Beneath The Surface, Windows President Steven Sinofsky Contends With Microsoft’s Awkward Hardware Partner Relationships

Thanks to Microsoft’s new Surface tablet, Redmond is now in the delicate position of competing with the hardware partners that generate a significant portion of company revenue. Does Windows president Steven Sinofsky think its OEM partners can compete with the Surface tablet?

Beneath The Surface, Windows President Steven Sinofsky Contends With Microsoft’s Awkward Hardware Partner Relationships

September’s been a busy month for product announcements: Apple, Nokia, HP, Motorola, and Amazon have all unveiled new smartphones or tablets. And HTC, Lenovo, and other hardware makers will introduce even more new gadgets in the coming weeks.


But no matter how many devices flood the market this holiday season, there’s one that everyone–from consumers to critics to analysts to shareholders–will have their eyes on: the Surface tablet, the first Microsoft-manufactured PC device in the company’s 30-year history. The tablet, which features an ultrathin magnesium casing, integrated kickstand, and innovative attachable keyboard, is one of the most compelling alternatives to the iPad yet. But it could also prove incredibly disruptive for Microsoft, which will soon be in the awkward position of competing with its own hardware partners in the tablet market. During my reporting for Fast Company‘s feature on design at Microsoft, which is part of our October design issue, I got a sense of how uncomfortable the relationship is becoming between Microsoft and its partners, despite what Redmond says to the contrary.

The issue is that the Surface tablet will soon be going head-to-head with devices from its OEM partners, such as HP and Asus, which license Windows and account for a significant portion of Microsoft’s revenue. Lenovo has said “we don’t like Microsoft providing hardware.” Acer has warned Microsoft to “think twice” about its new strategy. Other hardware makers, including HP and Nokia, have been more diplomatic in their response to the Surface.

But how does Microsoft feel about its potentially disruptive strategy? Executives have been incredibly careful not to inflame the situation by commenting publicly. Microsoft CEO Steve Ballmer has cast the company’s foray into hardware as more of an inspiration for third parties–it’s “just a design point,” he has said. But in a recent SEC filing, Microsoft acknowledged the risks involved: “Our Surface devices will compete with products made by our OEM partners, which may affect their commitment to our platform.” (That’s not to mention Microsoft’s acquisition of Perceptive Pixel, a maker of multitouch displays, which seems to signal a deeper commitment to hardware than the company will cop to.)

Steven Sinofsky

In June, at Microsoft’s Surface event in Los Angeles at Milk Studios, I witnessed firsthand the now-sensitive nature of Microsoft’s relationship with hardware vendors. When Windows president Steven Sinofsky was asked off-stage at the event whether OEMs could compete with the Surface, he gave an ill-considered reply. “Not today,” Sinofsky said, trying to brush off the question before realizing a second too late how his comment could be misconstrued. “Not–I don’t mean…I’m not saying–I mean, today’s not a good day for answering stuff like that,” he stammered.

When pressed further and asked whether its OEM partners could compete with Microsoft in terms of hardware, Sinofsky explained that it’s not as if Microsoft has some “special” access to hardware components that its partners don’t. “It’s all the same world,” he said. “We don’t have any special things anywhere, so…”

Sinofsky trailed off and avoided answering other questions on the subject throughout the rest of the event.


In addition to Microsoft’s OEM partners, critics such as Forrester Research analyst David Johnson think the Surface tablet could significantly alter the relationship with its hardware makers, but believe that perhaps Redmond had no other choice. “The Surface is a poke in the eye of the OEM vendors that says, ‘Look guys, you’ve got to stop building junk,'” says Johnson. “Microsoft can’t afford any more mistakes.”

Check our complete feature story on design at Microsoft in our October design issue, and be sure to check out other recent stories on Microsoft, Apple, and the significance of Windows 8:
Will Apple’s Tacky Software-Design Philosophy Cause A Revolt?/Even Inside Microsoft, Users Rarely “Bing It”

[Image: Flickr user BuildWindows]

About the author

Austin Carr writes about design and technology for Fast Company magazine.