With Tablet, Microsoft Takes Aim at Hardware Missteps
By NICK WINGFIELD
SEATTLE — Around the time the iPad came out more than two years ago, Microsoft executives got an eye-opening jolt about how far Apple would go to gain an edge for its products.
We hear a lot about the power of the connected world re true partnerships of “eco systems” to deliver the best and most innovative offerings to customers. HOWEVER, recent business model success strongly suggest that in building a strong relationship between a supplier and its customers, particularly if aspects of a strong brand are involved, someone has to be the true owner to CONTROL all aspects of the offering. The classic struggle between Microsoft and Apple business models is a clear example:
Microsoft learned through industry sources that Apple had bought large quantities of high-quality aluminum from a mine in Australia to create the distinctive cases for the iPad, according to a former Microsoft employee involved in the discussions, who did not wish to be named talking about internal matters.
The executives were stunned by how deeply Apple was willing to reach into the global supply chain to secure innovative materials for the iPad and, once it did, to corner the market on those supplies. Microsoft’s executives worried that Windows PC makers were not making the same kinds of bets, the former employee said.
The incident was one of many over the last several years that gradually pushed Microsoft to create its own tablet computer, unveiled last week. The move was the most striking evidence yet of the friction between Microsoft and its partners on the hardware side of the PC business. It is the first time in Microsoft’s almost four-decade history that the company will sell its own computer hardware, competing directly with the PC makers that are the biggest customers for the Windows operating system....
...“ You've got this sclerotic partnership structure where the partners don’t have any oxygen to be innovative,” said Lou Mazzucchelli, an entrepreneur in residence for a venture capital fund backed by the state of Rhode Island and a former technology analyst. “I believe Microsoft was painted into a corner. If they’ve didn’t move soon, Apple would have so much of a lead, it would be almost impossible to catch them.”....
....Microsoft worked with other hardware partners to devise products that would be competitive with the iPad, but it ran into disagreements over designs and prices. “Faith had been lost” at Microsoft in its hardware partners, including by Steven Sinofsky, the powerful president of Microsoft’s Windows division, according to the former Microsoft executive.