From partner relations to antitrust, Microsoft's new hardware push has serious implications

OEM partners might not like this new initiative. More importantly, the Justice Department might not either.

Microsoft Surface tablet Lumia smartphones antitrust PC makers
Credit: Image credit: Microsoft

With this past Tuesday's show in New York, Microsoft doubled down on hardware when everyone expected it to fold. After disastrous losses with early Surface tablets and the Nokia acquisition, it stood to reason that CEO Satya Nadella would raise the white flag and say $2 billion is enough.

Instead, Microsoft came back with beautiful new Lumias, stylish (and pricey) new Surface models, and a stunning new laptop. Overlooked in the hoopla over the laptop and tablets was a second-generation Microsoft Band, which has gotten its own kudos.

Microsoft is generally getting good reviews for this news, but there is a potential downside for the company. Its OEM partners might feel burned. CRN, which specializes in the tech reseller channel, raised the issue that HP, Dell, Lenovo, and the rest might be a bit upset.

"This is a huge throwdown against the hardware OEMs," an unnamed CEO of a major solution provider told CRN. "I just don't get it. It's already a crowded market. Why does Microsoft need to enter the laptop market, duking it out with HP, Dell and Lenovo? This throws all of Microsoft's hardware OEM relationships into disarray. It also makes me wonder if Microsoft will get into the server business. What's next?" 

That CEO and a Lenovo reseller mentioned Microsoft's past anti-trust issues from the 1990s with the Department of Justice. They pointed out that Microsoft appears to have a built-in advantage in that it does not have to pay for the Windows license, whereas OEMs do. Windows is free only to devices under 9 inches horizontally, which means the phone OS, basically.

The question is how Microsoft handles this. A few resellers quoted by CRN said they felt Microsoft was pulling a move from Apple, controlling the hardware and software. But we have to let that play out. Microsoft might also follow the Google route and simply set the bar high and try to encourage its OEMs to at least meet that bar.

Might I point out that the OEMs have not exactly been on their best behavior? Lenovo has been particularly egregious when it comes to loading its laptops with crapware and is earning the ire of customers. If Microsoft offers up a barebones Surface laptop with no crapware on it, the burden would be on Lenovo to knock that silliness off.

As always, we'll see how this plays out.

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