How Microsoft became surprise innovator in PCs

When Microsoft unveiled the first Surface tablet five years ago, it was a spectacular failure. At the time, the Apple iPhone was well on its way to conquering the technology industry, and the iPad appeared set to lead an even more devastating invasion of Microsoft’s office-worker kingdom.

Microsoft conceived of Surface, an innovative laptop-tablet hybrid, as a way to show off the versatility of its software. Windows machines, it argued, could work as phones, personal computers and tablets. And didn’t everyone love Windows? Nope. Microsoft soon took a $900 million write-off for unsold Surfaces.

Another effort to break into the hardware business, its acquisition of the limping phone-maker Nokia, dug a deeper river of red ink — a $7.6 billion write-off. By the summer of 2015, Microsoft’s hardware dreams looked crushed. Even today, the Xbox One, Microsoft’s latest gaming console, is losing to the Sony PlayStation 4.

Still, Microsoft persisted — and today, the company is making the most visionary computers in the industry, if not the best machines, period. In the past two years, while Apple has focused mainly on mobile devices, Microsoft has put out a series of computers that reimagine the future of PCs in thrilling ways. Yes, Apple loyalists, that’s just my subjective view.

And yes, Microsoft’s latest financial results aren’t exactly on my side here — the company announced recently that although its cloud software business is growing rapidly, revenue for its Surface division declined by 2% over the past year (because of changes it made in its launch schedule).

Microsoft, of course, makes most of its money from the PC business by licensing Windows to other computer makers, and it says that part of its goal in building hardware is to inspire and guide those companies’ designs. But it also wants the Surface line to sell — and although the division has grown enormously in the past few years, becoming a critical part of Microsoft’s overall business, Surface is still far smaller than Apple’s Mac or iPad line. Yet perhaps because it’s way behind Apple, Microsoft’s hardware division is creating products more daring than much of what has been coming out of its rival lately.

The hybrid Surface Pro — the inheritor of that first Surface’s vision, the latest version of which was released in May — hasn’t just become a moneymaker for the company. It was also the clear inspiration for the Apple iPad Pro, which supports a pen and keyboard but still feels less like a full-fledged laptop than Surface does.
Late last year, Microsoft also unveiled Surface Studio, a big-screen desktop that bears a passing resemblance to the Apple iMac — except its vertical display effortlessly pivots into a kind of digital drafting table, a slick trick that you can imagine Steve Jobs having lots of fun showing off at a keynote address.

And in the spring, Microsoft showed off Surface Laptop, which sounds humdrum enough; in shape and purpose, it isn’t much different from the MacBook Air, Apple’s pioneering thin and light laptop. But Microsoft’s machine has a better screen than the Air, and, more important, a future. People loved the Air, but Apple doesn’t appear to want to upgrade it, so Microsoft stepped in to perfect Apple’s baby. Note, too, that the rest of Apple’s PC road map has lately been looking shaky.

Apple’s latest laptops left many fans disgruntled, and the Mac Pro has gone years without an update. Apple is now moving quickly to address complaints from its high-end “pro” users — it says the Mac Pro will be redesigned, and a new Pro version of the iMac is coming later this year.

“I think Microsoft has recognised over the last couple years that maybe the creative community isn’t as locked into the Mac as many people think it is,” said Jan Dawson, an independent technology analyst. “There’s this window of opportunity for Surface to get in there — and even if that window closes with some of Apple’s upcoming devices, I don’t think Apple has that market locked up.” Last month, I visited Microsoft’s hardware lab at the company’s headquarters in Redmond, Washington. I arrived in the midst of a renovation, finding a team of its best hardware designers sitting in a cavernous, mostly empty room — a scene that perfectly captures Microsoft’s approach to hardware.

Under Panos Panay, Microsoft’s Surface chief, the company has given its designers and engineers license to rethink the future of PCs in grand ways — to sit in an empty room, dream big things, and turn those visions into reality. “We have this mind-set that says, ‘Hey, I’m going to take a shot at this, and if it’s not going to work, we’ll move on to the next thing,'” Panay said. “That is celebrated — it’s always, ‘Let’s go, let’s move.'” The mind-set has resulted in several shining ideas.

For Surface Studio, Microsoft built a brilliant companion device called Surface Dial — a palm-size knob that sits on your drafting-table screen, creating a tactile interface with which to control your computer. You can use Dial for basic things like turning up the volume. But in the hands of a designer, it becomes a lovely tool; you can scrub through edits in a video or change your pen colour in Photoshop with a turn of the wheel. Like Microsoft’s digital stylus — which works across the company’s PCs and tablets, whereas Apple staunchly, weirdly opposes adding touch-screen abilities to its Macs — Dial is one of those interface breakthroughs that we might have once looked to Apple for.

Now, it’s Microsoft that’s pushing new modes of computing.Microsoft’s machines aren’t perfect. I found Surface Studio, which starts at $3,000, to be underpowered for its price. Surface Pro is a wonderful laptop, but as a tablet, it isn’t as good as the iPad. And it, too, is pricey — although it starts at $800, you’re looking at $1,200 to $1,500 to get a model with decent speeds and the pen and keyboard accessories .

For these reasons and others, it’s unlikely that Microsoft’s PC hardware business will beat Apple’s anytime soon. But anyone who cares about the future of the PC should be thrilled that Apple now faces a serious and creative competitor.