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by NaOH
5104 days ago
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I'm not sure I follow Gruber's post here... I thought Gruber's point was very clear: Consumer expectations have shifted such that companies which survive (read: profit) are those which make money from reasonably priced hardware while the software is sold at low, low prices. The phenomenal, decades-long profitability of Microsoft has been based on consumers behaving in an opposite way: paying bare-minimum prices for hardware but a premium for software. The computer hardware industry is lined up to favor the hardware makers. They can also make the software (like Apple does with iOS) or they can acquire it at low cost (like Samsung using Android), but the profits come from hardware. The Surface, no matter how good it may or may not be since no can reasonably evaluate it yet, is a testament to Microsoft recognizing this shift. Really, the details of the market shift are irrelevant. The point is that the market is moving away from what has made Microsoft profitable, and the company has publicly (if in some ways indirectly) shown it understands this. The Surface (and Windows 8), despite how important it may be to the future of Microsoft, is most notable for the change it represents Microsoft making in its approach to profitability. |
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I think the shift to their own hardware, for this Surface product, is more about trying to achieve a user experience on par with Apple. It's obvious they haven't learned from Apple in that the user's experience includes first hearing/seeing the product on stage, immediate availability, etc. so the rollout isn't polished (far from it.)
I'm just not sure Microsoft is all-in on recognizing the full profitability shift where their software is essentially a loss leader. If Microsoft releases their own high-end desktop PC and phone with Windows 8 sometime in the next 12 months, then I'll believe they've made that mental leap.