Microsoft was wrong: Tablets are not PCs. So now what?

Google's Sundar Pichai, Microsoft's Terry Myerson, and Apple's Craig Federighi
Google, Microsoft, Apple

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The three most important device platform vendors—Apple, Google, and Microsoft—have each consolidated their mobile and desktop operating systems under a single product leader. This could be taken as a hint of a new industry trend, where each company is looking to consolidate onto single unified OS for all types of devices.

This would be a colossal mistake. The market has shown conclusively that people don’t want tablets that work like PCs. They’re different. Any attempt to force them together will fail.

But blending the best characteristics of each type of platform? That just might work.

Two points of view

Microsoft has always tried to insist that the tablet is a kind of PC. Microsoft created a variant of Windows XP for tablets way back in 2002. Its strategy around Windows 8 and Windows RT was summed up by then-Windows chief Steven Sinofsky’s “no compromises” rhetoric.

That is, Microsoft believed people wanted a single device that they can use to get serious work done—like a laptop—and for more casual or frivolous activities, like sitting on the couch answering email or watching movies in the back seat of the car. Windows 8 and its ARM-only cousin Windows RT were meant to serve both masters at once—the new touch interface was designed for tablets, and a variant of the old Windows desktop was still available for keyboard-mouse applications, particularly Office. (Windows RT does not make the desktop accessible to third-party software vendors.)

Microsoft Surface in Palo AltoMartyn Williams
Microsoft Surface

Microsoft’s all-for-one strategy reached its pinnacle with the Surface, the company’s tablet with optional detachable keyboard. Look, Microsoft seemed to be saying, you can have it all. Use it like a tablet at meetings or at home, then clickthe keyboard on it and use it like a laptop when you need to create a document or munge numbers in a spreadsheet.

Apple took the opposite approach with the iPad: It was based on exactly the same platform as the iPhone and ran iPhone apps. Google is closer to Apple’s approach: Android is for tablets and phones, and Chrome OS is for laptops with keyboards and touchpads.

The companies took these approaches largely for business reasons—Microsoft’s strength has been the traditional PC, so it wanted to extend that strength into the fast-growing tablet market. Apple dominated the early smartphone market, so it was only natural to try and leverage that strength into a more general-purpose computer.

Google has the least at stake here—more than 90% of its revenue still comes from Internet advertising, mostly search, which is incredibly profitable. So it has the time and the cash to play both ends.

One leader, one platform?

Last October, Apple put OS X leader Craig Federighi (at right in the photo at the top of the story) in charge of iOS as well. Google put Chrome (and Chrome OS) leader Sundar Pichai (left) in charge of Android in March. Most recently, Microsoft put its Windows Phone leader Terry Myerson in charge of all versions of Windows—including the desktop.

Look hard enough, and you might see a trend.

These companies probably wouldn’t mind consolidating everything onto a single platform—it would lower development costs if they only needed to maintain one platform (and design their own apps and services for that platform), and would make wrangling developer support a lot easier.

But the market has clearly rejected the all-in-one approach.

Surface RT is perhaps the clearest example of this. It runs an operating system, Windows RT, whose interface was designed to make hybrid tablet-PC approaches viable, but it lacks the main benefit of a PC—running traditional Windows apps. So customers are stuck with an operating system that isn’t optimal for tablets, on a piece of hardware that doesn’t really work for getting serious work done—have you tried using a 10-inch screen to run a spreadsheet or edit a complicated Word document? And they can’t run other required work apps. Instead of both-and, it’s neither-nor.

It’s no wonder that Microsoft is holding a fire sale to get rid of unsold Surface RT units and just took a $900 million charge for unsold inventory.

Reliable sales figures for Windows 8 tablets are hard to come by, as Microsoft doesn’t separate out Windows 8 sales by device type. But IDC estimated that during the first quarter of 2013, only 1.8 million Windows 8 tablets were sold. Most of those were Surface devices, boosted by Microsoft’s mass market advertising campaign.

Apple, meanwhile, sold about 20 million iPads during that quarter. The top three Android tablet makers, Samsung, ASUS, and Amazon (whose Kindle Fire runs an Amazon-forked version of Android with no links to Google services) sold about 13 million.

Why would the market leaders follow the market laggard’s approach? It makes no sense.

Next: Let’s look at each company individually.

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