "over time" qualifier is necessary -- so far, the market has rejected Microsoft's ideas. Sales of traditional PCs have slumped following the release of Windows 8; some consumers may have been turned off by the most radical change to Windows in nearly two decades.
Meanwhile, sales of Microsoft's Surface tablet have been underwhelming. In many ways, the device is emblematic of Microsoft's entire Windows strategy -- it's a tablet, but when combined with Microsoft's proprietary keyboard cover, it can act as a laptop. The Surface Pro, with its x86 processor, is even more of a hybrid, as it can run any piece of software written for a standard Windows PC.
Merging mobile with PC is not without numerous trade-offs
But that PC software compatibility is not without its trade-offs. Namely, the Surface Pro is expensive, starting at $799 -- its follow-up, the Surface Pro 2, will start at $899 and, when fully equipped, can cost almost $2,000.
There's also the fact that it's much thicker and heavier than Apple's full-size iPad, which will probably get even lighter and thinner when Apple refreshes the device at its event Oct. 22. The battery life also leaves a lot to be desired -- in an attempt to rectify this, Microsoft is offering a cover with a built-in battery. Although some analysts have speculated that Apple could follow Microsoft's lead eventually, Apple management has been firm in keeping its mobile efforts separate from its traditional PCs.
Apple's CEO, Tim Cook, called Microsoft's efforts at merging mobile with PC the equivalent of a "toaster-refrigerator," explaining that, in theory, virtually any two devices could be combined -- but it often doesn't make sense to do so.
But Apple isn't the company standing in the way
Microsoft's Steve Ballmer hinted at his company's hybrid strategy back in 2010, telling the D8 conference that in the real world, not everyone can afford to own a bunch of different devices. Maybe in Silicon Valley, engineers pulling in six figures can buy Apple's iPhone, iPad, and Mac, but the average consumer needs one device that can do it all.
Ballmer's point is not without merit. Even if one gets the cheapest models available, buying both an iPad and a MacBook would cost over $1,300. Given that the average PC historically retails for around $500 to $600, buying both devices could be a significant cost hurdle for many consumers.
But not if you'll settle for devices running Google's Android. With Google giving its operating system away for free, there are Android devices available at nearly every price point. Hewlett-Packard's Slate 7 retails for just $139 -- less than half of what Apple charges for the iPad Mini.
And tablets running Google's operating system could get even cheaper. In September, Intel's CEO said he expects sub-$100 tablets to appear on the market in the coming months. (Admittedly, he didn't clarify what operating system they'd be running, but based on how cheap Android tablets have been, he's probably referring to devices powered by Google's operating system.)
Combining a $100-$200 tablet running Google's operating system (a device optimized for mobile) with a standard, $500 laptop (a device optimized for traditional PC work) could provide a far better experience than using one of Microsoft's hybrid devices alone, and at about the same price.
Is hybrid the way to go?
Microsoft's bet on a hybrid strategy could work out -- in the long run. But it's definitely off to a rough start. Sales of traditional PCs have been poor all year, while Windows tablets remain in the minority. From last October through July, Microsoft sold an estimated 1.7 million Surface tablets, compared with the 14.6 million iPads Apple sold in just its most recent quarter.
Yet, ultimately, Google's Android could be the real threat. Microsoft's hybrid alternative could be a better value than Apple's multi-faceted, multi-device ecosystem, but ever-cheaper devices running Google's Android call into question the potential savings of buying just one, dedicated device.
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The article Microsoft's Entire Windows Strategy Is Based on This Premise originally appeared on Fool.com.Sam Mattera has no position in any stocks mentioned. The Motley Fool recommends Apple and Google and owns shares of Apple, Google, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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