CES Showcases Big Changes Coming At Microsoft: Page 2

Posted January 10, 2008

Rob Enderle

Rob Enderle

(Page 2 of 2)

Surface is Microsoft’s leading effort to redefine the Personal Computer into a GC or Group Computer – a shared community device that is largely connected to back end services and has UI that is very similar to what Apple has done with the iPhone. Microsoft is first creating a complete solution, which will be initially marketed to industrial buyers in food services and hospitality. Once proven successful the platform will be licensed out to third parties who will go after additional markets like consumer.

The end benefit is that the product starts out being as well cooked as an Apple product is and then goes to the partner for focused differentiating work. This could dramatically reduce the chance of product failure and dramatically increase the number of differentiated successful products using Microsoft technology. If this works, and until this process is fully proven it’s just theory, this process could give Microsoft a significant advantage against companies like Apple – and turn competitors like Sony into product partners.

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Zune and Xbox Next

With both the Zune (by the way has anyone noticed that the Zune marketing campaign is actually uncharacteristically good?) and the Xbox, Microsoft has complete offerings that could be licensed to others. The PC OEMs have already expressed interest in licensing the Xbox technology. And taking the complete Zune solution and enhancing it should be less risky by far than starting from scratch, or only using Microsoft’s Plays for Sure platform, which was widely licensed (but unsuccessful in dethroning Apple).

British Telecom is already talking about selling Xbox 360s as advanced set top boxes and such an offering would come with double subsidies. The end result would be an Xbox 360 and follow on products that could both outperform and be priced under products like the Nintendo Wii and be sold by telephone providers as they position against the cable companies.

The end result, even before the technology is licensed out for custom set top boxes (which is a likely future) would be a massive increase in the market potential for the Xbox. A potential that neither Nintendo nor Sony are set up to take advantage of.

Now we’re only seeing the very beginning of this in 2008. I wouldn’t expect this to truly ramp to a successful strategy until around 2010 on multiple products, and probably coincide with the follow on to the Xbox 360.

Wrapping Up

I think we are seeing an interesting a powerful change in how Microsoft approaches Consumer markets, one where they first fully complete an offering, then license out that complete offering rather than the historically less successful path of creating an incomplete offering and wishing for that one partner that could successfully complete it.

I do worry that with Bill Gates departure rather than seeing more of Microsoft’s sense of humor, we’ll see less, and I truly hope I am wrong here.

Overall, I think we are seeing the beginning of another massive change at the company and look forward with some anticipation to the products that result and hope that their sense of humor stays intact.

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