Lenovo just showed why Microsoft needs the Surface PC
Earlier this week, it came out that Lenovo had shipped a piece of software called Superfish on a bunch of new computers.
Turns out,
the software was a potential security nightmare. It hijacked security certificates from web sites that the user was visiting, which could have allowed hackers to steal user information using the same technique.
Lenovo formally apologized for Superfish yesterday, and admitted that even before the security problems became obvious, it was considering removing Superfish because it "frustrated some users without adding value to the experience."
This was an extreme example of what's come to be called "crapware" - software that PC makers ship on new machines not because it provides any particular value to the customer, but because these software companies pay them for distribution.
PC makers have done this for decades. It's one way they can make a little extra money in what has long been a commoditized market.
Most PCs are roughly the same - they run the same versions of Windows and have a lot of the same hardware components, so the only way PC makers can really compete is on price. Bundling this kind of software helps them fight this race to the bottom.
But there's one PC maker that doesn't need to bundle crapware: Microsoft.
The Surface hasn't been a great business for Microsoft. The first version of Surface ran a specialized tablet-only version of Windows that could not run older applications. It was a flop, and Microsoft had to write down almost $1 billion in unsold inventory.
But eventually Microsoft moved away from the tablet focus and turned Surface into more of a MacBook Air competitor - only with a detachable keyboard and a touch screen. The current version, the Surface Pro 3, has been selling pretty well and has been profitable for Microsoft for the last two quarters.
The thing is, Surface was never meant to be a huge money maker. Microsoft makes its money on software, not hardware.
Surface was meant to show the best possible user experience for Windows. It was to show how Microsoft had designed an operating system that worked on traditional PCs and touch-screen tablets. It was to show off interesting hardware innovations, like the detachable keyboard. It was meant to spur Microsoft's hardware partners to take advantage of Windows 8 in the same way.
And while Windows 8 had some fundamental problems, at least you knew that if you bought a Surface, Microsoft wouldn't load it down with a bunch of junky software from other companies.
Under Satya Nadella, Microsoft is rethinking its Windows business. But the Superfish incident shows that there's still a really good reason for Microsoft to keep making its own PCs.