Microsoft acknowledges Surface may trigger OEM hostility

Fling with tablets may affect computer makers' commitment to Windows, firm says in SEC filing

By , Computerworld |  Consumerization of IT, Microsoft, Microsoft Surface

Microsoft yesterday confirmed what most analysts and company watchers had concluded last month when the firm unveiled its own tablet, that it risks alienating the computer makers which account for the bulk of Windows sales.

In a document submitted Thursday to the U.S. Securities and Exchange Commission, Microsoft acknowledged the potential problem.

"Our Surface devices will compete with products made by our OEM partners, which may affect their commitment to our platform," Microsoft said in the 10-K filed for the second calendar quarter of 2012.

The New York Times' Bits blog first reported on Microsoft's SEC filing.

The statement appeared in the section dedicated to risk factors, where Microsoft also noted that smartphones and tablets -- device categories dominated by rivals Google and Apple -- threatened its business.

"Users may increasingly turn to these devices to perform functions that would have been performed by personal computers in the past," the filing stated. "Even if many users view these devices as complementary to a personal computer, the prevalence of these devices may make it more difficult to attract applications developers to our platforms."

It was the first time Microsoft described the competitive hazards of mobile devices in such blunt language.

Some might see Microsoft's statement as an after-the-fact admission of reality.

PC sales have stagnated -- IDC and Gartner recently said second quarter numbers were down 0.1% from the same period in 2011 -- and the consensus is that the flat sales can be partly attributed to buyers shifting their dollars to tablets and smartphones.

Although Microsoft has publicly sidestepped the chance that the Surface might antagonize OEMs (original equipment manufacturers), analysts assumed as much almost immediately.

How OEMs will react, however, has remained mostly a mystery.

On the day Microsoft unveiled the Surface, Carolina Milanesi of Gartner said, "With Surface, Microsoft has just made it even harder for every ODM [original design manufacturer) out there to compete in the tablet market -- except for Apple, that is."

Originally published on Computerworld |  Click here to read the original story.
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