Switched On: Surface damage

Ross Rubin
R. Rubin|08.12.12

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Each week Ross Rubin contributes Switched On, a column about consumer technology.

As Switched On discussed a few weeks ago, and as Microsoft noted in its recent 10-K filing, it is an unavoidable truth that the company getting into the hardware market will cause conflict with its partners. The extent of that conflict, though, depends on many variables and Microsoft can -- and must -- take steps to ameliorate it.

Recently, Acer CEO JT Wang has stepped up his rhetoric against the company's most important operating system provider entering the PC hardware market with its Surface tablet, but as the objections have become more forceful, they've also become more perplexing. The company says that it may be forced to explore alternatives if Microsoft proceeds, but Acer is not only one of the many companies already producing Android tablets, but one of the two producing Chrome hardware. (If it has a keen interest in MeeGo or Tizen, I'm sure its fellow Taiwanese rival ASUS can share how that worked out.) Even more curious is Acer's assertion that Microsoft is "no good at" hardware. If that is so, why worry?

Faced now with competing against Microsoft, did HP pull the plug on webOS too soon?

Neither Dell nor HP has been as active as Acer in the tablet market in the post-iPad era. As for Dell, it may be more reticent because Surface is a consumer-first play and the company is stronger in the enterprise space. The business PC market is also very fertile ground for HP, but the company remains the leader in the consumer Windows hardware market and has been striving to court the high-end with its Envy line that has expanded from laptops to printers. It is the Windows vendor that has the most to lose from Surface's success.

Faced now with competing against Microsoft, did HP pull the plug on webOS too soon? Might a TouchPad, which would have easily been in its second generation by the time Surface ships, have been a worthy competitor? Even in the height of its doubling down on webOS, HP never wavered in its support of Windows. On the other hand, even if webOS had met with more success it might have been an effective hedge against Microsoft doing exactly the kind of thing it is doing now. Of course, HP could still hop into the Android market as Acer has, and might even have more success than its PC rivals there, but it has shown little interest in doing so as it focuses its tablet efforts on Windows 8 and competing with Microsoft on that front.

It would indeed be ironic for HP if its webOS overtures helped to spur Microsoft to create its own hardware to compete with the Silicon Valley pioneer. But from a business standpoint, the evaluation is nothing so poetic. The revenue HP will gain from Windows 8 will be far greater than what it could have garnered from webOS. And its share of revenue lost in competition with Surface hardware will be far less than it would have spent trying to build a competitive ecosystem.

Ross Rubin (@rossrubin) is principal analyst at Reticle Research, an advisory firm focused on consumer technology. Views expressed in Switched On are his own.

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