Exclusive Microsoft blames PC makers for underwhelming Windows 8 sales over Christmas, The Register has learned. The software giant accused manufacturers of not building enough attractive Win 8-powered touchscreen tablets.
But the computer makers are fighting back: they claimed that if they’d followed Microsoft’s hardware requirements and ramped up production, they'd have ended up building a lot of high-end expensive slabs that consumers didn’t understand nor want.
The Reg has learned Microsoft provided clear and specific guidance on the hardware it wanted inside any machine running Windows 8 so as to show off and utilise the operating system's new capabilities, such as the touch-driven interface. Microsoft also gave its advice on the mix of high and low-end form-factors manufacturers should build, namely Ultrabooks, hybrids and simple laptops.
The Redmond giant had held a competition between competing computer makers, and the PCs it deemed the best were to be promoted under two labels: Hero PCs and Featured PCs. Microsoft wanted 10 Hero PCs to advertise globally and promised to pay retailers to display and promote 20 PCs on the Featured list.
However, the wheels came off that plan: Gartner said last week that during Q4 2012 Windows 8 didn’t make a “significant impact” on PC shipments and other analysts said sales of Windows 8 are lagging Windows 7.
Now Microsoft is planning to reboot its launch of Windows 8 next month. On Tuesday the company gave 9 February as the date for the US and Canada unveiling of the Intel-powered Surface Pro tablets. But sources tell us Microsoft is actually preparing for a February “relaunch” of Windows 8.
The Windows Pro Surface was planned to emerge in January, 90 days after Windows 8 and ARM-powered Windows RT Surface devices went on sale. That has clearly slipped.
Our well-placed source said that bad sales combined with PC makers “ignoring” Microsoft's advice has left Redmond executives fuming.
“Microsoft is very frustrated with major OEMs who didn't build nearly enough touch systems and are now struggling to find parts and ramp up. Microsoft says they provided very specific guidance on what to build,” our insider said.
Badge of honour: Vista revisited
When new versions of Windows are released, Microsoft usually gives minimum hardware specs for the operating system to PC makers as part of its logo programmes: machines that meet the requirements get an official Redmond badge to reassure buyers. It should be stressed that these specifications are always pitched as the minimum needed to get the OS running.
One recent example is the notorious "Windows Vista Premium Ready" and "Windows Vista Premium Capable" badges. That programme landed Microsoft with a lawsuit as litigants claimed Microsoft misled them on what “capable” meant. It emerged Microsoft had played fast and loose with its own rules to help Intel, classifying PCs as capable when they weren’t.
You can see the Vista specs here.
Windows 8, though, was a radical departure that Microsoft had to flaunt. It introduced touchscreen input; called for apps capable of running on ARM chipsets from Qualcomm, Texas Instruments and NVIDIA; and required PC makers install firmware capable of cryptographically authorising the boot up of the operating system.
A separate source at a major Windows 8 PC maker confirmed frustration is simmering inside Microsoft, and the blame is settling on PC makers. He said [Microsoft] “is pinning the blame on the manufacturers for not having enough touch-based product”.
'We couldn’t afford to make lots of product, lots of high-priced touch'
PC makers, though, are hitting back after Redmond's finger-pointing - countering that if they’d followed Microsoft’s advice they’d have ended up building very expensive tablets and would have been saddled with the costs of a huge piles of unsold units. Those who did buy Windows 8 PCs ultimately bought the cheap laptops not high-end Ultrabooks or hybrids.
One Reg source told us Microsoft isn’t blaming OEMs publicly, but doing so in private in meetings assisted with PowerPoint presentations. “There was a big debate, and we said: 'It’s not like that.' We couldn’t afford to make lots of product, lots of high-priced touch. We found people would look at nice high-end products and buy £299 devices instead,” the contact said.
The source also criticised the Hero PC and Featured PC programmes, calling the process "opaque".
The PC makers also blame Microsoft for sowing confusion with its Surface tablet. Among the manufacturers, it is perceived that the Microsoft-branded slab failed to educate users about the new touch user interface and distracted the software giant - leading to its failure to put adequate marketing muscle behind the launch of ordinary Windows 8 PCs.
The European launch of Windows 8 lacked the punch and focus expected by PC makers, as Microsoft focussed much of its efforts on the US and Surface.
“Microsoft is not blaming itself for not selling enough Surface, it’s blaming OEMs for not having enough touch-based product,” our supply chain source said.
The Reg asked Microsoft to comment on its sales in the final quarter of 2012. We also asked what the company believes is responsible for the fact Windows 8 didn't have a "significant" impact - as per Gartner's statement. El Reg also quizzed the firm on whether it believes more touch would help sales of PCs in Q1 and Q2 of 2013, and which steps Microsoft taking now.
Finally, we asked what guidance Microsoft had provided manufacturers.
In a statement attributed to Windows business planning general manager Bernardo Caldas, Microsoft said it works closely with hardware partners on a list of selected devices which it believes “people will love and that showcase the best of the Windows 8 user experience. This is not a new process for Windows”.
On those Q4 sales, Microsoft claimed 60 million Windows 8 licences had been sold to date - pointing to comments made by Windows division chief financial officer and chief marketing officer Tami Reller at a JP Morgan conference.
Microsoft did say that the figure of 60 million could be attributed to upgrades and sales to manufacturers – so not sales of actual PCs to the end user. Reller had claimed the 60 million was “roughly in line with where we would have been with Windows 7".
On the plans to help Q1 and Q2 sales and of a marketing reboot, Microsoft reckoned it was pleased with uptake of Windows 8 and said: “We work closely with our OEM partners to put a great hardware assortment that brings Windows 8 experiences to life at the center of our marketing campaigns – three key hardware refresh and selling timeframes for OEMs and Microsoft campaigns continue to be: spring, back to school and holiday.
"As market conditions evolve, we will continue to work in tandem with PC makers on creating successful and compelling campaigns.” ®