Where would Microsoft be today if they had given up on their OEMs 5 years sooner, and gone head to head with Apple on hardware?
http://www.engadget.com/2006/09/14/microsoft-launches-the-zu...
So clearly Ballmer had this in the cards for a long time. The various iterations of Zune, even though commercially unsuccessful, laid the groundwork for both the "Metro" UI language and Microsoft's in-house hardware design.
Maybe Zune was a necessary "weaning period" in reducing Microsoft's OEM dependency.
At the time, this was almost half what I would have paid pre-iPhone. Before the iPhone, I would have had to get a normal contract, plus a data add-on. Monthly cost was close to $80AUD.
Didn't a similar bundling of services at relatively lower costs happen in the US?
Still more expensive than call and text only, but still not that expensive.
There was that one guy, who got the tattoo...
Just getting Music on the Zune using the desktop software was an exercise in pain.
I think this is key. Microsoft has been selling keyboards and mice for a long time with probably a small team, but organizationally the Zune (and Xbox 360) efforts allowed them to staff up and work out a lot of the logistics.
I'm not sure that Microsoft could have stopped that, even if they rolled out a "high end" Surface like device 5 years prior.
It believe it's the lack of a low end product that makes Apple, and now Microsoft attractive to premium buyers.
That's what strengthened the Windows brand in the first place - availability, unbiquity, and the sense of it being the "default" ("nobody ever got fired for buying Microsoft").
Over time, the lack of control over the quality resulted in variation, and Apple was eventually able to capitalize on that by selling themselves as consistent experience, but that's only within the last decade. The OEM situation with Windows has been the case literally since before Windows (it existed during the DOS era as well).
It's good that Microsoft is finally responding to this pressure and providing a default, consistent experience (analogous to the Nexus experience on Android). But I wouldn't say that it's what did damage to the Windows brand, because without it, there wouldn't be a powerful Windows/Microsoft brand in the first place.
And they continued to believe that even when Apple demonstrated conclusively that people would go out of their way to buy Apple hardware, rip off the Mac OS that they'd paid for, and install Linux/Windows on it.
Why is it obvious to Microsoft that the Surface Pro, or the SurfaceBook, is a valid addition to the PC hardware marketplace, but it wasn't obvious to any of the many competing OEMs?
Does Microsoft consider it a loss-leader reference design?
If it's been profitable, why hasn't anyone else in the PC space copied it?
You answered your own question. The OEM's "ruthlessly cut the cost of production" too far and thereby damaged the PC brand.
This "ruthlessly" cutting of costs would have been survivable, however with Apple attacking from the flank with the iOS/app model, the PC makers were/are now in an even deeper hole.
Yes, low cost hardware drove Windows/PC adoption in the 80-90's. This was key to Windows success.
However, throughout the 00's the continued downward pressure on pricing by OEMs, Microsoft's questionable decisions, and the cheapening of the PC brands, caused consumers to be seek a premium alternative.
I believe it also makes sense to separate the consumer vs enterprise markets. Buying Microsoft at home is not the same decision process as buying Microsoft at work.