Tech Talk News: Is Microsoft Ready To Overhaul Their Business Model????

A few weeks ago Microsoft announced their Surface  Tablet which should hit the market this year. Is Microsoft entering the Tablet market too late or is it the right them for them?

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With the recent announcement of Microsoft’s new Surface tablet, the decades-old network of partners that Microsoft and Intel built just got a formidable new asset-rich competitor: Microsoft.

Like all successful partner networks, Wintel thrived because all of the players — the two principals, OEMs, the channel and other stakeholders — benefited individually from the association while contributing to the growth of the network itself. The Wintel platform is still the dominant desktop and laptop computing architecture.

But with smartphones, tablets and the cloud replacing desktops and laptops with remarkable speed, it’s a brand new post-PC world. And in the most stunning development imaginable, Microsoft’s Surface announcement confirms that Steve Ballmer and company are willing to do whatever it takes to achieve success — including blowing up the partner network Microsoft helped create — and that has been the linchpin of the company’s dominance for the past 30 years. And it has the financial staying power to do it.

How much staying power? Almost $60 billion.

Even though margins from its desktop business peaked in 2010, Microsoft still has 90 percent of that market and, as of the most recent quarter reported, assets of $118 billion — third behind Apple and HP — including $59.5 billion in cash and cash equivalents.

Naturally, there’s been a lot written about Microsoft and Surface lately. One is Charles Cooper’s CNET article entitled: As Microsoft retools, Ballmer has chance to rewrite his CEO legacy.

At the core of Cooper’s analysis is how Microsoft is going to compete with Apple: sleek new Surface tablets, Windows Phone 8, which will ship in next-generation Windows Phones, and possibly new capabilities such as a complete mobile payment system. As Cooper noted, “Take that, Apple.”

Certainly, competing with Apple is one driver of this gutsy make-it-or-break-it move for Microsoft. But in my view, the core of the story is really, “Take that, OEMs and channel partners.”

To be fair, there are some who think that Surface is merely an attempt by Microsoft to get its OEMs to step up with better hardware product designs and that it will exit the hardware business as soon as they do. This is a seriously misguided view that partners would do well to ignore.

Microsoft’s new world view
What’s happening here is Microsoft is looking at this new world through a totally new lens — and it doesn’t like a lot of what it sees. The world is changing fast, yet its existing partners are too slow and add too little value. They’ve been reduced to speed bumps on what Microsoft perceives as its road to success.

Also in the post-PC era, staying close to the customer is everything. It’s the only way to ensure a superior customer experience, which — as Apple has demonstrated — is a huge competitive advantage.

Apple achieves this by designing the hardware and the software for seamless integration and exercising strict control over the entire Apple ecosystem — sales, distribution, services and support and even carrier partners. In contrast, until now Microsoft has pursued a strategy of licensing its software to hardware vendors, maintaining modest control at best over product and the consumer experience.