Why the Microsoft Surface Exists

Not sure why I haven’t linked to this before now, but Horace Dediu (who is still biting his nails, for those keeping track) has written a fascinating article explaining how the Surface fits into Microsoft’s plan for the future.

In short, tablets are where the growth is happening in larger-than-phone computing — and Microsoft has little presence there. In traditional PC sales, Microsoft receives around $50 for a license of Windows, and $67 for a license of Office.

The surface, with its Apple-esque 30%+ margins, is a way for Microsoft to keep revenue and profit high, without manufacturers like Asus and Dell paying $50 a pop for a Windows license… Manufacturers who could easily switch to making hardware for Android — which lacks this hefty fee. Sometimes, Google will even pay manufacturers to use Android.

It seems that Android is doing more harm to Microsoft than I originally realised — Google might be going after third party device manufacturers. Smart.