We will try to answer these questions and more in this paper. We will start this paper with a brief history of the Tablet PC, where we will see that neither Bill Gates or Steve Jobs were close to being the first ones to come up or release an innovative product like this. After this, we will provide some information about Microsoft and the Microsoft Tablet PC. This will show us that, in theory, the Tablet PC was not destined to be a failure. On the contrary, it had some great specifications at the time and was backed up by one of the largest companies in the world.
So after that, we will try to assess the most important reasons for its failure. Furthermore, we will compare the core failure reasons to rodents that are successful, the pad and Microsoft’s new tablet, the Surface Pro.
During all of this, we will reflect on the theory from the literature on innovation. We will see that quite a few elements in this case study can be linked with theories we have discussed in class. At the end of this paper, we will conclude with a proposal on the crucial elements that determined the Microsoft Tablet PC to be a failure, and what Microsoft could have done to prevent this.
A brief history of the Tablet computer Although he gets the most credit for it, Steve Jobs was not the first person to have the idea of a tablet computer. The pad was launched in 2010 but the idea of a tablet actually goes back decades before that [AY]. We will start this part by giving some information about the original design of a tablet, and then list some of the major tablet-like products, and explain why they were not the start of a new PC-era. Back in 1968, Alan Kay, a computer scientist, started developing the idea of an all- in-one computing device.
After some advances in flat-panel display technology, user interfaces and miniaturization of computer components, he believed that this device would be perfect as an educational tool for schoolchildren. He called t the Donnybrook and published a paper about it in 1972. The first sketches of the Donnybrook still included a physical keyboard but Kay already envisioned that, with the right touch-screen technology, you could do away with this and display a virtual keyboard in any configuration [AY]. As we know now, Kay was ahead of his time. It would take the world nearly fourth years to be taken by storm by a tablet similar to the one he imagined.
But that doesn’t mean there were no tablet computers between the Donnybrook and Apples pad. The PC industry is an oligopoly, with a small number of very large firms dominating the market. As Bamboo (2004) stated, this puts pressure on these oligopolies. They realize that there is a market for these tablets and know that their future success depends on their and their rivals’ efforts and spending on R (Research and Development) in this field. If they are too late to the game, they might lose their market share (look at Monika in the Smartened industry).
We think that this explains the relatively high number of tablet-like devices that came out in the last decades, all with their own novelties. Bamboo was also right when he contradicted Schumacher, who stated that the innovation responsibility f the entrepreneur was narrowing. As we will see later, an entrepreneur called Jeff Hawking would develop two quite innovative products that would offer new functionalities and raise the bar for other tablets. When analyzing most of these companies, which were major players in the PC market, we see that they can, arguably, be called ambidextrous (as defined by Reilly and Dustman, 1997).
This however, is open for discussion. In retrospect we know that the tablet is some kind of substitute for a personal computer, but we don’t think that the developers defined it to be like that at the time. So f we look back at it now, we can say Nathan they were researching radical and disruptive innovative products while still pursuing incremental gains on their existing products as well. In the asses, there were several companies with tablet-like commercial products. The most important ones being: Pence, Communications Intelligence Corporation and Linux.
The Linux Write-Top came in 1987 and was one of the first handwriting-recognition tablets [AY]. Also in 1987, Apple started its tablet project with Motorola, which resulted in the release of the Apple Newton Messaged (see picture) in 1993. It was Apple’s attempt to fill a non-existent gap in a yet-to-be-created market. The very first device was met with criticism, mainly because of the comically poor accuracy of the text recognition software. The device also had no PC connectivity and it ran on three AAA batteries that gave it poor battery life [AY].
In 1989, Jeff Hawking (who later founded Palm) created the so-called first ‘real’ tablet, the Gripped. It ran MS-DOS but because of its high price and bulk it was mostly used by the military but ignored by the greater public [AY]. Learning from the mistakes of Apple and their own mistakes, the Palm team tempted to put together a PDA that wasn’t dogged by software issues. To improve on Apple’s attempt, the establishes had initially wanted to create handwriting recognition. However, after some research they were convinced that they could build a better device too.
In 1996, the Palm Pilot was born. But with no backcloth, no flash memory and only KBPS of on-board RAM, the only thing that made it stand out from the Apple Newton Messaged was the possibility to connect it to a PC via a serial port. However, this wasn’t enough to capture the imagination of the mass market [AY]. In 2001 , Intel came late to the game with its Intel Web Tablet, but it focused its product on the consumption of multimedia. The device had a touch screen in combination with a stylus but was virtually useless without an internet connection.
Strangely enough, it was pulled from the stores right before its launch[AY] . Microsoft was by far the most accomplished when it released its Microsoft Tablet PC in 2002 but, as we know now, it failed. As this paper is about the MS Tablet PC, we will thoroughly assess the reasons for this failure further on. The idea of a hand-held personal computer got more and more popular amongst signers, because by the mid sass’s there were lots of tablets to choose from, like the LOLLS from Motion Computing (the smallest at the time) and the Leno Thinking.
But because they were costly and not popular with consumers, they were mostly used in factories, by the military and by other field workers. It was not until 2010, with the release of the pad, that the Tablet computer became massively popular. The question we ask ourselves is: Why is this? What was wrong with the earlier devices and what makes the pad so much better? We think that the theory of Abernathy and Turtleback is applicable here. The abele is a new product and its evolution shows a fluid pattern. Each newly released device shows a superior functional performance.
The end user played an important role in suggesting the ultimate form of the product, as it was not until the pad in 2010 that the masses finally started liking the tablet. Given its enormous sales, other competitors admitted the dominant product design of the pad and started copying it. In the following years, pad-like tablets were released by almost all of them. Because the dominant model was found, we now see a more specific pattern in the market, as the main market players are now omitting on a cost level with incremental innovation. These innovations are mainly making processes cheaper and more efficient.
We can conclude that in the early years, the tablet industry showed a fluid phase, with a few oligopolies driving the most innovation effort. Arguably, these companies COUld be called ambidextrous as they were, without realizing it, developing an innovative novelty that could be used as a substitute for their existing product line. Since the release of the pad in 201 0, the tablet industry is transitioning from a fluid phase into a more mature phase, with the pad being mom sort of platform product where the new tablets (Microsoft Surface, pad air, are based upon.
Background Microsoft In 1975, Microsoft was founded by Bill Gates and Paul Allen. Most of its products were designed for computing and Internet, where they mainly focused on developing operating systems for computers. The biggest examples of this are MS-DOS and the variety of Windows versions. These operating systems were focused on the desktop and laptop PC’s. However, some developers of tablets used the MS-DOS operating system in their tablet (see the Gripped in the previous chapter). On top of these operating systems, Microsoft also established he Office package.
For these products, Microsoft was a pioneer compared to their competition by offering a good design with high functionality. After capturing more than 80 percent of the market, their main strategy became incremental process innovation of their core products. An example of this is the improvement of their operating system software for PC’s from MS-DOS to their soon-to-be-released version: Windows 10. Other Microsoft products, like the Oxbow, the Windows Phone and the June were developed in response to breakthrough products from their competition, namely the Sony Palpitation, marathoner following the phone and the pod.
Microsoft tried to regain some market share with these responses but was not very successful in this. As we will see, Microsoft did try to develop some really innovative products as well, the best example being their Tablet PC, but history shows us that they were not very successful in this either. The Microsoft Tablet PC ‘The size of a legal notepad and half the weight of most of today’s laptop PC’s, the Tablet PC is a full-powered, full-featured PC that runs Windows XP and combines the power of desktop computing with the flexibility and portability of a pen and paper notepad. This is how the Microsoft press release described their Tablet PC [AY]. Their vision for a Tablet PC is that it’s basically a full Windows computer. It runs all the familiar productivity applications such as Word, Excel and Powering, and offers the same rich connectivity to the Internet that people would expect from their desktop or notebook PC. What the Tablet PC adds is the simplicity of pen and paper. Because customers can write on the screen, it’s optimized for tasks that are very common in business computing ? like taking notes at a meeting or annotating a document, or for immerse reading.
When asked how the tablet differs from a notebook, Alexandra Loeb, general manager of Microsoft’s Tablet PC effort, responded[AY] : ‘Well, to begin with, you can balance it in one hand ? it will be about the size of a writing tablet. It will weigh less than your current laptop, and it will be incredibly useful when you are away from your desk and in a meeting. Our note-taking application literally comes up as a sheet of paper, and you just start writing. But what digital ink offers in addition is the ability to move, highlight, save, sort and search those handwritten notes.
How many times have all of us had to go back to paper-based notes from a meeting and scribble in the margin, or draw arrows to show where we really wanted to insert something? The Tablet PC allows you to actually manipulate that text ? you don’t need to rewrite all the notes around it ? and it gives you some very powerful new ways to share information and collaborate via email or the Internet. The integration with your key productivity applications extends the benefits of the paper metaphor in many, many ways. When comparing the Microsoft Tablet PC to earlier tablets, she states that 3 ajar things have changed. First of all, key technologies – such as battery life, display resolution, handwriting recognition and memory – have advanced substantially. Second, Microsoft can now learn from their own past experiences and those of their competitors (Microsoft attempted a Pen-Windows initiative in the mid-ass’s). They learned to look at the complete user experience instead of simply building support for the pen into the operating system.
So they knew now that they should develop the Tablet PC from the customer’s perspective rather than from the SO developers perspective. Third, the added component of airless communications makes mobility a key element in all future computing scenarios, so the Tablet PC provides greater mobile functionality than corporate computing. The Tablet PC’s themselves would be produced by hardware manufacturers like Hewlett-Packard Co. , Samsung Electronics, Toshiba Corp.. And Acre Group. These companies were Microsoft’s MOM partners (Original Equipment Manufacturers).
Like the earlier generation, some of these tablets looked like today’s tablets. On the inside, however, as we stated above, they were more like PC’s. They were expensive – at around 2000$ -, didn’t last long n battery power and on top of that, they were quite heavy. After its release, the Tablet PC’s got used in business settings, where being able to stand up while working on a PC was necessary, or at least welcome. But it remained in this niche, so the number of manufacturers that made the devices steadily shrank.
In Europe, sales of Tablet PC’s accounted for just under one percent of all mobile sales since they were launched in the last quarter of 2002. This means sales of 20,000 tablets running a pen-enabled version of Windows XP, compared with almost three million notebook PC’s (data by research firm IDS) [AY] . Their Business User Spending survey of buyers’ intentions also found that 60 percent of IT directors of business of all sizes were not interested in buying Tablet PC’s, and a quarter were not aware of what is on offer.
Buyers were mainly deterred by performance issues and high prices. Furthermore, a large number of consumers were waiting for the second generation of products with faster processors and better battery lives. Core failure reasons In this section we will describe the seven main potential failure factors of the Microsoft Tablet PC and try to comprehensively deduct the crucial failure indicators. Too short centralization timeshare Innovation can be a result of entrepreneurs’ technological ideas (technology push) or from market needs (market pull).
When it results from technology push, the innovation will have a higher impact when it turns out to be a success but one has to take into account the longer timeshare needed to commercialism the innovation. Therefore, patience is a necessary condition for any disruptive invention. When these guidelines are not adequately taken into account, the ‘perfect breakthrough product’ could be pulled out of the market too early while here would have been a great market opportunity for the product if it was given more adoption time (Heroine¶attire and Dahlia-Lund, 2014).
This could have been a reason why the Microsoft Tablet PC failed, but we don’t think it is applicable in this case. As we said in the previous chapter, the Tablet was produced by quite a large number of hardware manufacturers in the last quarter of 2002, and it was kept in the market for at least a few more years. If you compare this to the enormous success of Apple’s pad, which sold more products in its first nine months than Microsoft sold Tablet PC’s over its complete life span, e think that the timeshare for centralization was not too short.
Furthermore, if the manufacturing firms really believed that the MS Tablet PC would still become a success, they would have been able to keep production up, as they have such a large financial basis. Underperforming technology A second possible reason for failure can be that the technology of the Microsoft Tablet PC was still characterized by some major shortcomings. There is a possibility that Microsoft was unaware of these shortcomings. Another option is that they were consciously aware of the imperfections of their tablet but they just wanted to be the first mover on the market above all.
That lack of technology perfection is mainly caused by the familiarity constraint, which finds its roots in two main components: no or wrong alliances and lack of knowledge on customer preferences. Those two main factors can explain why the technology of the Microsoft Tablet PC would have lacked the threshold of adoption. The formation of alliances is often opted for in order to complement the internal activities of the firm. The main reasons for joint strategic alliances can reflect exploitation, economies of scales, knowledge from competitors, risk management and sharing f costs and resources.
Alliances are mostly part of an open innovation model in which the boundaries between a firm and its surrounding environment is porous. Such a framework can be accomplished by means of licensing agreements or joint venture cooperation (Cheeseburgers H. , 2003). Alliances are no necessary criterion for the success of an innovation, but in most cases, a company will benefit from a partnership with positive spillovers when its internal technology has some shortcomings. This can arguably be the case for the Microsoft Tablet PC.
Microsoft did have partnerships with its original equipment manufacturers, but we don’t think Microsoft made use of their partners’ expertise when designing the Operating System for their tablet. If they had done this, they should have seen that their software would be unnecessarily heavy to be put into a small device like a tablet. This lack of communication resulted in a few of the main problems that consumers had with the Microsoft Tablet PC. Because the hardware needed to run Microsoft’s operating system, it had to be state-of-the-art and powerful, but at the same time small enough to be put into a tablet.
As a result, the end product was too expensive, too heavy and had too worth of a battery lifespan. Not knowing what your (future) customers think about the product and what they prefer to be changed is another well-known core reason for the lack of an appropriate technology. E. Von Hippie (1986) argues that firms should approach lead users to check the practicality of their innovation. In the case of a technology push, the problem with defining the needs of an existing consumer is the fact that current users are constrained by their own real-world experience.
Applying this to our case, von Hippie claims that if Microsoft had asked his existent user ease to evaluate their tablet, those users would be biased by their familiar use of a normal PC. What Microsoft should have done, was identify those consumers that faced the need of a tablet PC, so those who would benefit significantly from the launch of a tablet. After doing this, Microsoft would have found out that the only users that really needed the kind of tablet that they were going to develop, were people in a business context that had to use a PC while standing up.
This market for the product is smaller than Microsoft intended it to be, and knowing its size, Microsoft could have altered their product to make it appealing to a argue group of consumers. Lack of concrete management vision Because it sees the Tablet PC as a form of replacement for the normal laptop or desktop PC, Microsoft is aiming to evolve into an ambidextrous organization. Ambidextrous organizations require management vision based on balancing today’s incremental needs with tomorrows unforeseen demands (Dustman et al. , 1997).
Since these organizations are not usually bureaucratic, the managers should provide a balance in these dual needs and concrete objectives for their breakthrough projects. There is no doubt that Microsoft is a successful company Rosenberg and Christensen, 1994) it has a very solid product base (Windows and Office) and is active in most innovative areas on the PC market. However, in practice, Microsoft is always one step behind on the competition. It made large R-investment decisions but no real breakthroughs in side-niches succeeded; for example the June (Microsoft’s response to the pod) or the Surface (their response to the pad).
Their objective, in particular for the Microsoft Tablet PC was to design something that would replace the notebook and the PC – Which is not stating what features you want to provide for your customers but only that o want to make a complete new product – This brings us to a new question; Why is Microsoft still so successful? History shows us that Microsoft is not a good product innovator (except maybe for their Windows and Office products, at their launch).
What they are good at, though, is making incremental innovations. They are a large company that use their existing product base and improve them by consistently adding new things. As a conclusion, we think that Microsoft is good at incrementally improving their existing core product base, but they lack the management vision to effectively evolve innovative breakthrough products (unlike Apple). They didn’t sufficiently focus on what their customers wanted although they said they did (see the chapter on the MS Tablet).
And only after the product was released, they saw that their target group was smaller than expected, but by then it was too late. Wrong organizational structure If the Microsoft Tablet PC had been a success story, Microsoft would have been an ambidextrous organization as the Tablet PC was a substitute for their existing products. Although the Tablet PC didn’t break through, Microsoft did have both heartsickness of an ambidextrous firm: exploitation of the mature PC market and exploration of the novel tablet market (Reilly et al. , 2004).
And so, following the literature, the best practice for Microsoft would have been to separate its exploration (tablet) research and development (R&D) unit from its exploitative (PC) units with an integrative link via the existing management hierarchy. However, according to our sources, Steve Babbler reorganized the company as a functional organization in which the CEO had a significant role on all products. This means that research and development on different parts of the operating yester software (e. G. Windows XP and Windows XP for Tablet) are done by different teams within the R&D department.
This functional structure is usually applied by single-product companies while Microsoft had several products. The problem with this is that certain teams, who had been doing the programming for a certain part of the Windows XP software, now also had to do the programming for that same part in the tablet version. If Microsoft would have adapted a cross-functional or even better, an ambidextrous structure, they would have had the opportunity to exploit synergies and spillovers in terms of sources and activities which would allow cross-fertilization and prevent cross- contamination.
The fact that they used a functional structure, resulted in an only slightly adapted version of the original Microsoft XP for laptops or desktops. The only new feature was that the user could use different buttons on the tablet and an attached stylus. So the end product was a tablet with a lot of functionality and good technical specifications but also a low battery life and a high cost. As we will see later, this is an important feature where the pad differs from Microsoft’s product. Bad marketing This is another possible reason for the failure of the Microsoft Tablet PC.
As we have seen in the chapter on the Microsoft Tablet PC itself and in the advertisements in the appendix, Microsoft positioned the tablet as a portable PC with the functionality of pen and paper. They overestimated the demand for this functionality. On top of that, a lot of possible consumers did not know clearly what the product had to offer (see the chapter on the MS Tablet PC). In our opinion, the marketing problems are caused by 2 main issues. First of all, they didn’t know that their product would only be used in such a small niche market. This could have been solved by some additional market research.
Secondly, the fact that Microsoft is not the one selling the tablets (their Memo’s are), but only the licensing for their software, is not a good incentive for Microsoft to put a lot of effort or investments into marketing. Although this sounds logical, we do not think it was one of the main reasons for the failure of the Microsoft Tablet PC. The CEO of Microsoft, Bill Gates, was an influential speaker. His announcement of the Tablet PC in 2001 was followed by a lot of anticipation. And quite a few IT reviewers had high expectations of his product.
Because of this, we don’t think that investing extra millions of dollars in an advertisement campaign would have changed much for the Tablet PC. External factors Strategy and products are dependent on the structural context of organizations (Bespoken, 1990). Due to the importance of being alive in complex and competitive environments, organizations must seek stable routines and make themselves internally and externally reliable (Koch, 2008). The economic crisis following the dotcom bubble burst was one of these external influences, reflected by the economic breakdown in 2001.