Why Acer is wrong about Microsoft Surface

Acer's CEO tells Microsoft to 'think twice' about building tablets because it's "not something you are good at"

Acer CEO Campbell Kan slammed Microsoft this week, telling a newspaper reporter that Microsoft should " think twice" about its decision to make Surface touch tablets.

"It is not something you are good at so please think twice," he said.

Oh, really?

I think Kan should think twice about that statement. If he did, he'd realize that's he's totally wrong.

Microsoft hardware is better than Microsoft software

Everybody calls Microsoft a software company, but of course Microsoft makes hardware, too. In fact, Microsoft has been making PC hardware for longer than Acer has. When Microsoft started designing and making mice in 1982, "Acer" was called "Multitech" and was still an electronic components distributor.

On average, Microsoft hardware fares far better than Microsoft software, either critically or commercially or both. Yes, the number of historical Microsoft software products dwarfs the number of hardware products, but Microsoft's hits-to-flops ratio is vastly better in hardware.

If you were to stop people on the street and ask them which Microsoft product is the best in its class, or ask them which Microsoft product they "love," the answer in both cases would probably be: Xbox 360.

Microsoft's track record on hardware is pretty amazing. Its mice and keyboards are among the best-selling ever. (I personally prefer Microsoft mice above all others, and even use one with my MacBook Pro.)

Microsoft's LifeCam webcams and LifeChat headsets are super good products for the money.

And Microsoft's SideWinder line of gaming peripherals are pretty great, too.

And remember the Zune? This little digital media player flopped in the market, mostly because Microsoft got it right just as the category itself was being killed off by smartphones, which replaced stand-alone media players.

If you don't remember the praise given this ill-fated gadget, remember what Engadget's Joshua Topolsky said about Zune hardware in 2009. He called it "incredibly sexy," "sleek," "smartly put together," and concluded that he's "taken with it."

Perhaps most devastating to Acer's case, however, is the interactive coffee table formerly known as Surface, now called PixelSense.

The original Surface, with its incredibly advanced multi-touch user interface, shipped before Apple's first multi-touch device, the iPhone.

The PixelSense is truly awesome multi-touch technology. The only major commercial company that can come anywhere close to Microsoft in designing large multitouch appliances is Jeff Han's company, Perceptive Pixel. Microsoft just bought the company!

So what part of Kan's statement is true? When Kan said: "It is not something you are good at," what does he mean by "it"?

Microsoft makes the best advanced-interface gaming appliance on the market. Microsoft makes the best large multitouch appliances on the market. And Microsoft has a killer track record in designing, making and selling hardware.

Sure, Microsoft is still making billions on software. From a business perspective, Microsoft is still a very successful software company.

But in the past 10 years, all of Microsoft's "hot" products -- the ones that lead categories, get rave reviews and engender loyal fans -- are hardware products.

Microsoft hardware is better than Acer hardware

Implicit in Kan's criticism is that companies like Acer are good at making touch tablets, while Microsoft is not.

Really?

Over the years, Acer has made some very good, very solid laptops. The company has also made pretty good desktops and tablets.

But Acer has never made a single hardware product that's groundbreaking, category leading or even exciting -- unlike Microsoft.

Acer products are solid, but bland and safe. Acer industrial design is clunky and unsophisticated and firmly stuck in the PC world of the 1990s.

Acer makes precisely the kind of hardware that has zero chance of success in Apple's iPad-driven, post-PC world.

Unlike the many laptops that Acer is best known for among users, Microsoft's Xbox 360 is in the same generational category as the Microsoft Surface. And what I mean by that is that the Xbox is really a post-PC appliance that puts a serious emphasis on innovative next-generation user interfaces.

While Acer specializes in yesterday's PCs, Microsoft makes the most advanced user interface device in the world, in the sense that Xbox uses high-definition haptic feedback, motion gesture command, voice command and more, and all this in a low-cost consumer appliance that has generated a loyal and serious fan base.

What has Acer ever built that's anywhere near as good or as advanced or exciting or as category-leading as the Xbox?

Nothing! Ever!

OEMs aren't loyal anyway

In addition to falsely stating that hardware is not something Microsoft is good at, Kan said in the same interview that "If Microsoft... is going to do hardware business, what should we do? Should we still rely on Microsoft, or should we find other alternatives?"

He's basically saying that if Microsoft is going to compete against OEMs like Acer, maybe OEMs like Acer should stop being loyal to Microsoft and look for alternatives to Windows.

My question is: What is Kan smoking? Microsoft partners in general, and Acer in particular, are perfectly disloyal to Microsoft, and have been pursuing alternatives for years.

Acer sells Linux PCs without much success. Most of the company's Acer Iconia tablets run Google's Android platform.

Is Acer's CEO unaware that Acer sells Linux and Android systems as aggressively as they can, yet almost all their revenue comes from Windows systems?

What does it mean to Kan for Acer to "find other alternatives?" Simply give up the majority of its revenue and go with the platforms that are not succeeding for Acer?

Microsoft's new strategy is the best post-PC strategy

Kan slammed Surface. But what he really fears, no doubt, is the whole post-PC world.

The truth is that so far, the post-PC universe is dominated by Apple because in part Apple has the right business model. One company makes the hardware, software and supporting cloud services as one integrated consumer appliance.

So far, this is the only strategy that works in the post-PC world, from a business perspective.

That's probably why Google is hedging its bets with the Motorola purchase, and why Microsoft is doing the same with Surface.

When appliances make their way onto desktops and into enterprises, what's a company like Acer to do?

Acer is probably afraid that Apple and Google and Microsoft will end up running away with the whole market, doing their own hardware tightly integrated with their own software and their own services, leaving the Acers of the world out in the cold.

And that's a rational fear.

Acer isn't afraid that Microsoft can't make great tablets. Acer is afraid that they can.

Mike Elgan writes about technology and tech culture. Contact and learn more about Mike at Elgan.com, or subscribe to his free e-mail newsletter, Mike's List. You can also see more articles by Mike Elgan on Computerworld.com.

Read more about tablets in Computerworld's Tablets Topic Center.

This story, "Why Acer is wrong about Microsoft Surface" was originally published by Computerworld.

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