Microsoft's Shrinking Window For Tablets: Its Fifth-Mover Product Strategy Is Late

Forrester is bullish on Windows 8 as a product for consumers. With Windows 8, Microsoft is adapting Windows in key ways that make it better suited to compete in the post-PC era, including a touch-first UI, an app marketplace, and the ability to run natively on SoC/ARM processors. This pivot in product strategy and product design makes sense as we move deeper into an era when computing form factors reach far beyond traditional desktops and laptops.

But in a new reportSarah Rotman Epps and I look at Windows 8 tablets, specifically, through our product strategy lens. What do we see? On tablets, Windows 8 is going to be very late to the party. Product strategists often look to be “fast followers” in their product markets. Perhaps the most famous example is the original browser war of the 1990s: Microsoft’s fast-following Internet Explorer drove incumbent Netscape out of the market altogether.

For tablets, though, Windows really isn’t a fast follower. Rather it’s (at best) a fifth-mover after iPad, Android tablets like the Samsung Galaxy Tab, HP’s now-defunct webOS tablet, and the BlackBerry PlayBook tablet. While Windows’ product strategists can learn from these products, other players have come a long way in executing and refining their products — Apple, Samsung, and others have already launched second-generation products and will likely be into their third generation by the time Windows 8 launches.

Meanwhile, newer competitors like Amazon (Kindle Fire) and Barnes & Noble (Nook Tablet) are reshaping consumer expectations in the market, driving down price points (and concomitant price expectations), and redefining what a tablet is.

These market dynamics are rapidly altering consumers’ attitudes and needs. Most significantly, consumers’ interest in Windows tablets is plummeting. In Q1 2011, Windows was by far the top choice of consumers — while no touch-first Windows tablets existed, 46% of U.S. consumers yearned for one. By Q3 2011, that picture had changed dramatically: Windows was no longer No. 1 in choice preference, and interest among consumers dropped to 25%. Microsoft has missed the peak of consumer desire for a product they haven't yet released.

For product strategists, Windows 8 tablets provide a cautionary tale: To be a fast-follower, you must amp up the experience — and do so quickly, before the market changes beyond recognition. Windows 8 tablets must provide consumers with a more differentiated product experience than it otherwise would have, had Microsoft entered the market sooner. They’ll have to take a lesson from Amazon’s product strategists, who fundamentally changed the tablet product experience by leading with content and services rather than feeds and speeds, at a compelling price point. In the rapidly evolving tablet market, Amazon — and Barnes & Noble, with its Nook Tablet — demonstrate fast following done right.

Comments

I don't know anything about a

I don't know anything about a Windows tablet, but what I do know is that it's tough to gauge interest when there is no product. I've seen the new UI and it looks all well and good, but how can anybody gauge consumer want if the consumer has no idea what they are being asked if they want? Just thinking that almost everybody asked this question was probably thinking about the Windows they currently have, so it's not really a smart study.

Plus, wouldn't it be smarter to ask consumers if they'd like a Samsung tablet that looks like "this" and then show them the new windows UI? Just always find it weird when microsoft is compared to hardware vendors.

Thank you for the comment!

Thank you for the comment! We tested interest in theoretical products -- basically, which OS would you ideally prefer in a tablet. This number plummeted (among n=5,000+ consumers in each of two surveys, for a total of over 10,000 responses) from Q1 to Q3. This shows how mind share for Windows is lost (due to the lack of a touch-first product in the market), even as newer players like Amazon and Barnes and Noble reshape consumer expectations of what a tablet is.

Indeed, asking consumers in person how they feel is a powerful test -- but one that is not amenable to quantitative testing. (Rather, we do studies like that on a consulting basis in focus groups). Overall, though, the quantitative results are powerful in and of themselves: In Q1, consumers were eager for Windows tablets. In Q3, many fewer feel that way.

That's all fine, but you have

That's all fine, but you have actually stated the flaw in your research in this reply.. you asked "which OS would you ideally prefer in a tablet". People are going to think Windows now, and (I can't believe I'm saying this) Microsoft was/is smart to not push Win7 on a tablet. They're actually smart to wait. Every analyst and researchers wants them to rush a product out the door. Why? Why not let them build a great product? That new UI is pretty intense compared to iOS, Android, and the Fire (I've never used the Nook..and yes I know the Fire and Nook are based on Android).

I don't know man..just seems kind of disingenous, and you replies are kinda off as well. Seems like you are inferrring a lot, and being a researcher myself, that's never good.

Let's wait until we see an actual tablet before we jump to conclusions as to wether or not people want one, ok?

I have an interest in Windows

Wait, how did you conclude that there's limited interest in a Windows tablet? Interest in WebOS and Android has faded quickly, but as an IT manager, I need Windows tablets. And it makes sense for Microsoft to wait in what is now a saturated right. Get the facts straight.

We didn't conclude that

We didn't conclude that there's a limited interest in Windows tablets. We concluded that Microsoft is exceptionally late to the game, and faces many challenges in competing in the tablet space next year. We also concluded that consumer (rather than IT buyer) interest is sinking rapidly.

But even among IT buyers, the dynamic is shifting. Huge enterprises (like GE, which is buying iPads for most of its sales force) are leveraging the iPad for tasks that *should* have been Windows' strengths... except that Microsoft didn't have a product. In addition to Sarah Rotman Epps on my team, I definitely recommend that you read the research from Ted Schadler, who serves content and collaboration professionals in IT organizations, and who is covering enterprise tablet adoption. You'd be surprised to know how many of your peers aren't waiting for Windows 8 and are buying iPads for work forces today!

Android

Interest in Android fading rapidly? What planet are your reporting from? Didn't Amazon just sell a buzzillion Android-based Kindle Fires last [Black] Friday ?

Forked Android (not branded

Forked Android (not branded as Android) is a bit different from pure Android. While pure players like Samsung Galaxy Tab, Motorola Xoom, and a host of others have largely failed to take off, it's the unbranded, forked, content-first Amazon Kindle Fire and Barnes and Noble Nook Tablet (which we discuss above in the blog post) who have made gains. See http://blogs.forrester.com/sarah_rotman_epps/11-03-10-why_ipad_2_wont_ha...

thanks!

Odd conclusion

It's a bit of an odd conclusion to draw, to be honest. Tablets, like smartphones, operate in yearly/24 monthly cycles, so essentially no-one is ever out of the game, because market share is constantly shifting.

iOS is the dominant platform right now - incidentally, it's the ecosystem that's winning out, not the hardware - but given people are inclined to replace their tablets with the yearly upgrades, Apple's userbase is never pinned down. There's plenty of opportunity for all of its rivals to take consumers back if they get their act together, although price will increasingly be a major factor.

Thanks for the thoughts!

NOTE: I edited my own comment; fixed typo of 9,000 to 39,000 below.

Thanks for the thoughts! Consumers actually don't purchase tablets in yearly or 24 month cycles; the iPad has only been in-market since April, 2010, so we don't even have 24 months of history to judge. You are correct that the ecosystem of iOS is a key strength of Apple's (we have written about this quite extensively) At the same time, your point about ecosystem highlights another *weakness* of Windows, which will lag exceptionally in touch-first, Metro UI apps whenever they finally get a product into the market. (Even if you count all the Windows Phone 7 Metro UI apps... we're talking ~39,000 apps only).

Apple will continue to lead next year, while Amazon and Barnes and Noble are shaking up market dynamics. Windows 8 tablets still have a lot of promise, but they face numerous barriers they wouldn't have otherwise faced if the product had come out much sooner.

We don't need to wait for 24

We don't need to wait for 24 months to pass - those see the kind of deals tablets are being offered on, so - combined with the yearly hardware upgrades - it's safe to say the majority of consumers will buy new tablets after 1 or 2 years. That's fairly obvious.

You're also out of step app wise. If, as believed, Windows 8 has access to Windows Phone Marketplace, then there are already 40,000 apps to choose from. Where are you getting 9,000 from?

The other major bonus Windows 8 will have is that it will ship on millions of desktop PCs from the word go, regardless of the tablets. With that kind of userbase, it seems unlikely the number of apps won't rise accordingly from launch.

Essentially, you're using a consumer survey to suggest Windows 8 has already missed its 'window' of opportunity. Frankly, I'd wait until consumers actually see them in action. Until that point, such surveys have no credible weight.

Thanks for the thoughts --

Thanks for the thoughts -- particularly the typo. iOS of course has a vast lead in number of apps vs. Windows Phone 7 marketplace. Plus, even if there is a step ladder to Windows 8 (no official word), sizing (vis-a-vis a tablet form factor) would be an issue on Windows 8 tablets, much like running an iPhone app on an iPad or a variety of Android phone apps on Android tablets.

We could always just wait for consumers to act -- but then, we wouldn't be very forward-looking in our analyses! Bottom line is that consumer surveys do show something about the market -- particularly when the drop in mind share is so strong as this one. Windows 8 tablets will have a much higher mountain to climb than they would have, had they come out in Q1, 2011.

You're using a typo - while

You're using a typo - while typed on a phone, I might add - to pick holes in my argument? Classy. Very classy.

I ask again, where are you getting this 9,000 apps number from?

Ahh. You meant your typo, not

Ahh. You meant your typo, not mine. Apologies.

Either way, those 40,000 apps would be at no more a disadvantage than those for iPhone that scores of people run on iPad: people see an app number, they don't really go too far beyond that.

Also, you fail to make a connection between Windows 8 on desktop and Windows 8 on tablet. As a whole, its userbase could actually eclipse that of iPad in a few years, if not less. People are going to run apps just as readily on the desktop version as they are tablets, so it's likely the marketplace won't be playing second fiddle to the App Store for all too long.

That's what is clever about Microsoft's strategy: linking the two form factors means Windows 8 will have a guaranteed userbase in the millions, almost from day one.

Either way, my point is it's perfectly possible to project how the tablet market will play out, but not from a study like this. Consumers are only interested in what they know at the moment, and with Windows 8 not out, it's hard for all too many to get all too excited.

Microsoft is usually never

Microsoft is usually never first to market with any new paradigm. Look at browsers, etc as prime examples yet they somehow manage to catch up. The question that need answering are:

1. Apple and Google collectively have built a vibrant developer ecosystem that is on-par with Microsoft's model. What do they need to do in order to win back the multitude of developers that have made the switch?

2. Apple has one over the consumer marketplace. Are there advantages beyond just the capabilities of the operating system in terms of installed base that they could leverage in an enterprise context?

3. In the minds of consumers, how much does price play a role in whether they are successful. Obviously licensing Android for free is certainly cheaper for tablet manufacturers. Do they have the right price points for all types of users ranging from cheapos to power users?

You should not use their

You should not use their browser as an example, they bundled in their OS for free. Netscape did not have a chance.

The introduction of low cost

The introduction of low cost quality brand tablets via Amazon and B&N marks the normalization of the Tablet market.

Consumers are no longer wowed bsmart phoneses and tablets, the cool factor is on the wane.

Only one or two players will have privilegelige of fat margins the rest have to compete on quality of offer and price.

As such I fully expect many companies to partner with Microsoft in real and meaningful ways in order to successfully compete.

let the commoditization of tablets continue unimpeded.

Let us not forget that while

Let us not forget that while Amazon is selling more tablets than the other also rans, they are shipping a mediocre product at best. I have rarely seen such agreement from reviewers that Amazon is no where near as good as an IPad and they all questioned whether the lower price was worth what you get.

Nope, sorry.

The giant within Microsoft has been awakened. The DOJ is off their backs, and no one makes a consumer OS better than MS. Why did Windows get popular in the first place? It was the price of the OS coupled with LOTS of hardware made with lots of competiton. And that is exactly what is going to drive this tablet into the stratosphere. The installed userbase of a billion windows users doesn't hurt either. Steven Sinofsky for President!

Windows became popular

Windows became popular because it ran on IBM PCs and big business only wanted to deal with IBM PCs

Fluke

Why do so many assume the future of tablets has to be the same as the past of computers? Why does one company, one way of doing, have to prevail? What other industry has one company in a dominant position? Cars? No. Electronics? No. Food? No. Medicine? No. Entertainment? No.

The computer industry is a fluke.

Win8 = 1st true tablet PC

Today's tablets are really not much more than over grown smart phones. When MS delivers Windows 8 on ARM based mobile devices, with full blown versions of Word, Excel,... That's when we will finally have a worthwhile mobile PC.

How is this different that

How is this different that the Windows XP Tablet PC edition that went on sale in November of 2002? http://en.wikipedia.org/wiki/Windows_XP_editions#Tablet_PC_Edition

Windows has had 9+ years to deliver a truly portable computer/tablet. And it hasn't.

If you keep waiting around for Microsoft to make a "worthwhile" device, you're going to miss all the devices that actually did get it right.

Two major differences

(1) That was bulky and massive to the point I had to hold it tightly between one hand and inside of elbow in order to scribe with other hand. It was basically a laptop with a clever swivel screen, making it tempting to try using in arms instead of lap, but too heavy for this to be comfortable after just a few minutes. And, (2) it ran on an inefficient and battery eating x86 processor that made it get warm, sometimes hot. Win8 on ARM should require less battery, reducing weight, solving these major mobility issues while delivering a full PC.

Win8 Tablet and Windows Phone 7....missed boat!

I agree with your article. I also see the same uphill battle with the Microsoft Phone 7. I don't really understand why Microsoft has dragged their products out so long to market release. This could be my ignorance to product development. All I know is "the marketplace will decide". An example of a great idea for Microsoft......be a leader and not a follower witht he Windows Phone 7. Put a Windows Phone 7 out there with NFC on it in the US marketplace before other competitors. Have something to market. Apple really doesn't have a superior product....they just market their product better (they really offer a false sense of security with their products). I have said this before......Microsoft needs Bill Gates back! A fire needs to be set under the product groups and leadership is really needed at Microsoft before they continue to loose market share. Geeks will unite with their products (support Micorosoft products) BUT if users are tied into a 2-year phone agreement then they won't budge....opportunity lost. The same applies with the tablet market.....get me one and I'll get comfortable and have no need to buy a different product. Right now, the enterprise is Microsoft's only hope and that is fading fast as well. Again....put a fire under things! I'll take the job and get it done!

Consulting Opportunity

Hi JP!

I wish to speak to you regarding a possible telephone based consultation for our client on how transformational Windows 8 could be in the tablet market. What email address could I shoot an email too?

Regards,
Seyit

Win 8 is different

Windows 8 tablet won't be a "tablet", just a real small and real fast very powerful hand-held unit with great multitouch, media performance, battery life that you can run full office on, as well as run Visual Studio to do your development (as well as every other program ever written for Windows).

Oh, and any Android app or Windows Phone 7 app you want to run.

Yup, a real loser.