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Microsoft, Design Guru


A how-to kit for the ideal PC has been making the rounds of leading design shops. It calls for "accelerated curves" and "purposeful contrast." The preferred colors include a shade of black called Obsidian and a translucent white dubbed Ice. "We want people to fall in love with their PCs, not to simply use them to be productive and successful," reads the enclosed booklet. "We want PCs to be objects of pure desire."

Doesn't sound much like Microsoft, does it? But it is. BusinessWeek has learned that a team of 20 in-house designers has been working quietly for the past 18 months on an elegant new look for PCs that will run Microsoft's next operating system, Windows Vista. It's a major departure for the company, which historically has left design to the likes of Dell (DELL), Hewlett-Packard (HPQ), and Gateway. Persuading the hardware guys to embrace the tool kit won't be easy. They're already work-ing overtime to build better-looking gear on their own.

But Microsoft Corp. (MSFT) feels the PC world needs a major face-lift, and one way to do it is through better integration of software and hardware. No one does that more effectively than Apple Computer, and the folks in Redmond may be worried that their resurgent rival is getting too much traction in the race to dominate the digital home.

What's more, a slick new look can only help the debut of Vista, which will reach consumers in January, years late and lacking many of the features it was supposed to have. "This has always been the issue with Vista: Who cares!" says Roger L. Kay, president of Endpoint Technologies Associates Inc., an industry analyst. "So they're going to try to pull all these elements together, to make [the launch] into a major event."

Microsoft is no newcomer to hardware design, of course. The company has made PC mice and keyboards for years. The Xbox game console has been a hit. Microsoft is working on a music player, Zune, that it hopes will rival the iPod. And the company routinely gins up ideas for PCs, including a small LCD screen on the outside of a laptop to display appointments and e-mail.

But trying to transform the PC ecosystem -- even peripherals makers such as Logitech Inc. received the kit -- takes things to a whole new level. It reflects the fact that the economics of the computer business is chang-ing. The PC world used to be divided into two camps: those who made lucrative software and the poor schlubs who built the low-margin hardware it ran on.

Apple has turned that model on its head. From the beginning it has managed to create a unified design for its products by building everything itself, first with the Mac and then later with the iPod. Although Apple sells one computer for every 20 PCs, the iPod's success has proved how crucial it is to create a seamless experience for consumers, who are buying much of the gear these days. Says a top PC design executive: "You're going to see more and more of this desire to integrate hardware and software."

Even if it means borrowing from Apple. Microsoft denies doing that, saying it's simply responding to demand for good design. Yet its approach has more than an echo of the Apple ethos. "We're decomposing the look and feel of Vista and bringing it into a language that hardware designers understand," says Steve Kaneko, design director of Windows hardware innovation. And here's another Apple-esque detail: The Zune player will work only with Microsoft's planned music service, sources say. In other words, it will be part of a closed system, like iPod and the iTunes Music Store.

SOFT SELL

So far, MIcrosoft is using a soft sell with PC makers. The Windows Vista Industrial Design Toolkit, hand-delivered to about 70 designers, contains everything a PC maker needs -- color palette, suggested materials, even graphics for icons and power buttons -- to create computers, laptops, and peripherals that hew to Vista's look. A separate booklet exhorts hardware makers to eschew drab, utilitarian boxes. Microsoft is providing the tool kit for free and vows not to strong-arm any company into incorporating the concepts.

Will hardware makers take the hint? Those most likely to use the tool kit are upstarts with tiny design budgets and little brand identity. One is A Living Picture PLC. The British startup plans to launch digital picture frames in October that use Wi-Fi to display photos stashed on a PC. The first two products rely heavily on the tool kit, from colors and materials to suggestions for geometry. In the end, Microsoft saved the company hundreds of thousands of dollars, says Jesse Grindeland, president of A Living Picture. "The question of using it wasn't really why," he says, "but why not."

Big PC makers such as HP, Dell, and Lenovo won't dive so deep. "This will look to [the hardware makers] like another way for Microsoft to take value from them and move it back to Redmond," says NPD Group Inc. analyst Steve Baker. "If they can't offer a unique look and feel, that takes away a lot of the value of being a hardware company."

In other words, if everyone uses the same design, a market with razor-thin margins will be further commoditized. Lenovo received the tool kit but is cool to the notion of implementing its concepts. "Our ability to differentiate ourselves comes from our industry-leading innovation," says a Lenovo spokesperson. "And design is a big part of that."

Trying to influence PC design is a no-brainer for Microsoft, since doing so costs the company almost nothing. That it's bothering at all shows that having a software monopoly isn't enough anymore.

By Jay Greene and Peter Burrows, with Steve Hamm in New York


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