How Microsoft Has Become the Surprise Innovator in PCs

27STATE1-superJumboWhen Microsoft unveiled the first Surface tablet five years ago, it was a spectacular failure. At the time, the Apple iPhone was well on its way to conquering the technology industry, and the iPad appeared set to lead an even more devastating invasion of Microsoft’s office-worker kingdom. Microsoft conceived of Surface, an innovative laptop-tablet hybrid, as a way to show off the versatility of its software. Windows machines, it argued, could work as phones, personal computers and tablets. And didn’t everyone love Windows?

Nope. Microsoft soon took a $900 million write-off for unsold Surfaces. Another effort to break into the hardware business, its acquisition of the limping phone-maker Nokia, dug a deeper river of red ink — a $7.6 billion write-off. By the summer of 2015, Microsoft’s hardware dreams looked crushed. Even today, the Xbox One, Microsoft’s latest gaming console, is losing to the Sony PlayStation 4.

Still, Microsoft persisted — and today, the company is making the most visionary computers in the industry, if not the best machines, period. In the last two years, while Apple has focused mainly on mobile devices, Microsoft has put out a series of computers that reimagine the future of PCs in thrilling ways.

Yes, Apple loyalists, that’s just my subjective view. And yes, Microsoft’s latest financial results aren’t exactly on my side here — the company announced last week that though its cloud software business is growing rapidly, revenue for its Surface division declined by 2 percent over the last year (because of changes it made in its launch schedule).

Microsoft, of course, makes most of its money from the PC business by licensing Windows to other computer makers, and it says that part of its goal in building hardware is to inspire and guide those companies’ designs. But it also wants the Surface line to sell — and although the division has grown enormously in the last few years, becoming a critical part of Microsoft’s overall business, Surface is still far smaller than Apple’s Mac or iPad line.

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