[AJ007]

Some speculation here.

There could be a multi-part strategy. Both Google & Microsoft probably covet the revenue and margins Apple received from selling their own devices. Those margins, in terms of phones and tablets are probably un-repeatable. Some next iteration of device however could contain offer big margins. That is something that could double Google's market capitalization. At the least Microsoft and Google understand that they need something to give them hardware experience.

Second, it allows Google & Microsoft to lead in hardware. Even if the Surface 3 flops, the OEMs have a guide pointing what is possible and which direction to go (or not to.) I imagined this was part of the reason why Google has had different manufacturers built their Nexus products.

The Surface buys Microsoft some time. The number of people who need Office and legacy systems is going to continue to shrink as special use case stuff is built -- whether from the analytical side like Tableau to something like FarmLogs. The operating system itself may very vanish in to the background, leaving us with some unix-based combination of Android and Chrome OS.