Microsoft admits to angering partners with Surface

By Stuart Sumner
30 Jul 2012 View Comments
Microsoft Surface

Microsoft has admitted that its Surface tablet is likely to anger its OEM partners, and could jeopardise their willingness to manufacture its products.

This would be something of a disaster for the Redmond-based firm, which relies on its ecosystem for not just much of the software that runs on its Windows platforms, but also the breadth of hardware options.

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In its Form 10-K, an annual performance report required by the US Securities and Exchange Commission (SEC), Microsoft said:

"Our Surface devices will compete with products made by our OEM partners, which may affect their commitment to our platform."

This would also have a negative effect on the revenue the firm makes from licensing deals, which is a significant proportion of its income. While acknowledging the threat to this revenue from announcing Surface, Microsoft added that the growing smartphone and tablet market offers other attractive options to developers, which could mean they don't all rush to make apps for Surface.

"We derive substantial revenue from licenses of Windows operating systems on personal computers. The proliferation of alternative devices and form factors, in particular mobile devices such as smartphones and tablet computers, creates challenges from competing software platforms," the firm said in the report.

"These devices compete on multiple bases including price and the perceived utility of the device and its platform. Users may increasingly turn to these devices to perform functions that would have been performed by personal computers in the past. Even if many users view these devices as complementary to a personal computer, the prevalence of these devices may make it more difficult to attract applications developers to our platforms," it added.

Windows 8, set for release on 26 October this year, was recently described as an 'impending catastophe' by Gabe Newell, head of games developer Valve.

Analyst firm IDC recently released a report stating that developers have lost interest in developing for Windows Phone 8, but that Surface may prove more popular among app-makers.

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