You'd be forgiven a sense of déjà vu watching competition heat up between Apple and Microsoft. On one side, the MacBook and new iPad Pro; on the other, the new Surface Book and Surface Pro range.
But while Apple and Microsoft have the most talked-about devices on the market, both vendors share one weakness – a questionable channel strategy. Will it come back to bite them?
When Microsoft first launched Surface, many interpreted the move as the software giant giving a mandate to its OEMs to produce more attractive devices, a sector of the market dominated by Apple.
With the launch of the HP Spectre, among others, we might finally be starting to see that strategy pay off. But as OEMs step up, will Microsoft’s decision to restrict access its premium device could come back to haunt it?
Apple has long been known for designer devices and a predominantly direct distribution model. When sold via the channel, its products offer resellers notoriously low margins.
Microsoft took some cues from its Cupertino rival by initially launching the Surface through a limited channel (the Microsoft online store and a few select retailers). Microsoft has increasingly expanded the Surface channel over the past 12 months, but it has been far from smooth sailing.
Microsoft's decision to allow HP and Dell to also sell Surface created more friction among the wider reseller base. When Microsoft launches its Surface Book laptop in Australia, it will be exclusive to the company's new flagship retail store in Sydney.
Enter the likes of HP, Lenovo and Dell, who have undergone a design revolution to catch up with Apple and Microsoft. We're seeing OEMs increase competition in the premium hardware category with devices that appeal to both high-end consumers and enterprises.
HP recently launched the latest update to its Spectre range, the Spectre x2 tablet hybrid and the Spectre 360 laptop. The Spectre x2 bears a striking and unashamed resemblance to the Surface Pro 3. The Spectre 360 is a luxury laptop that competes with the Macbook Pro.
Lenovo has also been looking to shake up the consumer market with its Yoga series. The Chinese vendor is set to launch the Ideapad Miix 700 and the Thinkpad 10, two more Surface lookalikes. Lenovo had previously designed its hybrid devices to look completely different from anything else on the market, such as the Yoga Tablet 2 and X1 Carbon. It's too early to say whether the Ideapad Miix 700 and Thinkpad 10 show Lenovo trying to follow Microsoft's lead.
Crosshead
“OEMs have had a lot to learn from Surface in the past two years,” said Gartner principal research analyst Lillian Tay. “When Microsoft came out with Surface, it was pretty clunky but vendors learned. When vendors start to understand how to use the form factor, they can start to differentiate their own product.”
Gartner predicts flat to single-digit growth in the hybrid tablet market in 2016 following the release of new devices and the launch of Windows 10.
Tay said the move away from traditional clamshell designs to a 2-in-1 hybrid tablet created an opportunity for OEMs to create devices as the market upgrades from notebooks.
“Surface has been a premium product. They didn’t position it as a tablet, but more like a notebook replacement,” said Tay. “They weren’t selling it cheap, and it was very successful. It helped to showcase to vendors that there are different segments; you don’t need to bring your price all the way down to $399.”
A wave of Surface-like competitors from channel-friendly hardware makers should be good news for resellers.
Frank Triantafyllou from Melbourne-based Complete PC Solutions doesn’t sell Surface or iPad. He said he’s looking at the likes of the HP Spectre and Lenovo’s X1 Carbon as alternatives to Microsoft and Apple. “One of the benefits of the [HP] separation is this focus on sleek new designs. I definitely look at Lenovo’s X1 Carbon as a competitor too.
“They’ll definitely grab market share from Microsoft only due to their own fault for restricting access. We can’t even sell Surface, and anyone can sell HP.”
Karl Sice is head of Staples Technology Solutions, one of the first resellers authorised to sell Surface. Sice said devices like Surface were breaking down barriers between consumer and enterprise products.
“Buyers drawing from their own consumer experience is creating a need in the market for something more colourful,” said Sice. “We’re seeing the consumer and business markets colliding at a faster rate than ever before. You only have to look at the Surface Book to see how much of a cross over there is between high-end consumers and high-end business.”
This gives resellers the opportunity to sell the same products to consumers, enterprises and education without worrying whether about the intended target market, said Sice.
Katie Bentley, chief executive of Melbourne’s Trident, said the company was firming up the potential of HP’s Spectre series. “The challenge for vendors is how they’re going to encourage resellers to continue to sell their products and enable them to make it financially beneficial. In our business, we find the support of the device is very important. HP and Lenovo can support the product, while Surface is more of a box drop that also deals with administrative issues.
“They’re all comparable though. The way the school landscape will change over the next five years will be a focus on services, so it’s important for vendors to fit their devices really well with clients," she said.
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