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'Microsoft Surface is not a business' says Former Windows Phone GM Charlie Kindel

Microsoft Surface

“Microsoft is not, and never will be, a hardware company.” That’s according to Charlie Kindel, former Windows Phone General Manager, who spoke at an event at ThinkSpace in Redmond last night. Referring to Microsoft’s Surface family of tablets, Kindel notes that sales will be a small fraction of its business in the PC industry as a whole. But didn’t we already know this?

Kindel continues to explain that it’s the ‘North Star’ for the rest of the industry. In essence, Microsoft is creating the Surface tablets to show OEMs and the competition what can be achieved through innovation and attractive design. The software giant announced the Surface tablets back in June. Both an Intel and ARM version will be made available to suit different consumer requirements.

“That is why Microsoft is building Surface. They are not building Surface to be a business. They are building it for the same reason they built the Microsoft Store. Think of it as a marketing expense. It shows the rest of the industry what is possible and how to do it right.”

Sony Xperia Tablet S

Sony has since unveiled the new Xperia Tablet S, which we took a look at not so long ago for the close resemblance of the Microsoft Surface. The company has obviously taken a look at Microsoft Surface and applied some features such as the unique cover / keyboard. The major difference between the Surface and Xperia Tablet S is the latter is running Android and not a version of Windows 8.

Kindel even went on to state he has advised his wife to hold off on purchasing an iPad until she has had the opportunity to experience what Microsoft is developing with both Windows and the Surface tablet. You can check out Kindel’s presentation slides and an archived video on his blog.

Source: GeekWire

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Reader comments

'Microsoft Surface is not a business' says Former Windows Phone GM Charlie Kindel

32 Comments

The Xbox division sells their hardware underpriced and makes money on games and xbl stuff. (it was officialy explained when kinect for pc got relased at a much higher price than kinect for Xbox).

Tomasz comment and also the fact that Microsoft competed with only one of their OEMs in a market that has nothing to do with PCs. This guy is saying surface is not a hardware business to try and soften some ruffled feathers. The Xbox was never a threat to OEMs. Surface is though. With each reveal of an RT tablet, all comments are full of people who say they are getting surface. Lol I'm one of them.

OEM Sony PlayStation, Microsoft Xbox was in direct hardware competition with them. To say they are not in the hardware business is stupid.

You misunderstand Riskbreaker's comment. The Surface competes with fellow Windows 8 tablets, whereas the Xbox 360 does not compete with Xbox 360s from other manufacturers.

Plus how much stock should we put in an Ex managers comments, business changes their minds all the time!

Famous last words when I buy a Surface I won't buy the device from the companies learning the design lesson from Microsoft.

I hope they function as good as they look!

Perhaps my wife's MAC Book Pro is retiring to an Microsoft device replacement? Hmmm, much the same route her iPhone will go when she spots my new Nokia WP8 PureView... Sweet!!!!

I had dinner with some MS dudes yesterday.  I posted in the rumors forums regarding WP8 release. 
I also asked about the surface.  My thoughts were always that MS will sell the surface for just a limited time and get out of the tablet hardware market.  Just enough to make a splash and then let the other OEMs take over in 2013.  I figured it would be a 6 months to 1-year sell period. 
So i gave the MS guy my opinion about the short term window for the Surface, he said he just came out of a meeting yesterday and that they consider themselves a hardware company now, but with the caveat that they are only expecting to sell 1-3 million units due limited distribution.  Surface may be limited supply with  MS stores/online being their disty channels.  All the reports seem to be true, MS goal for the Surface is to show their OEM partners how much they can do better to generate better quality and not to compete in volume.  MS doesnt want to anger them even more. 
Apparently Surface RT will be out 26th and likely be priced 399-599 but that can change. 
The one he meantioned was that the RT will be out on the 26th and potentially no other tablet will be out.  What that mean is tablets from Samsung, Lenovo will not be out for 90 days just like the pro. 
Take with grain of salt :)

That's interesting... It sounds almost exactly like how the original Nexus One was conceived - a phone by Google available only through Google's online store. Hopefully the Surface's future is as bright as the Nexus line. So far, nothing has pulled me away from the Surface Pro, apart from its December-January release date.

Well with OEMs like Samsung adding that terrible start-menu, Microsoft is forced to deliver their own hardware.

Start menu was not terrible for 20+ years... I think Samsung is going to sell lots of computers as it is an ease into change...granted I've been on W8 for almost a year and love it, I still know it's gonna be a rough first six months for PC W8 users.

Microsoft may in fact limit their hardware success early on in effort to appease their partners, but if the partners continue to produce Atom-based garbage, I would fully expect Microsoft to change their tune. As for Kindel's comments, well, regardless of his opinions and statements, all I can say is... there's always a reason a person is no longer working for a company. It could be that his vision and opinions of the platforms differs from that of the company. I have no opinion on the accuracy of his statements aside from that caveat.

Keyboards, mice, video cameras are not business for Microsoft? I'm sure Logitech is confused by that statement.

Yea right....a "north star"? It would be in MSFT interest to become a viable hardware company and further increase revenue and profit streams ala Apple now that Google is in the picture.  If Google wasn't in the picture, I would reluctantly buy that spin, but MSFT has to hedge against Google's leverage and I'm glad it's happening now before it could've been too late.

I think this is Microsoft's way of setting a lower price point in the market for the RT in hopes of buying market share from the iPad, iPad Mini, and lower end Android devices.  If Microsoft introduces a Windows 8 RT tablet at $199 - $299, Samsung and the other OEMs can't price theirs at $499 to build in a large profit margin.  I think MS has seen what happened to HP's TouchPad and BlackBerry's PlayBook.  They started out pricing to match the iPad and failed and have been largely written off.  But when they lowered the prices to the $199 or so price pount, they sold out quickly.  MS wants there to be a HUGE demand for the RT devices so they are forcing the hands of the OEMs to come in at a price point similar to the Surface or to risk being ignored in by the market. 
 
It may be a temporary thing, I don't know, but I do think it's a shot across the bows of the OEMs to keep the prices reasonable to ensure widespread success at launch.  Just my thought.

If it's just a "north star" design concept to inspire OEMs, then why mass produce and sell? The auto industry makes concept vehicles to show off tech and indicate company direction, but they don't sell them and they ARE in the "hardware" business.
If MS is selling hardware, they are now, by definition, in the hardware business.

I'm going with the idea that it's a "Nexus" device. It sets the bar for OEMs and gives consumers an actual product to relate to.

I think the biggest keyword in Microsoft's plans for the future is "distribution". The $39 price tag for the Win 8 pro upgrade means they want to get people to upgrade asap, so that they can start making money from app and media sales.

There is a reason Kindel is a former employee, but that doesn't mean his assessment is wrong. I think he is right on the money when he compares the Surface to the Microsoft Store. The lesson of the stores has been to show the retailers a different way to present technology products. I think the lesson has begun to sink in. For example, the stores are carrying the new, and very attractive, Vizio PC's with the standard Microsoft "Signature" feature. But on Vizio's own website, they are also selling the PC's and boasting about how they included Microsoft Signature. Vizio, a new entrant to PC's, is differentiating on design and the MS Signature feature. I've bought two PC's with MS Signature. Once you have, you'll won't want anything else. This is all a direct result of Microsoft entering the direct retail business.
I remember when the first Microsoft Stores were announced, the same doomsday comments about competing with partners. Yet the roll out of these stores has been methodical (and too slow in my opinion), learning as they go, taking their time and not a head-on competition with the Best Buys and others. I suspect Surface will develop the same way. A relatively small initial effort through limited channels to minimize the fear among OEMs. Once the Surface becomes the hit I think it will be, the OEMs will step up their game (some already are) or fall by the wayside because the race to the bottom (looking at you Acer) will be slowed. There should always be a place for commodity PC's. But the way things were going, that is all there would be at all, leaving Apple as the company with a design ethic and better margins in technologies. Microsoft had to change that dynamic. The stores and Surface are the tools to do that. Microsoft is continuing to expand the stores. I suspect, they will continue to demonstrate the cutting edge with Surface too.

The longer Microsoft continues to operate with this guy's mentality, the longer it will take Microsoft to make a long-lasting and powerful stance in any mobile computing market. Microsoft needs to stop acting timid around its OEMs and get rid of any employee who goes around professing such nonsense. It seems like almost all of Microsoft's hardware partners have slept with Google in some way or another because of Android, so I don't see how they could feel "attacked" when Microsoft finally decides to take matters into its own hands and offer consumers a Windows experience worth showing-off.

The last paragraph makes it sound like we can view the powerpoint slides he used to convince his wife to not buy an iPad.

I only really hope that the Surface goes better than the MPC computers they did some time back.  There was a lot of problems with their power bricks that made many of them fail miserably.  My hospital bought a lot of them when they first came out for work stations and over a period of about 2 yeras, they eventually replaced nearly all of them.  I looked at the power supplies and it reminded me of the old failoure prone epoxied bricks that came with my Commodore 64 back in '81 that overheated and melted.
I truly do hope these W8 tablets take along with the other incarnations.  I plan to build a new desktop and hopefully upgrade to a WP8 when/if Sprint comes along with one.