Microsoft who on one hand is cuddle up to PC brands while stealing their customers with the other is starting to cop some flak from brands such as Lenovo.
Microsoft who is currently building out massive databases has a master plan to become the dominant provider of both software and PC’s to both business and consumers at the expense of their current PC partners claims insiders.
Part of that plan was revealed in their latest financials released last Friday when the US Company revealed that revenue from its Azure cloud service more than doubled, while revenue from Office 365, the cloud version of its popular productivity software, jumped nearly 70%.
Chief Executive Satya Nadella has tried to boost its cloud businesses by firstly giving away Windows 10 for free. A key element of that strategy is that consumers have to supply accurate contact and registration details which are logged into Microsoft’s Auzure Cloud databases.
Once Microsoft has this information they start marking their Office 365 software along with offers to buy Microsoft hardware including Xbox consoles, and Surface Pro PC’s.
Chief Executive Satya Nadella claims that their new Microsoft cloud offering delivers recurring revenues rather than the one-time sales associated with its conventional businesses.
He estimated that the company’s combined cloud businesses are running at an annual revenue rate of $8.2 billion and are on track to hit a $20 billion target.
Some PC Companies are starting to now see Microsoft as a threat.
Recently Lenovo took a stand against Microsoft’s Surface PC as struggling brands such as Hewlett Packard and Dell cut deals to flog the struggling Microsoft product.
Last week Lenovo President and COO Gianfranco Lanci said he refused an arrangement to resell Surface devices to enterprise customers a year ago.
Microsoft “asked me more than one year ago, and I said no, I don’t see any reason why I should sell a product from, within brackets, competition,” Lanci said.
While it may defy belief that PC makers are selling Microsoft’s hardware instead of their own, some vendors such as HP and Dell have broader enterprise service businesses to protect so they have moved to get into bed with Microsoft.
They’ve begrudgingly accepted Microsoft’s offer to resell Surfaces when customers ask for them, despite making no money from the sales.
“These are customers we have been working with for many, many years and we don’t simply want to cede those relationships to a competitor, so we said ‘OK, we’ll participate in that’,” HP CEO Dion Weisler said, according to The UK Register.
In the past, vendors like Lenovo and Dell politely dismissed Microsoft’s Surface devices as uncompetitive, and in some cases even praised them as helping strengthen the PC market.
While they continue to put on brave faces publicly, reports are emerging of behind-the-scenes hostility as a new version of the Surface Pro is rolled out.
Lenovo executives have told ChannelNews at IFA in Berlin that the Microsoft Surface Book takes direct aim at traditional laptops.
After Microsoft revealed the Surface Book, one OEM employee told Business Insider that Microsoft was like a “sleeping lion” that no vendor’s dares disturb”.
One PC vendor told ChannelNews that Microsoft has become “A right bastard to the PC industry”.
“One minute they want us to promote Windows then they move to steal your PC customers. They have become a real threat and this is just the start”.
Meanwhile, sources within Asus reportedly said they felt blindsided by the new hardware, which they may have not have even known about ahead of time.
Although Microsoft claims that its hardware is complementary to that of other PC makers, its partners can’t be happy about the prospect of Microsoft dominating the high-end market, leaving them to fight over the scraps.
Some observers claim that there’s little they can do, as Windows at this stage remains the most viable desktop operating system to put on their machines.
Microsoft, which unveiled the new Surface Pro 4 and Surface Book at its Windows 10 event on October 6, approached Lenovo more than a year ago about selling its Surface Pro 3 tablet.
Lenovo, however, wasn’t interested in adding the Surface Pro 3 to its sales line-up. Microsoft “asked me more than one year ago,” Lenovo President Gianfranco Lanci said at the Canalys Channels Forum trade show this month, according to the Register.
“And I said no, I don’t see any reason why I should sell a product from within brackets, competition.”
Last month ChannelNews broke the exclusive story about Lenovo’s rejection of the Surface Pro.
Lenovo confirmed to ChannelNews that Lanci had made the remarks concerning the Surface Pro 3.
A spokesperson for Microsoft said the company does not disclose the terms of partnerships and won’t offer comment on confidential conversations with partners.
“We have a long standing partnership with Lenovo and we partner with them in many ways, and we’re always considering unique collaborations and partnerships that help address customer needs,” the spokesperson said.