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Ballmer Pledges Level Tablet Playing Field For Hardware OEMs

Microsoft CEO Steve Ballmer says the software giant will charge itself a software royalty so that its hardware OEM partners are on equal footing in the battle against Microsoft's own Surface Tablet.

Microsoft CEO Steve Ballmer told CRN that the software giant is taking steps to assure the company’s hardware OEM partners have a level playing field when it comes to competing with Microsoft’s own Surface Tablet.

Specifically, Ballmer said in an interview Monday at Microsoft’s Worldwide Partner Conference in Toronto, that there are three questions Microsoft is answering affirmatively to in order to assure hardware partners are on ’equal footing’ so that those OEMs ’know absolutely that there is opportunity here [for them in Windows 8 Tablets despite Surface.’

[Related: Exclusive: Steve Ballmer Speaks With CRN At Microsoft WPC ]

The first question, Ballmer said, is ’do we license them everything [in Windows] that we use in our own Surface? And the answer to that question is: yes. No. 2: they will say, ’Hey, look, essentially do you charge yourself some kind of a royalty so that we’re on equal footing from a price perspective?' The answer is we handle things so that things are appropriate in that dimension. And the third question they ask is when they give us their confidential information, do we protect that from the Surface team. And the answer is of course we will do that.’

Ballmer stressed that there is nothing that Microsoft can do on its own with Surface that hardware OEM partners cannot do too with their own Windows 8 tablets.

’We have been very good about supporting our OEMs. Very good,’ he said. ’There is nothing that we can build that our OEMs can’t build with their own energy, innovation and the like. There will be 375 million PCs sold. I think it is probably fair to say that we are not going to sell a super-high percentage of the 375 [million].’

’So it is not us alone,’ said Ballmer. ’It is us and our partners, It remains us and our OEM partners, not just our solution provider partners. But it is us and our OEM partners. Surface will be a very important thing. And I am really excited about it. But we are also going to see great work from HP and Dell and Samsung and a bunch of other guys.’

Ballmer said he expects Microsoft OEM partners to have ’great devices’ that show off the advantages of Windows 8.

’There are not only going to be Surface tablets which I am very excited about,’ he said. ’We have partners who are doing tablet designs, x86 tablet designs, Intel (SoC) tablet designs, Nvidia, Qualcomm. I mean you are going to see an explosion of a number of Windows tablets. I happen to have a personal fondness for the work we are doing with Surface. But you are going to see a range.’

NEXT: Surface Could Put A Dent In Apple's Market Share


One example of the innovative work being done by hardware OEMs is Lenovo’s Yoga product, said Ballmer. That Lenovo laptop has won raves for its ability to flip backward transforming into a tablet. ’Is that a tablet or a PC?’ asked Ballmer. ’I don't know. I don't know what to call that. I think most people call it a notebook. And yet it looked pretty tablet-ish to me.’

Microsoft is introducing two Surface tablet products: Surface for Windows RT, a consumer tablet running Windows 8 on ARM microprocessors that Microsoft expects to be used in the workplace, and Surface for Windows 8 Pro, an Intel Core-based tablet that runs the edition of the upcoming Windows 8 operating system for business professionals.

Tim Harmon, an analyst for Forrester Research, a Cambridge Mass. market research firm, said he sees Surface as a winner that is destined to put a dent into Apple's iPad market share. He praised Microsoft for its innovative keyboard design and for positioning its new Surface for Windows RT product squarely in the business market.

As for the competition with hardware OEMs, Harmon called Microsoft’s concept that it will charge itself royalties ’monopoly money.’

’If I was an OEM partner I would be a little disconcerted,’ said Harmon. He suspects that if those OEMs step up with strong innovative Windows 8 tablets, Microsoft could back off from its Surface push in three or four years.

’They did it to spur OEMs to get their houses in order,’ said Harmon of the Surface launch. ’We’ll see a fairly clear distinction between the consumer market and the business market. I think Microsoft will cede the bulk of the business market to the the OEMs.’

Harmon said the business market for tablet computers could be as ’big or bigger’ than the consumer market for tablets. While many talk about the consumerization of IT, he said, there is also the ’businessization of the consumer’ which could spark business customers to use their Windows 8 tablets at home. ’That is where the battle lines are being drawn,’ he said.

PUBLISHED JULY 12, 2012

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