A school where Apple is the teacher

Microsoft this week revealed the extent to which it is taking lessons from its rival, writes CIARA O'BRIEN

ON MONDAY in Los Angeles, hell froze over.

At least that’s how one analyst described Microsoft’s announcement that it would be producing its own tablet. Other descriptions varied from “totally antithetical to their core business”, and “taking their destiny into their own hands”.

It’s safe to say Microsoft’s unveiling of the Surface tablet caused a bit of a stir.

A few years ago it would have been inconceivable that Microsoft would be playing catch-up to Apple in the technology market. And in some respects, it is still ahead of its Mac rival; there are far more Windows machines in use in the world, for example.

But Apple has slowly managed to claw its way to the top. Last year it became the most valuable company by market cap, and its shares are currently above the $580 mark.

Since it skirted bankruptcy in the late 1990s, Apple has fashioned itself into a premium brand that spawned a lucrative ecosystem, and a successful retail operation to boot.

In recent years it has turned into a fine art the knack of creating a buzz among techies and consumers alike. After tackling the mobile market with the iPhone, Apple even created a whole new category of devices – the tablet, where its iPad reigns supreme.

In comparison, Microsoft may have seemed slightly staid.

Although chief executive Steve Ballmer showed off a Windows tablet device in 2010, before the launch of the iPad, the devices failed to set the market alight. Its Windows Phone software has sparked a bit of interest – Microsoft announced Windows Phone 8 at an event yesterday – but although the operating system has made some gains, it isn’t as much of a threat to Apple and Android as Microsoft may have liked. So maybe it shouldn’t come as a surprise that Microsoft appears to be taking some inspiration from the Apple way of doing business.

Last year the company announced it would open 75 new Microsoft stores over the next three years. So far there are 20 in operation, all in the US.

A casual observer might notice the similarities between the new Microsoft retail outlets and Apple’s. The design; the easily accessible experts instore; the hype. Microsoft store openings in the US last year were greeted by pictures of staff high-fiving customers as they entered, one with the Windows logo shaved into his head. The message was: “We’re exciting.”

And now this week’s announcement that Microsoft is entering the tablet market. The lead-up was cloaked in secrecy, a well-known method of Apple’s.

But it’s more than just a change in marketing. In other areas of Microsoft’s business – PCs, mobile – the tech giant has stayed firmly out of the hardware business, preferring instead to leave it to partners such as Samsung, HP and Dell to come up with the goods. The announcement of the Microsoft branded Surface is a major shift.

Jan Dawson, chief telecoms analyst at Ovum, said Microsoft’s partners should feel a bit slighted by a “huge vote of no-confidence”.

“On the hardware front, what does it say about the tablets Microsoft is seeing from its OEM [original equipment manufacturer] partners as it gets ready to launch Windows 8, that they felt they needed to launch their own tablet? Either they are not happy with the devices out there, or they are not satisfied with only taking a licence fee from selling Windows-based tablets.