Microsoft Makes Risky Bet on Hardware in Attempt to Match Apple

Microsoft Makes Risky Bet on Hardware in Attempt to Match Apple
<a href="">efes</a> / Pixabay

Microsoft Makes Risky Bet on Hardware in Attempt to Match Apple

Microsoft Corporation (NASDAQ:MSFT) recently joined the war of tablets in the technology battlefield that has been dominated by Apple Inc. (NASDAQ:AAPL) and Samsung Electronics Co. Ltd. Microsft has long concentrated on its software business, along with Intel Corporation (NASDAQ:INTC) and Oracle Corporation (NASDAQ:ORCL). The company has been working in partnership, with hardware manufacturers for close to four decades.

However, according to the New York Times, the company feels that the standards set by Apple in terms of hardware are far beyond what its current partners can offer. For this reason, Microsoft has embarked on vertical integration whereby it intends to sell its software to its customers by using its own hardware.

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Microsoft ventured into this business through its recently launched Microsoft Surface Tablet. Nonetheless, The company will be facing a stiff challenge from the current market leader, Apple, as well Samsung, one of its customers.

Microsoft is focused on producing high quality hardware to go along with its magnificent software, an area it feels it can dominate. It seeks to challenge the quality of Apple’s pricey iPad,  which is made of high quality aluminum.

However, the report notes that computer hardware manufacturers do not wish to assemble their products Cheaply, but rather to focus on the high cost of licensing the Software acquired from Microsoft, Intel, and Oracle. Consequently, this has contributed to their aversive attitude to take a risk, as they try as much as possible to up their profit margins.

This is also evident from Hewlett-Packard Company (NYSE:HPQ)’s recent struggles. HPQ is Microsoft’s main customer. The company plans to restructure and layoff many employees.

Unfortunately, Microsoft is not finding the new environment as friendly as it would have wished. We recently noted that the Surface Tablets, have an approval rate below 50%. The majority of consumers are opting to stick with their current devices, acquired from either Apple, Samsung or Research in Motion (NASDAQ:RIMM)’s BlackBerry.

Additionally, in another post, we compared Microsoft Surface’s Tablet rumored prices, to those of Apple iPads and Samsung tablets. It seems that both models of Windows Surface seemed expensive.

Furthermore, in a recent article on tablet war, Acer’s founder, Stan Shih, one of Microsoft’s customers,  labelled its supplier’s war against Apple iPad as a lost battle. However, analysts described this as a retaliatory comment by a customer who felt betrayed by Microsoft; given that the company never informed its customers prior to Surface launch.

Nevertheless, Microsoft believes that being both a software and hardware manufacturer could help it take a  risk in acquiring expensive raw material for computer hardware. The report actually notes that, Microsoft made the decision in coming  up with its own tablet long before the first iPad was manufactured.

In other reports, CNET points at Apple’s massively acquired aluminum material for iPad manufacture to be a likely stumbling block for Microsoft. The report also points to the failed HP/Microsoft tablet launched in 2012, together with deteriorated trust between Microsoft and its customers, as a driving force toward its venture into the Tablet business. The register, of U.K, features an article focusing on the potential competition in tablets war, by referring to it as healthy, regardless of what comes of Microsoft Surface at the end of it all.

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