Allchin To OEMs: Create Computing Experiences

During Microsoft's annual OEM executive summit at company headquarters in Redmond, Wash., Allchin, group vice president of platforms, advised the vendors to shift development resources into creating computing "experiences" through which they can differentiate their offerings, rather than beating each other up mainly on price and spewing out product specs.

Allchin urged a mass-volume customization approach, encouraging OEMs to focus on specific needs in the home, entertainment and small-business markets.

"If we do this, I believe that there are great opportunities for them to have more differentiation among them, and, in fact, to make more margin dollars," Allchin told CRN following his presentation. "Hardware, software and services have to be created in tandem to create this experience."

Allchin's advice to the OEMs made sense to solution providers and smaller system builders, many of which have been following this approach for years.

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"If I was in the OEM PC business, I would be looking for a different business to be in unless I had a customized PC such as an industrial PC, a miniature PC or a wearable PC," said Andrew Grose, president of Nortec Communications, Falls Church, Va., which was named Microsoft's VAR partner of the year. "If something is customized for a specific person's need, they will usually pay a premium, and this will create the economics for a profitable product."

John Samborski, vice president of Ace Computers, a system builder in Arlington Heights, Ill., said the large OEMs haven't led innovation in hardware solutions design for some time, choosing to engage mainly on price. "Basically what they're telling the big guys is that they have to learn to care about their customers instead of treating them like sheep," Samborski said.

Another system builder said OEMs should move beyond the standard Windows setup page, but he acknowledged that all large-scale manufacturers face major economic hurdles trying to do mass customizations.

"Every OEM has the same issues with razor-thin margins," said Mike Healey, president of TENCorp, Needham, Mass. "There are certain economies of scale that have to be balanced with customization."

Microsoft has been moving down this development path for some time, with specialized versions of Windows including Windows XP Embedded, Pocket PC Phone, Tablet PC and Media Center, Allchin said. And he said other new Windows footprints are coming.

Allchin said some system builders are doing customizations but only a minority have accomplished what he is suggesting. Work done by system builders in crafting specialty music and gaming platforms is also a step in the right direction, he said. Examples that apply to the business world could include a ruggedized notebook for real-estate agents.

"There is a question here about innovation, of how you get rewarded for the innovation and get enough volume to make up for the investment that you made there," Allchin said.

Allchin pointed to the success of Small Business Server as a design model for OEMs to emulate in the future, citing its "blowout" sales volume. The Janus Server from First International Computer takes the Small Business Server 2003 concept even further with its small footprint, low power consumption, almost silent operational mode and onboard UPS, he said.

A spokeswoman for Hewlett-Packard said the Palo Alto, Calif., vendor shares Microsoft's vision that computing needs to become more focused on specific customer experiences. Its "Troy" prototype PCs, demonstrated in May at the Microsoft Windows Hardware Engineering Conference, are focused on better integrating collaboration and communication tools.

Formats include an iPAQ Pocket PC as well as a notebook, and features being tested include cellular signal recognition, conversation management, three-way calling, transferring and a call history that includes both e-mail and phone calls.

"What Microsoft is doing here is to encourage differentiation within the conventional form-factor machines to inject new energy into the industry," said Andrew Brust, chief of new technology at Citigate Hudson, New York. "It's not an easy concept to sell, but a worthwhile one."