Microsoft’s meaningless RT license could sink Surface

Microsoft’s new Surface RT “laplet” is now on sale. It doesn’t look as cool as the late, lamented Courier, but give Microsoft credit for not creating yet another iPad clone. The Surface is designed for a different target marketplace and a different purpose. It is, first and foremost, a business machine, intended to support actual work, unlike the iPad, which is first and foremost a media gadget.

Nonetheless, Microsoft is poised to snatch defeat from the jaws of victory. Why that’ll happen is a lesson in leadership — and an uncomfortable one. But first, some thoughts on what makes the Surface a possible business-user winner.

[ See InfoWorld’s hands-on review of Microsoft’s Surface RT and find out whether Windows 8’s and RT’s bundled Metro apps are as good as the iPad’s. | J. Peter Bruzzese explains Windows RT’s security options. | For more of Bob Lewis’ continuing IT management wisdom, check out his Advice Line newsletter. ]

What makes the Surface cool?

Two features in particular boost the Surface’s cool cachet. First, there are the well-publicized integrated keyboards (two versions). Typing is essential when people are working. Using the iPad’s onscreen keyboard is hunting and pecking at its far from finest, and while there are decent keyboard add-ons for the iPad, they’re just that: add-ons.

Second, there’s the stylus. Unlike the iPad, which has index-finger resolution, the Surface has subpixel resolution for stylus use, a separate stylus touch mode that disengages skin-sensitive touch (so you can rest your hand on the screen and still write or draw), and — a nifty touch, no pun intended — an eraser on the other end of the stylus from the writing tip.

(Truth be told, none of this comes from in-person use. Apply the appropriate skepticism, and for a full hands-on review see Galen Gruman’s “Review: Microsoft’s Surface RT will make even a fanboy cry.”)

Microsoft’s Surface demise

Why will Microsoft snatch defeat from victory when it comes to the Surface? Here’s one reason: Even the iPad gives consumers enough choices to be confusing, with three memory configurations multiplied by two networking alternatives: Wi-Fi and Wi-Fi plus cellular.

The Surface simplifies this by not having a 4G option and just two memory choices. But Microsoft offsets this simplicity with its decision to offer two devices, with different processors, running two different versions of Windows (RT and 8), only one of which will run existing Windows software. That’s a near guarantee to confuse just about everyone.

Except IT, which, luckily enough, is (or should be) Microsoft’s primary sales target, because:

• The iPad is poorly suited to a work environment, as I’ve argued in this space from time to time, so the enterprise is the underserved tablet marketplace.
• The Surface Pro could serve as a laptop replacement for a significant fraction of mobile employees, unlike the iPad, which is designed to be an adjunct.
• Microsoft is organized to support enterprise customers, unlike Apple, which is organized to support consumers.

Still, why make IT’s job harder? Having to explain why it has to give employees the more expensive Surface Pro when they can buy the Surface RT for a lot less (BYOD!) is going to aggravate just about everyone involved.

But it’s Microsoft’s worst decision that holds lessons in leadership for all of us. That’s the decision to bundle the Office Home & Student edition of Microsoft Office with Windows RT.

No, that isn’t the problem. It’s a terrific idea that adds a lot of value with no extra manufacturing cost. The problem is having a Home & Student edition of Office in the first place — one that includes the restriction that you can’t use the software for business purposes without your company paying for a second (enterprise) license that adds absolutely nothing of any value other than making business use legal.

Tradition vs. market sense

Tradition trumped market sense here. The tradition: selling multiple products at different prices based on the value they provide, even though the products are molecule-by-molecule identical to each other. It goes back at least as far as the 1970s, when Data General sold a printer line with three models that differed only in printing speed, price, and which position a three-way switch was set inside a locked access panel.

According to microeconomic theory, this tradition is perfectly sensible. Customers ought to be willing to pay more for more value. Microsoft is following tradition, and if the Surface’s target market consists solely of microeconomic theorists, it might the right pricing strategy. Otherwise, it’s deep-down dreadful because:

• From a customer perspective, legitimate value comes from what a product will do, not from what the vendor will let me do with it.
• Fair pricing is cost-plus rather than value-based. Not convinced? Look at airfare, which is, except for a few carriers like Southwest, stupid already. Now imagine you’re traveling on business, so Delta charges you more for your seat than it charges the traveler across the aisle who is taking a vacation. Enough said.
• Just about nobody who buys a Surface RT computer will pay even the slightest attention to this restriction anyway.
• Microsoft can afford neither the expense nor the bad public relations that would come from trying to enforce it.

How Microsoft came to shoot itself in the foot on licensing

Understand, I have no insider knowledge. I’m just inferring what follows. Still, I’d bet this licensing decision was a political compromise.

There are five ways to get to a decision: autocracy, consultation, consensus, voting, and delegating. Steve Jobs ran an autocracy. He made the decisions based on his vision of how things should be. In many situations, this is an awful way to go about it, especially because autocracies lead to lack of engagement and buy-in, imposing limits to how much responsibility anyone is going to take. Ever hear someone say, “I never said that would work. It was your decision, not my decision!”? If so, you understand.

Autocracy often results in uninformed decisions as well. “I’m the boss — I make the call,” is a clarion call for everyone else to shut up and keep their opinions to themselves.

But as opposed to consensus decision-making, autocracy has three big advantages. The first two are that it’s quick and it’s cheap, and if that’s all there was to it, I’d say you get what you pay for and leave it at that.

But autocracy is also the most certain way to achieve coherent, elegant design, recognizing that “design” goes far beyond a product’s styling, features, controls, and fit and finish. Especially when it’s software, the design includes such niceties as pricing and licensing.

I’m guessing Steve Ballmer decided he needed maximum buy-in and engagement from his executive team with respect to a radical decision: selling a Microsoft-branded business computer. When someone on the team objected to the loss of licensing revenue associated with bundling a highly functional version of Office, that led to the no-business-use licensing decision. And when someone else raised red flags about the impact a low-cost Microsoft-branded laplet complete with bundled Office might have on other Windows hardware vendors, that resulted in the RT plus Pro decision. That’s not to mention Microsoft’s continued failure to adapt Office to a touchscreen environment — more likely to be a political compromise than an oversight.

Microsoft compromised to achieve consensus. That’s my guess.

Next-gen IT’s takeaway

Regardless of whether my speculation is right, the underlying principle applies to decision-making in your organization.

Clarence Johnson, chief designer of the SR-71 Blackbird spyplane, once pointed out that no committee ever designed a Mona Lisa. That’s the point: When coherence is what matters most, someone must have sole design authority. Decide consultatively rather than through pure authoritarianism? Absolutely — that helps you avoid missing what should be obvious.

Consultatively, not by consensus: Consensus gives you buy-in, not elegance. And when it comes to design, elegance matters most.

This story, “Microsoft’s meaningless RT license could sink Surface,” was originally published at InfoWorld.com. Read more of Bob Lewis’ Advice Line blog on InfoWorld.com. For the latest business technology news, follow InfoWorld.com on Twitter.