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Did Microsoft Inform HP And Dell About Its Surface Book Assault?

Partners said Microsoft's entry into the intensely competitive laptop market caught them off guard and may have even surprised Microsoft's top-tier PC partners.

Was Microsoft's Surface Book launch Tuesday a sneak attack on Hewlett-Packard and Dell?

That's the question HP and Dell partners are asking, given that the two vendors just one month ago inked a deal that made them Microsoft Surface Pro tablet resellers. The reseller pact with Microsoft was already viewed by some partners as a knock on their own product lines. The Surface Book entry raises even further questions about how HP's and Dell's product lines weigh in against Microsoft on price, performance and security.

Dell, for its part, did not address whether the company was surprised by the Surface Book launch in a statement to CRN.

[Related: Partners: Microsoft's Surface Book Puts HP, Dell, Lenovo On The Hot Seat ]

"Microsoft is a great partner," said Dell in the statement. "We cooperate in many areas and compete in others. It's part of the modern way of doing business today. Look, it’s a Windows 10 World and greater awareness of the benefits of Windows 10 is good for our customers, Microsoft and for us."

Hewlett Packard had not issued a statement at publication time.

Solution providers, for their part, said they see the new Surface Book as a surprise assault on HP and Dell -- one that is especially troubling, given the fact that HP and Dell are already competing with their own solution provider partners by reselling the Microsoft Surface Pro.

"I don't know what went on behind the scenes and whether they told HP and Dell about this," said Bob Venero, CEO of Holbrook, N.Y.-based solution provider Future Tech, No. 232 on the CRN 2015 Solution Provider 500. "If Microsoft was shortsighted enough to sell a competing product in the laptop space, they are shortsighted enough not to have told those dedicated OEMs."

Venero said he was shocked that Microsoft would compete with its hardware partners by unleashing the Surface Book -- a 13.5-inch laptop with a detachable screen priced starting at $1,499. "I am absolutely surprised by this, given the amount of business that Dell, HP, Lenovo and Toshiba do with Microsoft," he said. "To have a laptop from a software company that competes with those Tier One OEMs is problematic. I understand competition, but in this case, I don't understand why Microsoft as a software company does not let those hardware companies drive the hardware business. To me, this looks like Microsoft trying to take share away from those dedicated and committed companies that are selling Microsoft software embedded on every machine they sell. In my opinion, this is a shortsighted move by Microsoft."

Venero said he will remain committed to his primary hardware OEM partners Dell and HP. "This doesn't affect my loyalty to the OEM partners who have helped Future Tech become what it is today," he said. "It is business as usual for our sales team."


Vinny DiSpigno, CEO of Holbrook, N.Y., Apple specialist Webistix, told CRN he was also taken aback by Microsoft's willingness to pick a hardware fight with its top hardware OEMs. "I'm really surprised that Microsoft is getting that deep into the hardware business because of all their relationships with all the other manufacturers," he said.

The CEO for an SP500 company, who did not want to be identified, said the Surface Book puts HP and Dell into a precarious position. "I just don't see how it is good for those relationships in any manner whatsoever," said the CEO. "I see it as a share shift against their OEM partners. I don't get it. The last thing this industry needs is another laptop choice. It's a hyper-competitive business with very low margins. I don't know how they are going to make money on the hardware. It looks like to me they are just trying to protect their software position."

As to whether HP and Dell were told about the new Surface Book product, the SP500 CEO said: "They had to have told the OEMs this was going to happen. If they didn't, those partners will measure their relationships accordingly."

Jon Bach, president of Puget Systems, a Kent, Wash.-based Intel system builder partner, said he is glad Microsoft is giving its hardware partners, including HP and Dell, a kick in the pants.

"I feel the same way I did when Surface originally came out," he said. "The mobile PC industry had stagnated, and to continue to improve, it needed a kick in the rear. We've seen great progress on high performance, ultra-mobile computing in the last few years, and a lot of the credit goes to Intel and Microsoft for leading the way with that innovation. I think we could see the same progress pushed from the Surface Book as well."

Bach said building an innovative, competitively priced laptop is not easy. "Any company, big or small, can build a desktop," he said. "With a laptop, all the small businesses out there [like Puget Systems] are stuck with the options they are presented to resell. I can tell you from experience that the options are poor. I welcome any disruption to the industry that raises the bar and holds everyone to a higher standard."

Kevin McLaughlin contributed to this story.

PUBLISHED OCT. 6, 2015

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