Microsoft actually did start competing with Apple on hardware already back in 2006:

http://www.engadget.com/2006/09/14/microsoft-launches-the-zu...

So clearly Ballmer had this in the cards for a long time. The various iterations of Zune, even though commercially unsuccessful, laid the groundwork for both the "Metro" UI language and Microsoft's in-house hardware design.

Maybe Zune was a necessary "weaning period" in reducing Microsoft's OEM dependency.

The Zune wasn't half bad. I liked it much more than my ipod at the time.

I was in the same boat. I had a Zune HD, and it was a very underrated hardware/software package. Probably a good example of a superior product that was a victim to timing, marketing, and other forces outside of the product itself.

It's biggest problem was timing -- launching less than a year before the iPhone was a huge problem. The market had moved on from the entire dedicated MP3 player space before the Zune had a chance to find a market and iterate on the product to refine it.

I think the biggest problem was that nobody took it seriously, and I'm not really sure why. It was easily as good, if not better, than the iPods of the time. I definitely don't think it was an issue of timing though. the iPhone's capacity at launch (8GB) was a joke compared to dedicated players at the time. And music streaming services weren't all the popular. Plus even if they had been, it would be a year until we saw a 3rd party app store on the iPhone.

>I think the biggest problem was that nobody took it seriously

There was that one guy, who got the tattoo...

Jesus, that guy. He's lucky it's a pretty neat-looking symbol. So in 10 years when nobody recognizes it he can play it off as some obscure video game reference.

Not just one. And considered changing his name to Zune too. He seemed to regret it though. http://www.wired.com/2009/09/zune-tattoo/

It was too little, too late. They were roughly as good as a well established option, with a better ecosystem. There is nothing compelling about that, and as noted the dedicated player was about to get its lunch eaten (not that anybody knew this).

I think its biggest problem was that it had wifi, but didn't have a web browser. Then six months later, along came the iPod Touch ...

I don't know if that's true. The first few iPhones were very expensive unlocked and on contract, required signing up for a $70-$100/month phone plan, which was close to double what dumbphone users were paying. The iPod Nano, iPod Touch and iPod Classic saw updated versions each year, slowing down only once iPhones and Androids became mainstream and replaced dedicated music players.

The original iPhone was 400$ without contract (it was locked to AT&T though). However, it could be jail broken by simply going on a website using the built in browser. Unlocking it wasn't much more complicated too (within the launch week, you could unlock it with a turbo sim, and couple months later software unlock were released).

I got an iPhone 3G in AU on a 2 year $40AUD/Month contract.

At the time, this was almost half what I would have paid pre-iPhone. Before the iPhone, I would have had to get a normal contract, plus a data add-on. Monthly cost was close to $80AUD.

Didn't a similar bundling of services at relatively lower costs happen in the US?

Still more expensive than call and text only, but still not that expensive.

the software was abominable. The zune ran a version of MTP that was proprietary and so could not be used on older versions of Windows or Linux... while ipods worked beautifully on Linux.

Just getting Music on the Zune using the desktop software was an exercise in pain.

Agreed, entirely. I adored my original Zune, as far as a piece of hardware, it was amazing. Cool look, big color screen, heck even an FM tuner. It was ahead of its time. The software on the other hand still gives me nightmares. It crashed all the time, would constantly lose large chunks of metadata I had meticulously entered, would randomly freeze while loading music... it was the weak link in the Zune chain.

> * The various iterations of Zune, even though commercially unsuccessful, laid the groundwork for both the "Metro" UI language and Microsoft's in-house hardware design.*

I think this is key. Microsoft has been selling keyboards and mice for a long time with probably a small team, but organizationally the Zune (and Xbox 360) efforts allowed them to staff up and work out a lot of the logistics.

The OEM's participated in a race to the bottom in an effort to maximize how many people bought PC's. This caused damage to the Windows/PC brand. By the time they pivoted to "ultrabooks" the damage was done and these brands were seen as low end/discount unable to produce quality PC's.

I'm not sure that Microsoft could have stopped that, even if they rolled out a "high end" Surface like device 5 years prior.

It believe it's the lack of a low end product that makes Apple, and now Microsoft attractive to premium buyers.

> The OEM's participated in a race to the bottom in an effort to maximize how many people bought PC's. This caused damage to the Windows/PC brand.

That's what strengthened the Windows brand in the first place - availability, unbiquity, and the sense of it being the "default" ("nobody ever got fired for buying Microsoft").

Over time, the lack of control over the quality resulted in variation, and Apple was eventually able to capitalize on that by selling themselves as consistent experience, but that's only within the last decade. The OEM situation with Windows has been the case literally since before Windows (it existed during the DOS era as well).

It's good that Microsoft is finally responding to this pressure and providing a default, consistent experience (analogous to the Nexus experience on Android). But I wouldn't say that it's what did damage to the Windows brand, because without it, there wouldn't be a powerful Windows/Microsoft brand in the first place.

Exactly - how can you hurt the Windows brand when the whole point of the product was to commoditize the hardware to bring the cost of the total solution - hardware + software - down in price? Microsoft's goal has always been to encourage and in some cases even mandate interoperability. That's typically been thought of as a good thing, but you can't be surprised when hardware makers do everything they can to cut corners - when you're selling a commodity you can't charge anything above the prevailing marginal cost of production. The only path to success is to ruthlessly cut the cost of production.

If your product is being commoditized, the only way to seek margins is to fight commoditization. You do that by deifferentiating your products. And what laptop OEMs seem to have concluded is that differentiating on build quality/design/attention to detail/form factor wasn't an option.

And they continued to believe that even when Apple demonstrated conclusively that people would go out of their way to buy Apple hardware, rip off the Mac OS that they'd paid for, and install Linux/Windows on it.

Why is it obvious to Microsoft that the Surface Pro, or the SurfaceBook, is a valid addition to the PC hardware marketplace, but it wasn't obvious to any of the many competing OEMs?

How profitable is the Surface for Microsoft?

Does Microsoft consider it a loss-leader reference design?

If it's been profitable, why hasn't anyone else in the PC space copied it?

I believe (don't quote me on this) Microsoft is closing in on a billion (1) dollars in annual revenue from Surface. Not sure how much is "profit" but someone who follows earning more closely might be able to clarify.

If the form factor is really that successful, I wonder why no one else is copying it? The Surface itself is made by a Taiwanese company named Pegatron, which is a division of Asus - so it's even being made by an established PC hardware company.

"how can you hurt the Windows brand when the whole point of the product was to commoditize the hardware to bring the cost of the total solution - hardware + software - down in price? "

You answered your own question. The OEM's "ruthlessly cut the cost of production" too far and thereby damaged the PC brand.

This "ruthlessly" cutting of costs would have been survivable, however with Apple attacking from the flank with the iOS/app model, the PC makers were/are now in an even deeper hole.

Depends on which era you're referring to.

Yes, low cost hardware drove Windows/PC adoption in the 80-90's. This was key to Windows success.

However, throughout the 00's the continued downward pressure on pricing by OEMs, Microsoft's questionable decisions, and the cheapening of the PC brands, caused consumers to be seek a premium alternative.

I believe it also makes sense to separate the consumer vs enterprise markets. Buying Microsoft at home is not the same decision process as buying Microsoft at work.

Interesting b/c Microsoft had made a big push to promote the tablet form factor back in 2002, but the OEM devices weren't popular. https://en.wikipedia.org/wiki/Windows_XP_editions#Tablet_PC_...

I'm under the impression they were legally prohibited from "[giving] up on their OEMs 5 years sooner" due to US antitrust action. DOJ oversight ended in May 2011 and the Surface line was announced in June 2012.

Yep this was painfully clear a long time ago. Their entire tablet PC/pen computing stuff was DOA because of shitty vendors. (And MS not really making the UI accessible, but that's another point.)