Thursday, at the annual Microsoft Financial Analyst meeting, CEO Steve Ballmer gave a somewhat baffling explanation about Microsoft’s position on tablet/slate computing that seems to run contradictory to the strategy of one of the company’s biggest manufacturing partners.
Though Microsoft is focusing this year on Kinect, Bing, and Office as areas of consumer growth, the biggest consumer product for Microsoft, beyond all others combined, is Windows.
“Windows and Windows’ success is a tide that floats all boats, so to speak,” Ballmer said in the meeting Thursday. “Of those 400-odd million PCs that’ll get sold in the next year, over two-thirds of them will get sold to the consumer. So, our biggest consumer product, no question, actually is the consumer Windows PC.”
Ballmer said Windows has close to a 93% market share for all laptop computers, and the share is still growing. But there is competition coming in the form of the tablet computer running a non-Windows operating system.
“We’ve had Windows 7 on tablets and slate machines now for a number of years, and Apple has done an interesting job of putting together a synthesis and putting a product out, and in which they’ve — they sold certainly more than I’d like them to sell, let me just be clear about that,” Ballmer said. “We think about that. We think about that in competitive sense. And for us, then, the job is to say, ‘Okay, we have a lot of IP, we have a lot of good software in this area, we’ve done a lot of work on ink and touch and everything else — we have got to make things happen.’ Just like we had to make things happen on netbooks, we’ve got to make things happen with Windows 7 on slates.”
“We’re working with our hardware partners, we’re tuning Windows 7 to new slate hardware designs that they’re bringing them to market,” Ballmer said, emphasizing the impact Intel’s Oak Trail processor will have on slate development when it arrives next year.
So non-Windows tablets are threatening to make a dent in Microsoft’s consumer dominance, and to cover that portion of the market, it is working on consumer Windows Slate products.
Compare this to a statement from Todd Bradley of HP’s Personal systems group at the Fortune Brainstorm Tech conference:
“I think you’ll see us with a family of Slate products, clearly a Microsoft product in the enterprise, and a WebOS product broadly deployed,” Bradley said.
HP was the biggest Slate partner Ballmer mentioned in his CES 2010 keynote last January (the other two were Pegatron and Archos,) but the company’s support for Windows Slate has come into question since it moved to acquire Palm and its mobile device business in April 2010. If the company is creating Windows 7 slates for the enterprise sector and WebOS for consumers, it is actually going completely against what Microsoft says it needs.
Toshiba’s compelling dual-screen “Libretto” tablet is expected to be available in August, and it runs Windows 7 Home Premium, but Toshiba has said it will only be available in limited supply and it is more a concept device than mass market tablet competitor.
At the end of his discussion Thursday, Goldman Sachs analyst Sarah Friar asked Ballmer to be absolutely clear about what version of Windows the Slates will get.
Here is Ballmer’s response in full:
“We’re coming full guns. The operating system is called Windows. No…there’s… let me be unambiguous. A new Windows Phone for screen sizes that, let me just say, are, you know, sort of bigger than three or four inches …the answer is Windows Phone. We are in the game. We’re all in the game today with Intel architecture machines. We’ve got improvements coming from Intel. We’re driving forward. We’re unambiguous about that. Now, where we’ll go and what’s going to matter –I said also in my remarks that in no way will we allow hardware to be the impediment. We will embrace what we need to embrace over time in terms of hardware evolution.”
“But you say to me, ‘Are we going to see slate?’ Yes. What processor are they going to have? They are going to have an Intel architecture processor at least in any foreseeable future. Are they going to run Windows? Yeah. Will it be tuned? Yes! And we are going to sell like crazy. We are going to market like crazy. We have devices that will run more applications, that have as much content, that have anything you want on the planet. And we have an ecosystem of developers that know how to write applications for that thing. Believe me, as I think everybody knows, you can buy two PCs for the price of one iPad — two netbooks today for the price of one iPad. So, people are sitting there over-celebrating bomb costs and blah, blah, blah. We and Intel can get our job done, and know how to make money.”
For an “unambiguous” statement, this still requires a bit of parsing:
1.) Slates are built on Intel’s chips and will run some version of “Windows.”
2.) There is also a version of Windows Phone for devices bigger than 4″ on the way, but the devices that will utilize it are still unknown, and indeed Microsoft is not limiting itself to a processor type or instruction set with that OS. These do not appear to fall under the description of “Slate.”
Ballmer then went on to say, “Let’s not speculate, let’s merely say when you get your Windows 7 machine, it will print. Let’s just start with that. I mean some people actually like to print every now and then. Ours will print.”
That part, at least, sounds like a strategy anybody can grasp.