The end of the road for OEMs
extremetech.com
extremetech.com
I love how someone who's never worked in the sector asserts that it's all trivially easy to do and the money just rolls in.
In reality, there is almost no market sector that's trivially easy. Problems are fractal. EVERYTHING is hard. I'm sure that if you dig deep enough into it, slicing bread is a tricky business to be in. Should the bearings be teflon or delrin? How do you compete with the new machines from China? What about that new OSHA mandate coming down the pike?
Suddenly, they all seem to have the technology to build ultrabooks, a year prior, one one had any technology that could even remotely come close?
The same goes for so many aspects....battery life, screen resolution, looks....Apple blows almost every single other company out of the water on almost every important aspect, except perhaps price, and even there you can even make the argument that they are better.
So yes, it is hard, but it didn't just suddenly become not hard in the last year where some OEM's are finally starting to come out with attractive products. And despite how hard it is, Apple somehow solves almost everything - the only thing OEM's seem to take an interest in solving is either hitting a very low price point (and they'll cut every corner it takes to get there) or the extreme upper end of performance.
It's almost as if all computers were sufficiently powerful for 99% of use cases that that's the only thing most people care about...
Slicing bread is a dead easy business to be in. You buy a bread slicer, and you let it run. innovation, no matter the sector, is what is hard. And the point the article is making is that we haven't seen any innovation out of the tech OEMs in a long time.
Yeah, that's why no one ever watches the Olympics.
Running? Pffft! Lots of people do that. No new techniques in the last 9,000 years!
No, it's almost impossible. Doing the same thing for year after year is impossible because someone comes along and does some part better from the customer's point of view, and then you don't have a business.
> Slicing bread is a dead easy business to be in. You buy a bread slicer, and you let it run. innovation, no matter the sector, is what is hard.
There are no "easy businesses".
For starters, there's no "bread slicing" biz. Slicing bread is a small part of whatever it is your customer is actually paying for.
Never confuse "units of billing" (suc as "loaves of sliced bread") with the business. For example, the biz is often making sure that they can serve their customers profitably. Fresh, on-time, small-inventory, etc is what makes a difference, not the bread slicer.
There's innovation in every biz that lasts. Technology is usually the easy part.
That's what I'm saying. Nobody in the pc OEM game has done that lately, that's why it has been so easy to be a OEM.
You're wrong. You seem to think that PC OEMs just order some parts and slap them together. That's no more true than "buy a bread slicer and you've got a biz".
Being a PC OEM has always been hard and the ones that have survived have innovated. (Consider Starbucks. Pouring coffee isn't their biz.)
Never confuse "I don't know what they do" with "they don't do anything".
Instead, they are trying to insure that there will be decent slate hardware available at the Windows 8 launch.
It's not as if OEM's have been knocking slates out of the park since the iPad was released. And I suspect that the OEM's haven't exactly been clamoring for a Windows slate OS, either, considering the lackluster profits for everybody but Apple (and perhaps the Amazon ecosystem).
Come 2013 Microsoft will have options - either to continue as a hardware vendor ala Xbox (and slates are a great product line extension); or having gathered meaningful data to scale back to OS provider as was the case with Kin.
Sure the OEM's will not get to set the tone for Windows 8 slates right away. Given their love of crapware, that's a feature, not a bug.
I've worked with a number of OEMs and original device manufacturers (ODMs) over the years and they have been a hugely important resource for getting technology into consumers hands. But one of the things which I have learned is that they don't make products, they manufacture them. The difference between those two statements is subtle and important. An OEM will manufacture exactly what you ask them to manufacturer, they will write into the contract what it is and they will build it. If the device they build is not competitive to some other product it really isn't there fault, its "you" the person writing the contract's fault.
iPads are made by FoxxConn, which is, an OEM. They make lots of stuff for lots of people. They aren't threatened by the 'newer than the new iPad iPad' because they know that Apple will likely ask them to build that one too. That the iPad is an iPad is because Apple drove a vision of what an iPad should be so hard they drove into FoxxConn's heads and they build them.
But not all OEMs are product companies. They are just good manufacturing companies. And sometimes they say "Why should we let these guys push our price down and take all the profits?! They buy those from us for $X and sell then for 3X$! We want that money too!" And so these manufacturers try to make a 'product.' And they do make it by looking at it and making something as similar as possible, but they often don't "get" what it is that makes the product the product because they haven't had the vision drilled into their heads. So you get 'knock off' products.
In all my dealings with OEMs the OEM assumes they are doing the hard job and the product design is the easy part, and the product guys figure they have the hard job and just making it is the easy part. They are both wrong, there is no 'easy' part.
So did Microsoft, thanks to those OEM's. I for one hope that Microsoft's goal is to kill the OEM's. I mean, imagine if all of the sudden no other company but Microsoft could create a Windows machine. No Windows XP, no Windows 7, no Windows 8. Do you think hundreds of millions of users all would just buy from Microsoft their PC's?
I think it would create a huge vacuum in the market, and the OEM's would simply flood the market with Linux machines. Normal people would just buy those Linux machines, while the more savvy users would keep pirating Windows for a few more years until Linux becomes a more viable market.
Sure, Microsoft might get say 20% of the "PC" market on their own, just like Apple has in the mobile market globally. But the vast majority of the market would be filled with OEM Linux machines, just like 70% of the market is now filled with Android phones from other OEM's.
Where does this idea come from?
Yes, if that was the only way to get Windows. Linux doesn't run their software. Windows does. They'll buy Windows.
I'd love to switch to Linux - but until Premiere, After Effects, and Photoshop all run as well on Linux as they do on Windows, I can't. (Not to mention various other bits and pieces of 3D software).
What's your thought process behind this?
No one's talking about MS pulling Windows licensing for starters. But even if they did, I can't imagine any reason the market would go from where we are to where you describe, unless the hardware MS produced was absolute crap.
Sounds like an invitation to an anti-trust suit. I don't think Microsoft wants to go through another one of those.
https://answers.launchpad.net/ubuntu/+questions?field.search...
Note that the first answer suggests switching to daily builds. I'm not sure that's sound advice for my mother.
Yes, better support is available for Linux. It starts at $99 a year for Red Hat, $109 per year for Ubuntu. That's more than a Windows 7 OEM license.
The other issue with Linux is the sales channel. Lower priced computers (assuming that retailers lower the price of Linux machines) mean lower revenues for retailers while fixed costs (other than inventory investment) remain the same - i.e. a Linux laptop incurs the same shipping costs, takes up the same display space, and requires the same (a generous assumption) level of sales support.
In general, lower margins are not appealing to electronics retailers unless there is a higher sales volume. I've yet to see a convincing case that an increased supply of Linux computers in the retail channel would increase overall computer sales (I don't think I've ever seen an unconvincing argument for that matter).
Android succeeded because it allowed the smartphone market to expand. Aging form factors were displaced by more sophisticated devices - one should not discount the fact that the overall market for mobile phones was expanding, either. The case simply isn't analogous.
OEMs do their Windows support too. Also, there is little space for Linux support for the average Joe because all Joes who install Linux are above average.
In any case, I doubt Microsoft has the balls to do it. To me, it's more like they are sort of copying Google and Apple, trying to emulate them, cargo cult style.
More to the point, do they think Michael Dell will just sell the assets and give the money back to Dell's shareholders?
My god! Another way to say that they did all the hard work(the hardware itself) and earned 1-3% margin in the process.
...while MS will earn margins bigger than 95% on Office and Windows. >30% margins as the entire company(Once MS spent billions trying to extend his monopoly to other sectors).
OEMs are not going away. It is MS who is in danger. OEMs are the Vietcom, used to live on a cage or in the jungle, eating scraps. People that want cheap PCs will continue buying them with Windows 7, Linux or Android.
Also, I feel really bad for Apple and Google that Microsoft is going to deliver such an ass-kicking tablet that it puts them out of business, or at least into a distant second and third place.
Yeah, that was sarcasm.
My experience, over 25+ years, has been that MS products are almost always inferior to the competition (with the possible exception of XBox), and only exceed where they can exploit bundling. I don't see the leverage over tablet users. Also, how many places hung on to WinXP until support ran out, since Vista/7 sucks so bad? (7 might be less glitchy, but I still HATE the new UI, and I am relieved not to have to use it at home)
I suppose if MS starts to bundle their own PC hardware with Win8 at WalMart and BestBuy, it will make traditional PC components more expensive, alas.
I did do Logitech for a while, but they were incredibly user hostile - for example they didn't have drivers available for download, at one point wanted to charge for them, and then the final straw was a driver for a USB keyboard that refused to install on the grounds that I was pirating the driver!
I detest the constant assumption in Windows that you are a vile thief stealing it, but the hardware accessories have been the other way around. Drivers always available, always worked, and even available for Mac. And on Linux the hardware has just worked out of the box.
This Microsoft mouse has been with me since 2006 and has been the best mouse I have ever used. At this point they are 6 years old and I am thinking of replacing the USB cable to make them last even longer.
Why can't someone make a nice tactile keyboard at an affordable price? Humidity is getting at my keyboard and I'll need a replacement soon.
I was thinking about their very ill software, though, which would be part of the bundle, crippling whatever it was the table did.
Im not a console guy, my favorite desktop OS is Linux. But i like to play games, so i had a windows dual boot, and a Wii. But Windows requires way too much maintainace. And dual booting is annoying: i am an impatient guy.
So i got an XBox. Because consoles are hassle free, right? Boy, was i suprised. The interface (metro) is horrible with a controller. Voice commands are not available in Holland either (not even in English). The thing boots slower than every other device in my house. Xbox live is flaky, and the thing has daily updates.
It was the worst user interface experience in my life. Maybe my expectations were too high. Maybe the name itself should have tipped me off (this is aimed at 16 year olds with too much time, that like to tinker).
Maybe Apple sand Google spoiled me, with iOS and Android, proving that a device could be simple, with low maintainance. Maybe i expected just a faster Wii.
Or maybe, Microsoft is just very very incompetent.
Maybe the PS3 is better, i would not know. The general consensus seems to be that xbox live is better than psn, but its hard to imagine, just how bad the ps3 would have to be. But seriously, how can anyone bring such a confusing pile of horseshit to the market. Its beyond my comprehension.
In the end, it was just a slower booting windows, with a worse controller, and more updates, bullshit dialogs, and bugs.
I hate the thing. It was the biggest purchasing mistake in my life. Oh, and kinect does not work. Not that i care about that much, but its a complete deception.
In general it seems that both the PS3 and the 360 have a very loyal following, yet hate each others system.
There seems to be a culture war there. This seems to distracts people from actually noticing the quality (or lack there of) compared to its potential. And its hard to have an honest debate about that, without all the fanboys showing up, and focusing on which system sucks less.
I guess consoles are just not for adults. I don't have the time or the patience to deal with that all that crap. It's no easier than just running windows. It's actually worse.
And we can't speak out, because it will be drowned out by the fanboys focusing on which console sucks more. All I know, is that, unlike what I expected, the 360 did not provide any value to me. And it's all because of the software and UX.
Who's going to make & sell the other 345M PCs that are sold every year.
This talk of Microsoft becoming a hardware company is crazy talk with no understanding of the underlying dynamics of the industry.
I recently wrote a post on this:
http://ceklog.kindel.com/2012/07/25/a-mouse-and-keyboard-don...
First of all, I think the reason why the iPad and iPhone have been so good hardware-wise while most Android devices have been lackluster in comparison is that the vertical integration that Apple can achieve allows them to make decisions at this point that would be completely stupid if they were just another OEM or IHV.
Basically, because iOS is a very large ecosystem with a guaranteed large install base per product, Apple can afford to tape out chips that would have absolutely no chance of being profitable for a IHV (e.g., NVIDIA or Qualcomm). Since every iOS tablet sold for the next N years will use A5X, it makes sense for Apple to design and tape out their own SoCs specifically for that, but the device fragmentation inherent in the Android market makes it extremely difficult for IHVs to do the same. Look at A5X versus Tegra 3 in terms of die size. Tegra 3 is 80mm^2. A5X is 165mm^2. SoCs from IHVs (at least for the foreseeable future) need to be dual-purpose tablet/phone chips in order to deal the many devices the IHVs will need to target (differentiated using clockspeeds or binning), which means no huge die sizes allowed. Even if Android tablet sales increase to iPad levels overall, part of the reason for that is choice; OEMs probably won't be willing to use the same enormous processor in their $600 flagship as their $150 budget tablet due to their margins (or the chip wouldn't exist because IHVs wouldn't be able to make a profit at the cheaper levels because of the fab costs).
Vertical integration also means Apple can eat the cost of large die size SoCs because they don't have to worry about margin on the SoCs alone.
In other words, if bigger chips result in better experiences for tablets, right now the only way to guarantee that is to play kingmaker and only support one SoC. The way Apple has done that is to build their own SoCs and cut the IHVs out entirely. Yet, they haven't done this in PCs at all. PC hardware is all Good Enough at this point; there's no hypothetical 40%-perf-advantage-if-only-someone-would-build-it chip.
As the mobile market matures, platforms become more established, OEMs combine, etc, the need for vertical integration will disappear because mobile hardware will become a commodity, largely indistinguishable in meaningful ways besides minor perf/W or perf/$ advantages. IHVs will see enough sales to do what Intel or the GPU companies do in the PC space and build one scalable architecture for all platforms, there will be relatively established price points, etc.
I would also like to mention that Android integration is a bit poorly designed, IMO. If a hardware manufacturer writes drivers for Windows, those drivers are still likely to work as Windows itself matures with newer releases. However, with Android, each new release of its OS leaves dozens of models behind on a previous release. Couldn't Android have designed their OS to be a bit more... upgrade-friendly?
Personally I think these things are just cyclical: it takes a vertically integrated company to really break through into a new domain, that much is true. But then that new area will always be commoditized and the most open, flexible and widely available platform will "win" in the end - until the next major innovation cycle begins. We need both the yin and yang of this cycle to move things forward.
I do think MS may have unintentionally saved Android on tablets - the mere hint that Microsoft could possibly go its own way and leave the OEMs with nothing to sell will be giving them such nightmares that they will be doubling down on their investments in Android if only to give themselves a lifeline to future viability if the unthinkable happens. Without that I suspect half of them were probably ready to completely jump ship and leave Android behind as a bad experiment.
http://www.engadget.com/2012/08/08/intels-thin-mini-itx-plat...
https://www-ssl.intel.com/content/www/us/en/hardware-develop...
http://www.missingremote.com/review/lian-li-pc-q05-thin-mini...
True, you don't need an OEM to build them (and maybe that's the point here). But I don't quite get the Acer argument. Thin mini-itx devices easily bolt on to the back of their monitors.
Last time I looked, the inside of my Vizio 47" had nothing but room too.
Dell, Gateway, Acer and many others got their start with the DIY system builder -- and a Computer Shopper.
I don't want to have to pick my poison when it comes to walled gardens the next time I want a new system.
Other companies do not physically possess the equipment
or resources to produce anything that even approaches an
iPhone or MacBook Pro
Perhaps Lenovo can subsist at the bottom end of the
market, or maybe it too will shut up shop.
And my very first Android phone (Nexus One) had a vastly superior (and practical) construction than the iPhone of the time. The thumb ball was great for precise scrolling and you can tell up/bottom or front/back apart when holding the phone in your pocket. But once again, there was no marketing to rub that into the brains of the shoppers.
Although it will indeed be irrelevant if Microsoft/Google push OEMs aside. For one, I am not looking forward to the depressing "glossy aluminum future". If nobody has ever managed a laptop even half as good as a Thinkpad, I am having doubts if Microsoft will.
Do you now?
Quote: "So Microsoft faces a dilemma. Their business model of expensive software on cheap hardware is not sustainable. The future is nearly free software integrated into moderately priced hardware. For Microsoft to maintain their profitability, they have to find a way of obtaining $80 of profit per device. "
It will be interesting to watch.
Is it ?
Ew?