Microsoft Officially Admits The Surface Is Likely To - Business Insider

Microsoft executives have been understandably cagey about admitting that competing with its PC partners could damage the relationship with those partners.

Their public statements have indicated that all is hunky dory with Windows PC makers like Dell, HP, Lenovo. Bill Gates said that Microsoft's Surface was the "best of both worlds. You can have a rich eco-system of manufacturers and you can have a few signature devices," he recently said.

And Ballmer swore that Microsoft wasn't going to give itself some kind of financial advantage over its partners -- even though its charging PC makers quite a lot of money for the Windows operating system.

But finally, in it's annual report, the company stepped up and told the truth -- that Surface competes with PC makers and could really hurt Windows 8 sales.

"Our Surface devices will compete with products made by our OEM partners, which may affect their commitment to our platform," the company said in its 10-K filing to the SEC. If Windows 8 doesn't become popular enough, that could "make it more difficult to attract applications developers to our platforms," Microsoft also warned.

And while it was at it, Microsoft also admitted that Apple's was right.

"A competing vertically-integrated model, in which a single firm controls the software and hardware elements of a product and related services, has been successful with some consumer products such as personal computers, mobile phones, gaming consoles, and digital music players," Microsoft said in its report.

"We also offer vertically-integrated hardware and software products and services; however, our competitors have been in the market longer and in some cases have established significantly large user bases."

The filing was first noticed by Nick Wingfield at the New York Times.

Source: http://www.businessinsider.com/microsoft-oem-partners-2012-7

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