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Microsoft’s decision to build its own tablet was spurred by Apple’s iPad.But not entirely for the reason you might think.
Nick Wingfield at the New York Times reports that in 2010, Microsoft executives learned, “Apple had bought large quantities of high-quality aluminium from a mine in Australia to create the distinctive cases for the iPad.”
This was an eye-opener for Microsoft. Microsoft’s partners do not go to the same lengths for their gadgets. HP, Dell, Acer, etc. just use whatever materials are available, and cheap.
The reason they do this is because they make little money from computers thanks to Microsoft and Intel. Microsoft charges a big fee for its Windows licence. Intel charges a big fee for its chips. That leaves not so much room for profits.
As a result, PC makers aren’t going to the same lengths Apple is going to make awesome hardware.
Microsoft realised that Apple has better hardware and better software in a complete package at a competitive price. (OK, maybe Microsoft wouldn’t concede the better software bit, but we think deep in its heart it knows it is at least as good, if not better.)
Rather than wait around for HP to get its act together, Microsoft decided to go for it on its own.
This whole story is illustrative of the bind Microsoft is in. It sucked a lot of profit out of the PC business for years. When it was the only game in town that worked well. But, Apple is now the most valuable company in the world, and Google is disrupting its business model with a virtually free operating system.
Microsoft’s old game plan isn’t going to work as well in the future. Now it has to figure out how control rare materials from mines in Australia if it’s going to compete. It’s a weird new world.
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