Should Microsoft stop selling hardware?
Wow. I just read what I must think is the beginning of the most ill informed debate on this topic ever. I would post a link, but I was only able to read the first few paragraphs without signing up for some random web site. So, I'll just discuss the gist of what I read (acknowledging in advance that I didn't read the whole article and things may have changed direction later on).
Basically, it talked about MS's recent financial discussions and how Surface, Windows Phone and Xbox aren't doing so great. They then drew a parallel to Google's purchase of Motorola as a sign of why they should get out of these businesses.
I'm going to start with the primary failure. Drawing a parallel to Google's Motorola purchase. There are so many things wrong with attempting to link those two it is impossible to know where to begin. Firstly, Android is, and was at the time, in a monopoly position. Windows Phone is the underdog. Google didn't need to buy a phone OEM to bolster their platform. Motorola was on the down and out, even within the Android ecosystem. Nokia was down but rebounding and they OWNED the Windows Phone landscape. Google started out by saying they weren't in it for the hardware (so the subsequent sales of their hardware divisions shouldn't even deserve notice here), the claim is that Motorola was purchased for their patents. Microsoft explicitly purchased Nokia FOR THEIR HARDWARE.
Claiming Google realized they should leave hardware to the other OEM's in non-sense. Google knew that from the start. Hence the emphasis on patents. They likely just dumped the hardware divisions the second they found buyers for them. In fact, Google probably could have been successful to some degree as an OEM, but getting serious about it might have scared off other OEM's and actually hurt their business overall.
The situations could not be more different. Simply put; there is no parallel to draw. Both the reasons for buying hardware OEM's and their situations are completely at odds. The outcome of Google's acquisition sheds no light on Microsoft's.
So, lets start from the easy one. Xbox One. This is a unique beast for Microsoft in that they are the only OEM and they are the software maker. So, they can't give up one without the other. And while the Xbox One isn't beating PS4 at the moment, it is far from a failure. I don't think that there is any wisdom in advising them to drop this hardware. If nothing else it is the most favourably viewed consumer brand they have at the moment.
Furthermore, the Xbox brand is about more than just the Xbox One. Xbox Music and its subscription service for instance are tied to that brand. And it is a damn good service. And it is undoubtedly profitable. Xbox Video is probably less so. And then it is also associated with gaming in general, including Xbox Live games on the PC and WP. Xbox Live as a service is definitely profitable, and the only vehicle for that service at the moment is the Xbox One. Killing off their Xbox console division would be astronomically stupid.
The other intriguing thing about Xbox, is if you consider Microsoft's biggest competitors in other spheres. The Xbox consoles make them the only one with a mature and feasible gaming platform. This means they have a potentially more inclusive eco-system.
The next easiest topic is Windows Phone and the Nokia purchase. Microsoft needs a mobile OS. But, aside from Nokia, no one was really stepping up to the plate except for HTC for a brief period. Samsung basically just takes their currently Galaxy S phone, changes the body enough that accessories won't work with and then load it up Windows Phone. Other vendors make cheap, generic phones.
Very few OEM's produced very few handsets and with the exception of the HTC 8X and 8S, no one was making Windows Phones that differentiated themselves from Android devices except Nokia. Lumia phones look different and were a cut above the rest. But, with the Nokia X line, it seemed like Nokia was starting to let Android slip in. And honestly, if nothing else, Microsoft couldn't afford to let Nokia slip away. Remember, Google doesn't need Motorola hardware to sell Android, Samsung kicks Moto's ass. This IS a different story.
And that is the reason why they can't leave the hardware on the Windows Phone side to OEM's. Because they aren't getting enough attention from OEM's to keep the OS alive. And they need to keep the OS alive. At this point, they can't afford to bail on the mobile market. And, honestly, the platform is alive and well. Developers are starting to take to the OS, improving the most common complaint; lack of apps. User base is growing. They will likely continue to grow and remain in 3rd place for some time. I'm not optimistic about them beating out the iPhone or Android globally. At least not any time soon. But I can see them becoming at least a socially acceptable alternative in the near future.
The Surface lineup I have a hard time discussing. I'm not even sure if Microsoft cares if it succeeds. I understand why they undertook it. I remember the devices unveiled along with Windows 8 originally. They were unoriginal pieces of cheap crap. They couldn't compete with iPads on quality or accessories and they couldn't compete against Android on price. Surface tablets (talking about Pro here) married great hardware (as far as tablets are concerned) with cool new accessories (soft covers with built in keyboards) and showed what a high end Windows tablet could be. Since then, OEM's have branched out a bit and shown some amount of diversity in their hardware (though mostly, they still produce cheap, unoriginal crap).
I don't think it was ever meant as a market leader. It was meant to be a reference design showing others what was possible. In that capacity it served its purpose I think. And they have a fairly loyal following, even if it is a smaller group. They could probably abandon future versions without any impact however. I don't think other OEM's are paying attention any more. If they release a Surface Pro Mini at a competitive price point that offers value similar to the Surface Pro, that might spur some more out of the OEM's, but unless that happens, this is one area where I agree Microsoft could afford to drop their hardware ambitions temporarily. But then, I also don't think it necessary. Especially with the Nokia acquisition, they have the facilities to dabble. Furthermore, they aren't pumping out hundreds, or even dozens of variations of the hardware to support. And they already need to support the software side.
So no, I don't think Microsoft should stop selling hardware. Xbox isn't failing (even when it loses money) and provides a broader ecosystem. The Lumia line is integral to Microsoft's Windows Phone offerings and Surface, while you could take it or leave it is likely not harming the company much.
Basically, it talked about MS's recent financial discussions and how Surface, Windows Phone and Xbox aren't doing so great. They then drew a parallel to Google's purchase of Motorola as a sign of why they should get out of these businesses.
I'm going to start with the primary failure. Drawing a parallel to Google's Motorola purchase. There are so many things wrong with attempting to link those two it is impossible to know where to begin. Firstly, Android is, and was at the time, in a monopoly position. Windows Phone is the underdog. Google didn't need to buy a phone OEM to bolster their platform. Motorola was on the down and out, even within the Android ecosystem. Nokia was down but rebounding and they OWNED the Windows Phone landscape. Google started out by saying they weren't in it for the hardware (so the subsequent sales of their hardware divisions shouldn't even deserve notice here), the claim is that Motorola was purchased for their patents. Microsoft explicitly purchased Nokia FOR THEIR HARDWARE.
Claiming Google realized they should leave hardware to the other OEM's in non-sense. Google knew that from the start. Hence the emphasis on patents. They likely just dumped the hardware divisions the second they found buyers for them. In fact, Google probably could have been successful to some degree as an OEM, but getting serious about it might have scared off other OEM's and actually hurt their business overall.
The situations could not be more different. Simply put; there is no parallel to draw. Both the reasons for buying hardware OEM's and their situations are completely at odds. The outcome of Google's acquisition sheds no light on Microsoft's.
So, lets start from the easy one. Xbox One. This is a unique beast for Microsoft in that they are the only OEM and they are the software maker. So, they can't give up one without the other. And while the Xbox One isn't beating PS4 at the moment, it is far from a failure. I don't think that there is any wisdom in advising them to drop this hardware. If nothing else it is the most favourably viewed consumer brand they have at the moment.
Furthermore, the Xbox brand is about more than just the Xbox One. Xbox Music and its subscription service for instance are tied to that brand. And it is a damn good service. And it is undoubtedly profitable. Xbox Video is probably less so. And then it is also associated with gaming in general, including Xbox Live games on the PC and WP. Xbox Live as a service is definitely profitable, and the only vehicle for that service at the moment is the Xbox One. Killing off their Xbox console division would be astronomically stupid.
The other intriguing thing about Xbox, is if you consider Microsoft's biggest competitors in other spheres. The Xbox consoles make them the only one with a mature and feasible gaming platform. This means they have a potentially more inclusive eco-system.
The next easiest topic is Windows Phone and the Nokia purchase. Microsoft needs a mobile OS. But, aside from Nokia, no one was really stepping up to the plate except for HTC for a brief period. Samsung basically just takes their currently Galaxy S phone, changes the body enough that accessories won't work with and then load it up Windows Phone. Other vendors make cheap, generic phones.
Very few OEM's produced very few handsets and with the exception of the HTC 8X and 8S, no one was making Windows Phones that differentiated themselves from Android devices except Nokia. Lumia phones look different and were a cut above the rest. But, with the Nokia X line, it seemed like Nokia was starting to let Android slip in. And honestly, if nothing else, Microsoft couldn't afford to let Nokia slip away. Remember, Google doesn't need Motorola hardware to sell Android, Samsung kicks Moto's ass. This IS a different story.
And that is the reason why they can't leave the hardware on the Windows Phone side to OEM's. Because they aren't getting enough attention from OEM's to keep the OS alive. And they need to keep the OS alive. At this point, they can't afford to bail on the mobile market. And, honestly, the platform is alive and well. Developers are starting to take to the OS, improving the most common complaint; lack of apps. User base is growing. They will likely continue to grow and remain in 3rd place for some time. I'm not optimistic about them beating out the iPhone or Android globally. At least not any time soon. But I can see them becoming at least a socially acceptable alternative in the near future.
The Surface lineup I have a hard time discussing. I'm not even sure if Microsoft cares if it succeeds. I understand why they undertook it. I remember the devices unveiled along with Windows 8 originally. They were unoriginal pieces of cheap crap. They couldn't compete with iPads on quality or accessories and they couldn't compete against Android on price. Surface tablets (talking about Pro here) married great hardware (as far as tablets are concerned) with cool new accessories (soft covers with built in keyboards) and showed what a high end Windows tablet could be. Since then, OEM's have branched out a bit and shown some amount of diversity in their hardware (though mostly, they still produce cheap, unoriginal crap).
I don't think it was ever meant as a market leader. It was meant to be a reference design showing others what was possible. In that capacity it served its purpose I think. And they have a fairly loyal following, even if it is a smaller group. They could probably abandon future versions without any impact however. I don't think other OEM's are paying attention any more. If they release a Surface Pro Mini at a competitive price point that offers value similar to the Surface Pro, that might spur some more out of the OEM's, but unless that happens, this is one area where I agree Microsoft could afford to drop their hardware ambitions temporarily. But then, I also don't think it necessary. Especially with the Nokia acquisition, they have the facilities to dabble. Furthermore, they aren't pumping out hundreds, or even dozens of variations of the hardware to support. And they already need to support the software side.
So no, I don't think Microsoft should stop selling hardware. Xbox isn't failing (even when it loses money) and provides a broader ecosystem. The Lumia line is integral to Microsoft's Windows Phone offerings and Surface, while you could take it or leave it is likely not harming the company much.
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