It means the battery of cells can sustain 42W of power for an hour. Similarly, it could sustain 84W for half an hour or 21W for two hours, etc.

 

these devices could end up being vaporware, quickly discontinued or the design sold off to a friendly hardware manufacturer.

I think MS is going to get a LOT of blowback from HP, Acer, Asus etc who see MS competing with them with an unfair advantage

Good call! Acer is already saying the same thing:

http://news.cnet.com/8301-1001_3-57...01_3-57456636-92/microsoft-will-withdraw-later-from-tablet-market-acer-founder/

And this:

The Surface marks a major strategic shift for Microsoft, ahead of the expected release of its new Windows 8 operating system by the fourth quarter of this year.

Microsoft is now pitting itself as a direct competitor, breaking with a 37-year old model where it had licensed its software to original equipment manufacturers (OEMs) such as Dell Inc or Hewlett-Packard Co, which made the machines.

That some of Microsoft's partners were not told beforehand about the Surface has led to a "sense of betrayal" in the industry, according to one source.

"This has always been a point of contention between OEMs and Microsoft -- Microsoft getting into the hardware space," a second source said.

http://www.reuters.com/article/2012/06/19/us-microsoft-windows-tablets-asia-idUSBRE85I1NL20120619

 

The other way to look at it is that if MS making its own Tablet makes Win8 Tablets viable then that is beneficial for hardware makers like HP, Acer, Asus, etc. Just conceding the tablet space to Apple doesn't help any of those companies and their Android (or WebOS) tablets haven't broken any sales records.

 

Wayne, that could be the way MS sees it but I think its not the best way to approach it.

A smarter approach may have been for MS to fund the R&D, patent the design, and then essentially give the design to hardware sellers provided they only use the design for W8 tablets. (They would make their money back through the $85 per W8 licence they are supposedly going to charge)

 

That's true but MS may be willing to sell the Surface at a slight loss initially to gain market share with the hope that costs come down over time. That is harder to do (though not impossible) when someone else is manufacturing the device.

Here is an interesting take on the Surface: http://www.theverge.com/2012/6/19/3097726/surface-microsoft-next-chapter

 

That's true but MS may be willing to sell the Surface at a slight loss initially to gain market share with the hope that costs come down over time. That is harder to do (though not impossible) when someone else is manufacturing the device...

Wouldn't that just make the relationships with the OEM's even more strained? MS definitely has incentive for taking a hit now with the potential for future license fees, but this will come at the expense of the OEM's. They don't have license fees for extra income, they must make their profit from the hardware sales, plus they have the added cost of paying MS a licensing fee for the OS. People generally don't expect their tech products to increase in price after the initial roll out. OEM's wouldn't be able to sell a Surface tablet at a higher price than MS.

 

Apple is going to do something just like this with the iPad and OS X, starting with Lion Apple has gradually introduced iOS concepts to OS X. They will probably be fully integrated by the time the one after Mountain Lion gets released.

 

Why are people assuming that Microsoft would sell this tablet for a loss?

The hardware for the ARM version is similar to what other tablet vendors are using for Android tablets. Why wouldn't Microsoft be able to match those prices?

The hardware for the Intel Core i5 version is similar to what we find in Ultrabooks. Why wouldn't Microsoft be able to match Ultrabook prices?

These things can be done without taking a loss. Especially when (as some have noted) that Microsoft doesn't necessarily need to pay itself for the Windows license.

 

^^^ its a safe assumption because Apple is regarded as the gold standard in supply chain managment and their ability to leverage it as a competitve weapon.

Digitimes (not that they are particularly well regarded for predictions) is reporting today the cheapest Surface will land at USD$600. That's probably about right and may even be below cost given MSFT has no leverage as a software company.

And as for the comments that MSFT doesn't have to license the OS from itselg, that's not exactly the way it works. They still have to account for the cost portion in their BOM, so there's no free ride especially given the very low volumes of external sales.

 

Why are people assuming that Microsoft would sell this tablet for a loss?

Actually only Wayne suggested MS would sell it at a loss and he only suggested a "slight loss" so I'm not sure where your comment comes from.

 

Dan Farber over at CNET also thinks it is a vapourware ploy and echoes the feeling that OEMs must be livid with MS:

Clearly, Microsoft's intent was to make a bold statement and freeze the market. Microsoft CEO Steve Ballmer basically said, "Don't bother buying iPads or Android tablets or ultrabooks, wait for our cool and snazzy Surfaces that will become available later this year (allegedly August) when Windows 8 launches."

Of course, unlike Apple, Microsoft isn't risking a sales fall-off for tablets and ultrabooks by pre-announcing the Surface. Manufacturers who build Windows-based ultrabooks can't be too pleased with the Surface pre-announcement.

http://news.cnet.com/8301-1035_3-57456982-94/microsoft-attempts-market-freeze-with-surface-preview/

Don't look behind the curtain, folks!