Earlier this year Microsoft introduced their Surface 3 tablet and insisted that it was really a hybrid notebook. We reported on this in a May report titled "Microsoft's New Surface Pro 3 Thinks it's a Notebook." I was perplexed at how aggressive Panos Panay, Microsoft's Corporate VP for Surface was by insisting that the Surface 3 was better and lighter than Apple's MacBook Air. Today, news has surfaced out of Taiwan that may shed some light as to why Panay focused so hard on competing with the MacBook Air.
In a new report this published this morning, Taiwan-based supply chain makers reveal that "Microsoft is facing increased competition from MacBooks and Chromebooks, with the global notebook OS market share for Windows 8 already dropping to below 90%."
The report added that "Thanks to iPhones and iPads, demand for Apple's Mac series products has also been rising in the past few years."
To counter this trend, the report noted that "Microsoft has recently extended its free Windows 8 licensing coverage and is cooperating with HP and Acer to release US$199 notebooks at the end of 2014." It's a classic case of "drastic times calls for drastic measures."
In addition to extending free licensing for Windows 8, the report finally noted that "Microsoft may also need to revise the shortcomings of Windows 8 and accelerate its pace on the development of Windows 9 in order to stay competitive."
Windows 9, code named Threshold was reported on in June. However, the shift is going to take yet another twist as Microsoft's CEO Satya Nadella announced yesterday during Microsoft's Financial Conference Call that their new OS will merge all of its major versions of Windows into one huge Windows platform.
According to June 2014 desktop statistics, Windows 7 holds 50% of the the market, Windows XP holds 25% while Windows 8 clocks in at a pathetic 5.93%. A clear sign that their customer base won't upgrade to this foreign OS that placed way too much emphasis on their new Metro user interface that never belonged on notebook or desktop hardware.
In the end, Microsoft is in panic mode as both their current OS and notebooks with Windows are crashing hard against Apple's MacBooks and Google's Chromebooks. Microsoft's solution will not be found in marketing their Surface 3 Tablet as a next generation notebook - as no one is buying into that tune in its current form factor. Matters are likely to get worse for Microsoft before they get better and it's going to be ugly as it plays out in the press over the next year.