Surface Signals a Sea Change

Surface is a new technology platform where people and devices interact with a flat computing table, at least in the first-generation product. Microsoft Chairman Bill Gates showed off a prototype of the technology, then referred to as "Play Table," at the 2006 Consumer Electronics Show. The technology and business model behind Surface radically departs from Microsoft's approach to PCs.

Microsoft built its success with the help of third parties, by licensing software that created a massive software developer, hardware manufacturer and channel partner ecosystem. But the strategy that made the PC the Swiss Army knife of consumer and business products hasn't translated as well into other technology categories—particularly consumer electronics.

Apple's iPod and Sony's PlayStation 2 show how successful an end-to-end solution can be, where one company does the hardware and software design and delivery. Microsoft has taken such an approach with Xbox and Zune and now Surface.

Surface, which was developed in part by Microsoft Research, is coming to market from the Entertainment and Devices division—the same folks responsible for the Xbox and Zune. At least in the early years, Microsoft will provide the basic end-to-end hardware and software. There will be plenty of third-party software developer opportunities, as with Xbox and Xbox Live, but much less for hardware. Microsoft has no immediate plans to license Surface to other manufacturers.

"Right now, it's very much a Microsoft end-to-end solution," Kyle Warnick, Microsoft's senior marketing communications manager for Surface, told me this morning. "This is radically different from a PC. We wanted to make sure that we deliver a high-quality and consistent experience."

Microsoft's approach to Surface means that its partners can't expect to engage the company in new product categories the way they have with PC hardware.

"We're going to own it for the near term," Warnick said. "Over time, we'll continue to look at other options available to us," which could include OEM licensing.

Microsoft's approach is highly sensible. Too often, hardware partners hold back the software's potential. Ultra-Mobile PC is good example. Microsoft built off-the-shelf prototypes that could be sold for as little as $500. The majority of first-generation devices came in at more than $1,000 instead. Microsoft's hardware partners had different priorities.

How about Windows Vista? Hardware is one of the operating system's major experience shortfalls. Hardware manufacturers slowly release or fail to release Vista drivers for older devices because they want customers to buy the newer printer or digital camera. The hardware OEM's priority is often cross-purposes with Microsoft's.

The Xbox and Xbox 360 deliver a pretty good end-user experience, as does Zune. Other than the iPod, Zune is the first music player where I've had no real problems syncing music with a PC. Microsoft can and does deliver a good experience when it controls all the major technology pieces. Apple isn't alone in this capability.

Surface signals a sea change—Microsoft's readiness to release hardware and software in new product categories rather than rely on OEMs. If successful, Surface could unleash a much broader array of consumer electronics devices that Microsoft could directly manufacture. Again, if successful, Surface could emerge as a platform competing with PCs and that interacts with all the same devices.

Taking the Long View
Surface also firms up one of Microsoft's main differentiators as a successful high-tech company. While dot-coms often still take the quarterly view, Microsoft often looks far into the future. When I spoke to Warnick earlier today, he repeatedly used "three to five years" in discussing different Surface opportunities.

With the Xbox, Microsoft took on early heavy losses to gain market share, with the intention of reaping profits from the second-generation console. That's taking the long view. Similarly, Microsoft is looking as much at the future as the opportunity and the supporting developer and services ecosystem necessary for surface computing to succeed.

The long view is as much the past as the present or future. Surface's roots go back to 2001, when Microsoft employees Steve Bathiche and Andy Wilson brainstormed ideas for a virtual game table. The team developing the concept built a prototype around an IKEA table presented to Gates in 2003. In 2004, Microsoft created the Surface Computing Group, which developed more than 85 prototypes. The look and feel was set in 2005, and Gates showed off a working prototype at CES 2006.

Surface has been a long time coming, and it will be long time going. The first product, a 30-inch display table, is designed for commercial use. The product uses cameras and software to detect human gestures, objects and devices on the table's, ah, surface. Microsoft promises a wide variety of interaction types, without the use of mouse or keyboard.

Four pillars lift Surface:

• Multitouch, meaning people use their fingers and hands to manipulate Surface.
• Multiuser, meaning several people can simultaneously interact with a Surface table or device.
• Direct interaction, meaning that no mouse or keyboard is required.
• Object recognition, meaning Surface can recognize anything from a paintbrush (to create digital brush strokes) to a cell phone.

Some of the potential usage scenarios are interesting. In a restaurant, a diner could manipulate a visual menu or pay by laying down his or her credit card on the surface. In a coffee shop, the same consumer could download news, ringtones or music to a cell phone placed on the table's surface. Assuming Microsoft can deliver on its promises and commercial businesses buy into them, Surface could create a simple mechanism for selling atypical services. For, say, a Caribou Coffee or Starbucks, Surface could mean selling e-books and music downloads alongside lattes.

So there will be a Surface ecosystem, but just likely different from the PC model. Microsoft appears ready to invest the time and money to build it up.

"You will see an amazing amount of applications over the next three to five years," Warnick asserted.

Like any platform, applications determine success or failure.

Looking ahead three to five years, Microsoft also sees Surface moving from business-to-consumer services to direct use by consumers.

"One day you will see [Surface] in your home as well," Warnick said.

Promises, promises.

Related:

• Microsoft Skims the Marketing Surface, Microsoft Watch, May 30, 2007
• How Does Vista Rate?, Microsoft Watch, May 20, 2007
• New Q1 Arrives in Q2 and Q3, Microsoft Watch, May 7, 2007
• Microsoft Poised to Rule Entertainment, Devices World, eWEEK, May 3, 2007
• Microsoft Poised to Rule Entertainment, Devices World: Part 2, eWEEK, May 3, 2007
• Microsoft Poised to Rule Entertainment, Devices World: Part 3, eWEEK, May 3, 2007