How Microsoft has become the surprise innovator in PCs

Microsoft took a $900 million write-off for unsold Surfaces, its flagship tablet that was a failure

When Microsoft unveiled the first Surface tablet five years ago, it was a spectacular failure.

At the time, the Apple iPhone was well on its way to conquering the technology industry, and the iPad appeared set to lead an even more devastating invasion of Microsoft’s office-worker kingdom. Microsoft conceived of Surface, an innovative laptop-tablet hybrid, as a way to show off the versatility of its software. Windows machines, it argued, could work as phones, personal computers and tablets. And didn’t everyone love Windows?

Nope. Microsoft soon took a $900 million write-off for unsold Surfaces. Another effort to break into the hardware business, its acquisition of the limping phone-maker Nokia, dug a deeper river of red ink — a $7.6 billion write-off. By the summer of 2015, Microsoft’s hardware dreams looked crushed. 

Still, Microsoft persisted — and today, the company is making the most visionary computers in the industry, if not the best machines, period. In the last two years, while Apple has focused mainly on mobile devices, Microsoft has put out a series of computers that reimagine the future of PCs in thrilling ways.

Yes, Apple loyalists, that’s just my subjective view. And yes, Microsoft’s latest financial results aren’t exactly on my side here — the company announced last week that though its cloud software business is growing rapidly, revenue for its Surface division declined by 2 per cent over the last year (because of changes it made in its launch schedule).

Microsoft, of course, makes most of its money from the PC business by licensing Windows to other computer makers, and it says that part of its goal in building hardware is to inspire and guide those companies’ designs. But it also wants the Surface line to sell — and although the division has grown enormously in the last few years, becoming a critical part of Microsoft’s overall business, Surface is still far smaller than Apple’s Mac or iPad line.

Yet perhaps because it’s way behind Apple, Microsoft’s hardware division is creating products more daring than much of what has been coming out of its rival.

The hybrid Surface Pro — the inheritor of that first Surface’s vision, the latest version of which was released in May — hasn’t just become a moneymaker for the company. It was also the clear inspiration for the Apple iPad Pro, which supports a pen and keyboard but still feels less like a full-fledged laptop than Surface does.

Late last year, Microsoft also unveiled Surface Studio, a big-screen desktop that bears a passing resemblance to the Apple iMac — except its vertical display effortlessly pivots into a kind of digital drafting table, a slick trick that you can imagine Steve Jobs having lots of fun showing off.

And in the spring, Microsoft showed off Surface Laptop, which sounds humdrum enough; in shape and purpose, it isn’t much different from the MacBook Air, Apple’s pioneering thin and light laptop. But Microsoft’s machine has a better screen than the Air, and, more important, a future. People loved the Air, but Apple doesn’t appear to want to upgrade it, so Microsoft stepped in to perfect Apple’s baby.

Note, too, that the rest of Apple’s PC road map has lately been looking shaky. Apple’s latest laptops left many fans disgruntled, and the Mac Pro has gone years without an update. Apple is now moving quickly to address complaints from its high-end “pro” users — it says the Mac Pro will be redesigned, and a new Pro version of the iMac is coming later this year.

“I think Microsoft has recognised over the last couple years that maybe the creative community isn’t as locked into the Mac as many people think it is,” said Jan Dawson, an independent technology analyst. 

©2017 The New York Times New Service