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Investors have expressed concerns about the future prospects of many of these companies -- concern that is justified. For the fourth quarter of 2012, HP reported fourth-quarter 2012 revenue of $30 billion, down 7 percent year over year, and annual revenue of $120.4 billion, down 5 percent on declining sales in all three of its pillar businesses: PCs, servers and printers. For its third quarter of 2012, Dell announced an 11 percent year-over-year drop in overall revenue fueled in part by a 19 percent decline in revenue from PC sales.
But Microsoft's decision to make its own hardware, starting with Surface, does not seem to be high on the list of things investors are worried about. This is a serious miscalculation.
The story really began last June, when Microsoft revealed that for the first time in its 37-year-history, it would make a hardware product -- specifically, a tablet that it claimed would rival iPad and Android tablets in innovation and appeal. Furthermore, Surface would only be available in the U.S. through Microsoft retail stores.
Not surprisingly, Surface was kept secret from Microsoft hardware and distributor partners until just a few days before the launch.
I wrote at the time that Microsoft's new strategy would have a seismic effect on its partner network. At the very least, it upends decades-long relationships that Microsoft has cultivated -- and hopes to retain for some aspects of its business.
It is also certain to hollow out the value of many of the companies that have delivered the hardware platforms and distribution channels that have been essential in the past to Microsoft delivering on its value proposition to customers.
But that was then. This is now.
In formulating its new strategy, Microsoft is facing four new realities:
1. We are in a post-PC era. Sales of smartphones surpassed those of PCs in 2011. Sales of tablets will surpass laptops in just a few years.
2. The post-PC market is dynamic, exciting and rapidly changing and being driven largely by consumers instead of Microsoft's traditional sweet spot customer, large enterprises. For years now, Microsoft's hardware partners have been delivering PCs (desktops and laptops) that are uninteresting, unremarkable and uninspired.
3. The key to innovative hardware that appeals to consumers is having strict control over all aspects of product design, including the integration of hardware and software, as well as manufacturing and distribution.
4. Having a direct relationship with customers -- cutting out low-value intermediaries whenever and wherever possible -- is everything.
Sound familiar? It's a strategy that Apple has executed to become the most valuable company in the world.