Author(s): Peter Bryer
Back in March 2015, CCS Insight noted that Microsoft's hardware business had evolved over the decades from a side interest to a bona fide leading act for the company (see Daily Insight: In Case Nobody Noticed). Microsoft has come a long way from its software pedigree. From computer accessories and games consoles to smartphones, detachables and wearables, Microsoft's device portfolio has grown wider — at times following and at times out-innovating competitors.
Never before has Microsoft's dedication to hardware been more evident than with the introduction of a series of flagship products at its event yesterday in New York City. It was the biggest hardware launch in the company's history, and a statement that it's moving forward with new designs and category defining products despite any sales setbacks. A mixed track record of market success hasn't dissuaded Microsoft's hardware ambitions.
We've written several times about the "blurred lines" between product classes. Perhaps most notable yesterday was what might be the greatest cross-pollination of device categories to date. Microsoft's introduction of the Surface Book — which was showcased as a laptop that doubles as a tablet — and the Surface Pro 4 — presented as a tablet that doubles as a laptop — raises the subject of mutual exclusivity versus multidevice ownership. Even the company's new smartphones were demonstrated as desktop PC replacements.
The Surface Book was described by Panos Panay, Microsoft's head of devices, as being the "ultimate laptop". It's not the first full-touch detachable on the market, but almost certainly the most advanced to date. With prices starting at $1,500 and reaching $2,700, the Surface Book is a high-end product even for the two-in-one category of laptops, but will act as a showroom model for Microsoft stores to demonstrate the technology prowess of Windows 10. It's a foot in the door of the PC hardware market, but Microsoft says the Surface Book is intended to be as much inspiration for its manufacturing partners as it is an industry defining product.
The Surface Book received center stage at the event, but other product introductions showed Microsoft's dedication to constant category improvement. Microsoft's new tablet, the Surface Pro 4, and its new Microsoft Band 2 wearable were clear indications of its long-term dedication to the respective device categories. The introduction of a developer edition of Microsoft's HoloLens augmented reality device is part of its commitment to a futuristic product that's unlikely to scale for several years.
Microsoft continues to look for a pivot point in smartphones to offer serious volume competition to Apple and Google. The company introduced three new Windows 10 phones yesterday: the Lumia 550, 950 and 950 XL. The devices range in screen size from 5.7 inches for the Lumia 950XL — now essentially a market standard for flagships — to the 4.7-inch 550. The phones lack fingerprint sensors, which is somewhat surprising as competing devices on the market have established such scanners as part of the user experience. However, the Windows 10 phones do support Microsoft's Windows Hello facial recognition biometric authentication.
Microsoft's Continuum was demonstrated by using a Lumia 950 XL as a PC substitute, with a docking accessory to connect a full display, keyboard and mouse. Applications that scaled to the big screen to offer a desktop Windows experience were an impressive fruition of the company's vision, though it's too early to say if this is truly the start of something big or a feature that comes a little too late to matter.
The near-religious devotion to Android and iOS among consumers and developers is an obstacle that Microsoft has been unable to overcome. At $650, the Lumia 950 XL is priced in line with other flagships, but offers little compensation to consumers in exchange for a narrower ecosystem. The new Lumia phones are unlikely to do much to boost Microsoft's smartphone market share in an increasingly competitive environment unless the PC replacement facility can be established as a key selling point.
Microsoft is successfully fusing together its software and services with innovative hardware, and it's clear that the company has as much vision as any other device maker on the market. It's now capturing the audience's imagination with current and future products, and has cemented its brand as a designer of devices.
For further analysis of this market development, please click here to read our Instant Insight on the subject (subscription required).