With Surface tanking, Microsoft digs faster

Clueless management masterclass, OEMs not laughing

2012 Microsoft LogoMicrosoft just doesn’t know when to stop doing itself severe damage, and it’s latest desperate move is no exception. If you thought it’s ‘valued partners’ were incensed before, just wait until you see how happy they are now.

The latest move is one again around that unloved child of Redmond that has seen abysmal sales. No not Windows 8, the other unloved child of Redmond, the Surface tablet. You might recall the highs and lows of Surface, and the soap opera it has become. This week, Microsoft has admitted their strategy is broken, Surface is failing, and so they backpedalled hard. Unfortunately, it was right over the feet of all the hardware partners that they had run over earlier, the ones they barely kept from outright rebellion a few months ago.

Remember when Microsoft announced Surface to the surprise of their OEMs, suppliers, and everyone else? The OEMs collectively replied, “What?”, and this was followed shortly thereafter by words that SemiAccurate can not print. These glad tidings were prompted mainly by the realization that Microsoft was not actually joking, it was actually stabbing them in the back, undercutting them, and had been lying to them for months at that point in time.

Microsoft did seem genuinely perplexed by their reaction, they seemed to be taken aback by their entire partner ecosystem reacting to the move with violent negativity. Most four year-olds would grasp the conceptual framework here, it isn’t really that tough.

Microsoft management didn’t. I’ll bet they weren’t counting on HP reacting by dumping WART completely, Acer ‘delaying’ it until Q2/2013, Taiwanese OEM-speak for dead and buried, and the rest of the ‘valued partners’ dropping most projects. According to SemiAccurate’s sources, most are in bed with Google now, anyone surprised?

In light of this, Microsoft made it very clear that they were going to sell four million Surfaces initially, something that must have delighted the still peeved OEM community a bit more. That whispered number was strongly encouraged by Microsoft and their tame press minions who breathlessly wrote headlines about Surface selling out. Market watchers didn’t see the same result, but since Microsoft only sold Surface through their own physical stores and web site, they were the only ones who had the numbers. And they said things were selling great, even if their stores didn’t back that up when observers went in.

So the hard numbers started trickling out. Sales blew. Initial tablet sales, not including Surface, according to no less than NPD were sub-1% of first month Windows 8 machine sales, something akin to an unmitigated disaster. Fearful of losing ad contracts, most sites pointed out that this was actually a clear indicator of the success of Surface, it was doing great, the entire OEM and partner ecosystem just couldn’t match Microsoft’s superior design prowess. It somehow didn’t cross their minds that this is the same design prowess that lead to Windows 8’s UI, and then put it on server OSes. Or that if it was somehow true, that it might not be a good thing for Microsoft in the longer term.

That ‘superior product’ explanation seemed plausible if you don’t actually parse the information available, and luckily for Microsoft, few did. Then word came from Taiwan that despite ‘selling out’, Microsoft had cut their Q4 parts order in half. It was only then that the company admitted the four million units were actually the entire Q4 order that they were hoping to sell. But didn’t. Even in spite of most of the competition dropping their, err, competitive product lines in their entirety. No word on returns, or actual sales, not shipments to dealers as some suspect. Surface couldn’t meet half of expected demand in spite of Windows 8, Christmas, and fanboi fervor. It is DOA.

So with an incensed partner and sales chain, painfully awful reviews of a product no one wants, and an emboldened Google scooping up their OEMs, what does Microsoft do? In what can only be described as a management stroke, not stroke of brilliance, more the mentally and physically debilitating brain hemorrhage type stroke, Microsoft decided to expand their sales channel. Back over the still bleeding feet of the entire partner chain.

If you recall, Microsoft placated the OEMs a little, and we do mean little, by promising to only sell Surface through Microsoft stores and their direct web site. This was meant to show that Microsoft was only kicking one leg out from under the partner chain, not both, and it barely prevented an outright revolt and most OEMs from abandoning Windows entirely. Our contacts with OEMs say that it really was that bad, the depths of their hatred for Redmond right now is truly unprecedented, and all are hard at work on a Plan B that is Microsoft free.

And so Surface failed, and Microsoft reacted, and broke their promises to the entire OEM base. Now you can buy a Surface at Best Buy, others will soon follow. That sub-1% non-Surface tablet sales number may be the high water mark. See Microsoft. See Microsoft panic. See Microsoft have no clue. See Microsoft management flail. See Microsoft react. See Microsoft kick the other leg out from under their OEM partners. See problem? Microsoft sure doesn’t.S|A


The following two tabs change content below.

Charlie Demerjian

Roving engine of chaos and snide remarks at SemiAccurate
Charlie Demerjian is the founder of Stone Arch Networking Services and SemiAccurate.com. SemiAccurate.com is a technology news site; addressing hardware design, software selection, customization, securing and maintenance, with over one million views per month. He is a technologist and analyst specializing in semiconductors, system and network architecture. As head writer of SemiAccurate.com, he regularly advises writers, analysts, and industry executives on technical matters and long lead industry trends. Charlie is also available through Guidepoint and Mosaic. FullyAccurate