Why Is Microsoft Setting More Money On Fire With Surface 2?

Nerval's Lobster writes "Never mind that sales of the original Surface totaled a pitiful $853 million in its first few months of release, or that the tablet failed to make Microsoft an up-and-coming player (or any kind of player, really) in the mobile-device wars: Microsoft's now rolling out Surface 2 and Surface Pro 2, which feature upgraded specs and accessories but no radical adjustments to the first generation. Why would Microsoft pour good money after bad? The answer could be outgoing Microsoft CEO Steve Ballmer, who late last year released a memo suggesting that Microsoft was evolving into a 'devices and services' company. 'There will be times when we build specific devices for specific purposes, as we have chosen to do with Xbox and the recently announced Microsoft Surface,' he wrote. 'In all our work with partners and on our own devices, we will focus relentlessly on delivering delightful, seamless experiences across hardware, software and services.' That meant Surface (then on the cusp of release) was clearly a harbinger of the company's future direction — and canceling the project after the first generation would have been a stinging refutation of Ballmer's strategy. By spending the money and resources on a second device generation, Microsoft manages to save a little bit of face, albeit at considerable cost. But imagine the hilarity that'll ensue if this second generation goes down in a huge ball of flames like the first."

Comments

XBOX?

[a_nonamiss]

The XBOX 1 lost 4 billion dollars. It's now a solid market that Microsoft dominates. Why would they not use that same strategy here?

Re:XBOX?

[i kan reed]

A solid market that they haven't yet made a NET profit on, and may have lost in the next generation(I really hope they have).

Re:XBOX?

[RichMan]

The Microsoft goal is to flush so much money down the drain it will become plugged up.

Re:XBOX?

[Anonymous Coward]

The point is they took a market that was solidly held by a few companies and squoozled their way into it by throwing vast amounts of money and a few really successful games.

Sony did this back in the 90s and may have been the template for Microsoft's success.

The trouble is the mobile devices market isn't the same as the console market where you make a machine and let it ride for 5 to 10 years on software, this is a very fickle and expensive market to play in where if you aren't lumping features in every year you get considered dusty. If you lump the wrong features in you seem uncool.

Microsoft can't treat the trendy throwaway electronics game the same brute force way, unless they want to bankrupt themselves...?

Re:XBOX?

[Sockatume]

MS lost most of that money as a write-off replacing faulty units of what was by that point a very, very successful piece of hardware. Meanwhile the Surface moulders in stock rooms, without as much as a cut in its price for the new model to get it into people's hands.

Re:XBOX?

[i kan reed]

Not annualized profits, where years have been profitable. Division lifetime profit. like this

Re:XBOX?

[RivenAleem]

"You see, Killbots have a preset kill limit. Knowing their weakness, I sent wave after wave of my own men at them, until they reached their limit and shutdown. Kif, show them the medal I won"

Re:XBOX?

[medv4380]

MS Quarterly and Annual Report of course. I like how gamers get tricked by the reports highlight of 6 Billion in profit that has more to do with Windows, Office, and SQL Server, but they're sure that the gaming division has something to do with the sky high profits. Here you can look them all up yourself here. If you sum up all the quarters since the inception of their entertainment division you'll see that it barely accounts for anythings. Not to mention that there is a loss line that all the divisions share, but you'd be hard pressed to figure out what percentage the Entertainment Division is responsible for.

Re:XBOX?

[ProppaT]

Up until very recently, the 360 outsold the PS3. Not only with hardware but with software units pushed. While the Wii outsold everyone hardware wise, they undersold everyone software-wise, it it depends on which rubric you're using for success here. At this point Microsoft and Sony have basically both tied each other in the race. Sure, outside of North America and parts of Europe Microsoft did poorly, but that just goes to show how important the North American market is to the videogame industry. If you don't sell a single console outside of North America, but you dominate in North America, you're still doing pretty fantastic.

Re:XBOX?

[JDG1980]

The XBOX 1 lost 4 billion dollars. It's now a solid market that Microsoft dominates.

First of all, Microsoft doesn't "dominate" – they are one of several big players. (And the Xbox One definitely looks like it's going to play second fiddle to the PS4.) Secondly, market share is only important to a publicly traded corporation insofar as it translates into current or future profit. Microsoft burned so much money ramping up the Xbox line that they still have barely broken even, and when you consider the time value of money, they're probably still in the hole. They would have been better off paying that money out as dividends.

Re:XBOX?

[JDG1980]

Every man and his dog seems to own one. If they're not in profit yet, where did the money go?! I know they lost a lot on the notoriously high failure rate of the early models, but was it really *that* bad?

Yes, it was. The RROD fiasco cost Microsoft well over a billion dollars to fix.

Re:XBOX?

[doublebackslash]

The processor in the xbox 360 was a wholly custom part. It has extra components to encrypt and hash memory to and from main memory (only the hypervisor is hashed, the rest of memory is encrypted) as well as e fuses for locking out downgrades. It is also a 3 core part, definitely uncommon.
Much more information in the google tech talk The Xbox 360 Security System and its Weaknesses .

Really good tech talk, worth watching if you are interested in that sort of thing, as well as the original Deconstructing The Xbox Security System for the original xbox.

Enjoy!

Re:XBOX?

[a_nonamiss]

It's part of their long-term strategy to get into the living room, which has been very successful. I know many people who have an Xbox for the sole purpose of accessing movie rentals, Netflix, Hulu Plus, and play an occasional game or two. Yes, there are devices (such as the Roku) that do this, but they don't play games.

I'm not saying Microsoft is full of geniuses or anything. They've definitely made a lot of dumb errors over the years. They are most definitely chasing Apple in terms of innovation in consumer market. But I'm also saying that it's a mis-characterization that they're just burning piles of money for no reason. I actually respect that they're at least trying to work on a long-term strategy rather than just trying to shore up their numbers for next quarter by cutting costs. You can't build long-term market dominance by worrying about what happens next quarter. If you try, you end up like US car companies in the 1980's. They're still digging themselves out of the hole they dug by their shortsightedness, and none of them would even exist if it weren't for government bailouts.

For all the grief that the Surface Pro has gotten, it's actually not a bad piece of hardware. I'm using one right now. The Surface RT is a steaming pile of dogshit, but the Pro makes an acceptable lightweight laptop that can also run touch-friendly apps. Nobody will buy a tablet that doesn't have any apps, and nobody will develop apps for a tablet that nobody owns. I don't use it for "Modern" apps very much, but Microsoft is trying to create a bridge between the desktop and the tablet. Windows 8 actually does this well, and paired with well-designed, reasonably powerful hardware, it's very usable, even for a power-user.

Re:XBOX?

[Sarten-X]

whenever they're pressured to explain the success of the Wii.

Nintendo's success is easily explained. The Wii simply isn't a video game console, so it never had to compete against the "real" consoles. Sure, it has gaming hardware like a console, and it connects to a TV like a console, and it uses controllers like a console, and it plays games like a console...

...But it's different. The whole system is designed to appeal not so much to "gamers", but more to grandparents. It is a console for the masses, to entertain everybody to some degree. It's not the system you turn to for the latest pixel-pushing eye candy. It's what you use to see a silly cartoon character run amok in a fantasy world.

To the kids of the 80s, this is a betrayal. Nintendo was there from the beginning, and now it's abandoned its loyal fan base. To Nintendo, this is what it has always done best, drawing on the heritage of the NES, Game Boy, and DS lines. It makes "entertainment systems", good for quick entertainment that doesn't require much thought. Whenever it's tried to push the limits of technology (N64 and Virtual Boy come to mind), they rush the technology without considering the humans using it. The Wii is very human-centric, from its very name to the first commercials ("Wii would like to play"), so it appeals to a large market that only slightly overlaps with the True Gamers.

That's why the gaming industry often seems to have trouble understanding the Wii. It's outside of their normal world, and perhaps rightly so.

Re:XBOX?

[fahrbot-bot]

Every man and his dog seems to own one.

Not every dog. I saved some cash when I figured out that, for him, "focus relentlessly on delivering delightful, seamless experiences" meant chasing his tail and licking his private parts...

Re:XBOX?

[Bert64]

Two completely different pieces of hardware released under the same branding... MS have lumped them together in the same bucket.

Re:XBOX?

[Bert64]

They had fully functional x86 tablets long before the ipad...
Apple could have made the ipad x86 (or ppc) compatible, and therefore able to run desktop osx applications...
Android tablets can run existing linux applications with just a recompile (there are chroot setups for debian/ubuntu on android to provide the necessary libs etc).

Fact is the ability to run desktop software on a tablet is not a selling point... Such software is awkward to use on a touchscreen, and just results in a subpar experience. Apple succeeded with the ipad mainly because it ran touch centric software and didn't encourage users to run existing non-touch software.

Re:XBOX?

[Kjella]

Neither the XBone or PS4 are going to tank, they're both very capable machines with a strong following. They're profitable now (indeed, have been for 5 years) and it'd be an awfully long uphill battle for anyone else to enter the market. With the WiiU sales being crap it's basically down to a duopoly, you really think Microsoft and Sony want to go on an all-out price war for your benefit? No, you'll be paying enough that both enjoy a comfortable profit margin. Ten years ago the gaming division was a huge money burner, today it's a money maker. If Microsoft wanted to sell their gaming division, how much more could they cash in than 10 years ago?

For long-running businesses that have a steady cash flow the stock market has usually put a P/E ratio of 10-20 on it, that's price to earnings and currently Microsoft as a whole is at 12.59. Last fiscal year the gaming division earned $380 million, so if we take the average P/E it's probably worth around $380*12.59 = $4.8 billion while the money losing division ten years ago was probably close to unsalable. So if you include that Microsoft has actually turned a profit in the last 10 years, it's just that most is still in their pockets as an asset. If they really wanted to, they could almost certainly sell out the division for more than those $3 billion.

Re:XBOX?

[mcl630]

• Coal 37%
• Natural Gas 30%
• Nuclear 19%
• Hydropower 7%
• Wind 3.46%

Source: eia.gov

Re:XBOX?

[technomom]

This is Microsoft's huge problem. It's like the have complete idiots in their marketing department.

"I know, let's call the THIRD generation of our XBox product, the ONE!"

"Let's brand two completely different platforms (three actually) under the Surface name!"

"Let's have Programs and Apps kinda be the same, but different."

So much facepalm lately for MS.

Re:XBOX?

[Defenestrar]

I don't think MS is treating this as the trendy electronics game. I think they're trying to build an enterprise case for changing the whole computer interface model. A quality tablet should be able to replace every laptop within a company (and once people get used to it) be a far more natural tool (the laptop's design constraints decided its form factor). With the ability to run native Windows programs, you also don't have to worry about multiple styles of program licensing (i.e. corporate iPads, etc...), can use enterprise ready solutions, and not worry about separate policies or what happens inside of the firewall (other than the regular nightmares).

Re:XBOX?

[Nadaka]

I certainly enjoy chasing tail and licking parts, though I much prefer it in multi-player.

Re:XBOX?

[Aqualung812]

Windows tablets also DO NOT run native windows programs.

True for Windows RT tablets. Not true for Windows Pro tablets.
http://www.eweek.com/mobile/slideshows/surface-pro-vs.-surface-rt-10-reasons-to-buy-the-windows-8-pro-tablet/

Re:XBOX?

[doublebackslash]

Nope! I was a bit checked to learn that it is a true-blue down-to-the-metal tri-core myself! but decapped processors don't lie http://www.dvhardware.net/article6606.html

Weird, right?

Re:XBOX?

[Dogtanian]

Videos look interesting, I might check them out if I have time...

The processor in the xbox 360 was a wholly custom part. It has extra components to encrypt and hash memory to and from main memory (only the hypervisor is hashed, the rest of memory is encrypted) as well as e fuses for locking out downgrades. It is also a 3 core part, definitely uncommon.

I suppose this depends on what you mean by "custom". (I meant designed specifically for that machine from scratch, e.g. the Atari 800XL's ANTIC and GTIA processors, as opposed to its customISED, but based on the pre-existing standard design 6502C processor).

I wouldn't have expected MS to simply place a bulk order for an off-the-shelf PowerPC chip from IBM's catalogue. For a deal that size, I was sure they'd get a custom-modified version (e.g. cores, clock speed, pins, unneeded features stripped, etc. etc.) Granted, the level of customisation you describe there is significantly higher and more complex than I'd expected.

Even so, it can't be in the same ballpark in terms of development effort as the Cell, which (AFAIK) was basically an entire new architecture built from scratch. Strictly speaking that wasn't a custom chip since it's intended for other uses as well, but I'll still guess it was approaching (if not far more than) an order of magnitude more expensive than even the most generous budget for customising MS's PowerPC.

You see this in small businesses

[Cpt_Kirks]

You see small businesses make this mistake all the time: "If we only double down, and do what is NOT working HARDER..."

Then, they go under. If M$ does not shed the Ballmer curse soon, Apple will BUY them.

Re:You see this in small businesses

[digsbo]

Yes. It's called "Escalation of Commitment", and it happens in larger firms, too, and Government. Also with individuals. A good counter-example is HP ditching WebOS and now selling Android tablets.

Re: You see this in small businesses

[jinchoung]

in most marriages, that's called children.

Re:You see this in small businesses

[MickyTheIdiot]

Except the data from Democratic presidencies doesn't support that stereotype. But obviously you're already facts impaired so why continue to argue?

Re:You see this in small businesses

[dcarmi]

Trouble is that people have learnt that it is possible to not use Windows. They know about iPads and Nexus or Galaxy tabs. Until recently there was no real Microsoft option in this area.

Up pops Microsoft with their Windows tablet and hurrah! Except, it isn't quite the Windows we all know and relatively expensive and it flops. So MS try again, failing miserably to make it a compelling experience!

The least MS could have done is make the price so competitive that people will think about it. They need the consumer and I mean really need them! They need to grow the market and they need to help/encourage other manufacturers by way of subsidy.

Re:You see this in small businesses

[Sarten-X]

Stock car crashes often send debris hurtling down the track in the right direction, too. The car's still screwed.

Personally, I think PowerShell is departing further from any UNIX ideals. Part of what makes UNIX ideal is that (almost) everything is plain text. Data passed between components should be serialized into a human-readable form, or at least something a human can easily understand with a hex editor. That means that replacing components is possible and fairly straightforward, and your debugger can be a plain text editor.

PowerShell is different. It's the bastard child of COM objects and batch files, raised by .NET, with occasional visits from Crazy Uncle BASIC. Everything is a binary object, except for parameters being passed, which are strings, except for arrays which are neither strings nor regular objects, unless they're an object pretending to be an array... but either way, arrays being passed as parameters are subject to unpacking to become strings. Want to inspect any of this? Your tool is Microsoft's documentation. Since all of PowerShell's actual function comes from compiled libraries, you can only use what the vendor tells you to use, and good luck figuring out what exactly it's doing.

In other words, now batch files can suffer from inaccessible code, too!

Alternatives

[Anonymous Coward]

What other choice does Microsoft have? It can't get back in the game if it gives up trying.

Ah slashdot bias..

[bravecanadian]

I agree about the ARM version. And I know how great it is to bash Microsoft in absolutely every thread their name appears..

However, the Surface Pro 2 looks very attractive. I am buying one.

Re:Ah slashdot bias..

[Sponge Bath]

I know how great it is to bash Microsoft in absolutely every thread their name appears..

The unfortunate state of /. is 90% of stories are click baiting fanboy fodder. It makes it a joyous occasion when an occasional technical article slips through.

However, the Surface Pro 2 looks very attractive. I am buying one.

I'm not buying one... yet. What most partisans fail to see is Microsoft has no choice. Tablets are the future for the majority of consumers. Microsoft can't compete using someone else's OS. Microsoft can't rely on hardware "partners" to follow through. Their only long term chance is to keep plugging away at the Surface Pro until hardware power, battery life and application availability hits a tipping point. They may still fail, but quitting now is certain failure.

Not being well reviewed ...

[gstoddart]

The articles I'm seeing so far seem to boil down to "yeah, it's an improvement, but I still don't want one".

Microsoft is so focused on Office and Outlook that they seem to forget that the huge consumer market for tablets isn't being driven by these features. When everything you do is geared to a corporate environment, people not using it in a corporate environment don't look at your product.

It just often seems like Microsoft is doing it's usual "this is what the market wants", and not actually looking at what people do want.

And, quite frankly, Excel spreadsheets, PowerPoint slides, and connecting to a corporate Exchange server with Outlook .. that's not what the vast majority of people buying tablets use them for. It's like they're stuck in that "I'm a PC" mindset from those Apple commercials where the Mac is talking about having fun, and the PC is talking about making charts and saying those are fun.

Tablets are (from what I can see) used as infotainment devices with the ability to send some emails and surf the web. But somehow Microsoft, as ever, is looking at the business use case -- and I am pretty sure that the business use case is a much smaller chunk of the market.

So in terms of what is going to make people choose the Microsoft tablet over an Android tablet, it seems like a much smaller group is going to be looking for that.

Whether this is a product Microsoft keeps losing money on until they get any meaningful market share (like they did with the XBox), or the product starts gaining traction ... I have no idea. But looking at what I use my tablet for, Microsoft seems to be missing the point.

Re:Not being well reviewed ...

[gstoddart]

So it does all those things you claim users don't want. How does that prevent Surface from doing all the things users do want?

I'm not saying it can't, but Microsoft is marketing is largely on the fact that it's got Office and Outlook. Which makes it look like that's the main point.

But, if you already use Google's services, an Android tablet is more useful to you because it's already integrated with those. If you already use Apple's stuff, you're going to stick with that. And Microsoft is to late to market with this people are already on one of the other platforms.

The reality is, unless you specifically want this stuff to be delivered to you by Microsoft, and if you can get past some of the awful things I've seen about the Metro interface, you might not look at them.

Microsoft has burned a lot of goodwill with people over the years. So unless I had a compelling reason why I'd want/need to be using Microsoft stuff, I'm more inclined to buy an Android device. Because it's got more apps, and because I'm already using Android.

So, unless you are really really keen on having a Microsoft product, there is very little to make a compelling argument that's what you should go out and buy.

Re:Not being well reviewed ...

[geek]

Microsoft is so focused on Office and Outlook that they seem to forget that the huge consumer market for tablets isn't being driven by these features.

They are focused on these because it's all they have left. The OS is largely irrelevant now thanks to cloud services. Enterprise solutions are being edged out by BYOD options. Microsofts enterprise software is in a state of flux (SCCM 2012 is a nightmare IMHO). The cost to use MS software (I say use and not own because they are increasingly moving towards a rental model) is prohibitive and free or cheaper options exist.

Nevermind that MS just has a horrible reputation. No one wants to do business with them. It's like being bullied for 15 years through school by the same asshole and then that asshole wants to be friends after college and hang out.

Re:Not being well reviewed ...

[_xeno_]

Really? Excel is one of your top three selling points to consumers?

One of the (very few) selling points for the new iPhone 5C and 5S is that they now come with Apple's spreadsheet program for free, so - yes, apparently this is a thing people want? And that's not even on tablets, that's on a new phone.

In any case, yes, office apps are a thing people use on tablets. Tablets are getting used in the office these days as they're more portable for certain applications. They're getting used enough that Apple decided to make their office apps free on new devices.

If even Apple thinks people want spreadsheets on their tablets, I think it's safe to say that it's a thing people want, even if it isn't anything I'd ever want.

Re:Not being well reviewed ...

[DeathToBill]

Exactly. The Surface 2 starts at £359, the Surface 2 Pro at an eye-watering £719. If you want the one with 512GB of storage you are looking at one thousand four hundred and thirty-nine pounds, know to the rest of the world as a f!cking big wadge of cash. When did you last spend that kind of cash on a PC? I didn't spend that much on my last car.

Microsoft doesn't just mistakenly think consumers are interested in those features, they also mistakenly think people will pay between three and twelve times as much to get them.

Re:loses on XBOX & MSN for decades

[PPH]

"Now stand aside worthy adversary."

"'Tis but a scratch."

"A scratch? Your arm's off."

It's happened before

[UnknowingFool]

and canceling the project after the first generation would have been a stinging refutation of Ballmer's strategy

Then what was the Kin? It was barely on the market for 60 days when it was killed. The only difference I can see was the Kin was horribly buggy and maybe it was a side project. Ballmer seems to think that the future is devices which MS has not been doing well considering a decade of Windows Tablets and the death of Windows Mobile.

I seriously like my Surface Pro tyvm

[Morpeth]

Though I'm used to the default MS bashing here -- I have to wonder have many people have actually USED a Surface (esp the Pro) for more than 5 min in a MS store or at a friend's house?

Any issues I have with it are really Win8 GUI related, not device related. I have an iPad, and while yes it's cheaper, it's functionality is a joke compared to what I can do on the S-Pro. Since it's a full-fledged O/S, I can run all the development tools I want/need, and it's great for a contractor like myself who needs something with real functionality, performance and mobility. My wife, who is not particularly technical loves it, and prefers it over the iPad now -- she's impatient as h*ll, and the iPad is a lot slower, and while I know some people won't believe it -- it crashes a frickin' lot. Sure, they're pretty user-friendly crashes (browser just shuts down with ZERO explanation), but crashed nonetheless. And I think it's insane they STILL don't have a #@$! USB port on iPads, wtf?

Now, I think the RT isn't as useful (personally, but I want more than a tablet for mail/surfing), but the Pro is great imo -- the iPad is now is basically just my daughter's toy.

Re:I seriously like my Surface Pro tyvm

[geek]

Though I'm used to the default MS bashing here -- I have to wonder have many people have actually USED a Surface (esp the Pro) for more than 5 min in a MS store or at a friend's house?

I have two sitting here in front of me. I had to build the win8 image to push out via SCCM for our enterprise. The Surface pro is fucking terrible. What's the point of it when you spend 99% of your time on the windows desktop instead of Metro?

The entire device lacks focus. It doesn't solve a particular problem (although the multiuser aspect is nice on our domain).

If the Surface disappeared today no one would care. I was actually hopeful as I'd like to see some competition in the market. The Surface however isn't it.

Re:I seriously like my Surface Pro tyvm

[thrift24]

The only thing the surface does better than it's competitors is run a full fledged operating system, but what is the point of this?

You mentioned you can run development tools on it, but why would you want to do that? I couldn't imagine attempting to lean back on the couch with a tablet and write code on a touch screen, it would be awful. Of course you can slap on the crap keyboard and sit down at a desk almost like it's a real computer... but then why don't you use a real laptop/desktop. You could run office, but why? You could run full blown outlook, but why?

You say you want more than a tablet for mail/surfing.... Are you writing multipage emails on a tablet? What kind of surfing requires a full fledged OS?

Surface Pro is the answer to a problem that doesn't exist.

Re:it's fun

[ganjadude]

the issue to me is an RT tablet is pretty much useless and the pro is just to expensive. especially after you include a 130-200$ cover to it. Make me a sub 500$ pro and id be all over it

Surface 2 Pro, for Pros

[joeaguy]

The Surface 2 makes no sense, but the Surface 2 Pro, it could be the sleeper device of the year if Microsoft can market it correctly, and get some good software on it.

I went to a local Microsoft store and they demoed the Surface Pro to me, and I thought, oh that's nice, but its kind of a too thick and heavy to be a great tablet, and too small and quirky to be a great laptop. Then the salesman brought out the pen. "What? This thing has a pressure sensitive pen? That is amazing! Why didn't I know that?".

Imagine a tablet that can run Photoshop. Real Photoshop, not some express version. A tablet where I can do real work on serious projects using serious software as easily as I can just flip through web pages. A tablet where I can switch between touch, pen, keyboard, and mouse easily, using the mode that is best for me to get my work done. A tablet that is not just a device to consume content, but to create it.

That 6x video streaming demo and DJ pad shows that Microsoft is starting to get it. The Surface Pro is a device for creative professionals, and those who want to be one. While Apple has always been for that crowd, they haven't been paying attention to their needs quite so well lately. You have to use esoteric things like Thunderbolt. There are no tablets, or touch screens, or pen screens, and its all rather expensive. Plus, the surface actually looks cool.

So Apple, a high end company, became a device company and its been pulling them down to the lowest common denominator. Microsoft, which was the lowest common denominator, becomes a device company and its pushing them toward the high end. Its interesting how changes of fortune have reversed their roles.

Anyhow, I'm a Linux guy so I probably won't be buying one, but I am glad someone other than Apple is finally paying serious attention to the market for creative professionals.

Re:Surface 2 Pro, for Pros

[Morpeth]

I'd mod you up if I could, but I've commented here myself.

I have a first gen Surface Pro, and I think it's terrific (for the reasons you've stated as well as my own). I have a feeling the requisite MS bashing is keeping people from actually looking at them objectively. It's funny really, Google and Apple are just as much 'evil empires' as MS, but they're 'cool' and MS isn't for whatever reason. /. always had a bit of an anti-MS slant, but the trolls have really run away with it here the last few years. Ah well.

Windows 2.0 also sucked

[goombah99]

One could easily have said the same thing about Microsoft Word. It was a copycat and it sucked compared to Word Perfect when it first came out. But slowly they kept making it better and it won the market. One could have said the same thing about the early DOS, then the early Windows 2.0. Even windows 95. All those eventually won the markets that others owned. Moreover the same conditions exist now. It's not a saturated market; it's a growing market size.

Microsoft has followed this same pattern with all their incremental advances as well. All their new product revision completely stink at first. then they settle in and make them workable. Indeed things like Xune and PlaysForSure are outliers in that Microsoft didn't just bear down for the long haul.

Microsoft knows that embrace and extend works over time because it always has. Given they have a positive cash flow it makes even more sense since there's no ticking clock.

Re:Windows 2.0 also sucked

[JDG1980]

One could easily have said the same thing about Microsoft Word. It was a copycat and it sucked compared to Word Perfect when it first came out.

WordPerfect lost because it botched the transition from character-mode to WSYIWYG GUI. And it botched this because of crappy and shortsighted management that thought Windows was a fad.

If anything, Microsoft's modern strategy with Surface is analogous to WP's errors: they came late to the party with a subpar entry, and expected to win because they won the last market.

Re:Windows 2.0 also sucked

[rsborg]

One could easily have said the same thing about Microsoft Word. It was a copycat and it sucked compared to Word Perfect when it first came out. But slowly they kept making it better and it won the market. [...]

Reminds me of a movie [1] ...

King of Swamp Castle: When I first came here, this was all swamp. Everyone said I was daft to build a castle on a swamp, but I built in all the same, just to show them. It sank into the swamp. So I built a second one. That sank into the swamp. So I built a third. That burned down, fell over, then sank into the swamp. But the fourth one stayed up. And that's what you're going to get, Lad, the strongest castle in all of England.

[1] http://www.imdb.com/character/ch0091186/quotes

Re:it's fun

[ganjadude]

that isnt the argument here, i agree with that. the argument is that microsofts offerings are too expensive if they want to get some of the market, they need to lower the pro model price by a good 200 300 bucks

Re:it's fun

[Joce640k]

I was quite interested in a Surface Pro last week.

Then I found out it only has a 1 megapixel camera. Weirdly enough the cheaper Surface RT has a 5 megapixel camera.

Maybe I'll wait for Surface Pro 3 then....eh, Microsoft?