Pixel and Surface are turning the electronics industry on its head

A photograph of someone using a Microsoft Surface device with a stylus in tablet orientation.

Even with the Cubs winning the World Series and national politics inspiring breathless headlines, perhaps one of the strangest things about 2016 has been the transformation of some of the industry’s biggest hardware companies. Between the big three operating system makers—Google with Android, Apple with iOS, and Microsoft with Windows—a dramatic shift in strategic thinking for each company has become clear in the last few months.

Punctuating this strategic change are some not insignificant technology releases over the past year. iOS 10 was a significant evolution of Apple’s mobile aesthetic, Google released its first-ever smartphone, and Samsung has struggled with less-than-optimal temperature control issues. But looking back on 2016, and especially looking forward into 2017, a few trends have emerged that will redefine the mobile landscape in coming years.

Looking back on 2016, a few trends have emerged that will redefine the mobile landscape in 2017.

Google is bridging its platform into all-new hardware categories

Based on advertising revenues, Google is a search provider. Full stop. Its myriad array of products and online services, including everything from the ubiquitous Gmail through its ubiquitous Android operating system, exist solely in service of making its digital ads ubiquitous. But in the past few months, Google has diversified its product offering to include a new family of hardware products, branded by Google and designed to more deeply integrate the Google brand into users’ lives.

Google was successful in establishing a deep and wide platform with Android. But upon that platform, Google is now positioning itself to build a hardware empire.

The company’s announcement of its Pixel and Pixel XL handsets underscore its prioritization of first-class smartphone user experience, but also represent its tacit admission that closely integrated hardware and software products add up to a user experience greater than the sum of the two. And beyond smartphones, Google is smartly positioning its product line to dominate the platforms of the future.

First is Google Home, the company’s best impression of Amazon Echo writ large with machine learning and its decades of search intelligence. The connected home voice-assistant product category is just getting started, and is rumored to see a new entrant from the likes of Apple, but Google is making sure to establish a foothold within the conversations and aberrant questions that populate users’ lives.

But more interesting than Home is Daydream, and its dedicated View headset for virtual reality within Android. Pure virtual reality is an arena that many have ventured into—Samsung’s Gear VR, Sony’s PlayStation VR, and Facebook’s Oculus to name a few—but one that Google seems confident it can dominate by building on the ubiquity and ecosystem of Android. The VR–ready Pixel and VR–only Daydream mode of Android are only the beginning, but represent perhaps the best example of Google building on its strengths to segue into a new product category.

Google is confident it can use Android’s ubiquity and strong ecosystem to underpin its virtual reality ambitions.

Apple is balancing a superabundance of disparate platforms

The entirety of Apple’s product lineup seems mired in half-step limitations and holding-pattern compromises. The new iPhone doesn’t have a headphone jack, but next year’s promises to be a revolution. The new MacBook Pro is limited to 16GB of RAM by its dated Intel chipset, but Apple seems increasingly on the precipice of ARM processors in the Mac. And Apple TV’s fabled over-the-top streaming service is bogged down in negotiations with the cable industry, but Netflix is due to jump in at any moment.

This is a vision of an Apple trying to balance wide and disparate platforms—and failing to achieve that balance more frequently than they have in decades.

Of course, Apple’s revenues have been no slouch—the iPhone is still generating more profit for the company than any other smartphone maker, Apple Watch has become the top-selling product in its category, and iOS remains the mobile user experience that defines the digital lives of billions. But with its product iterations this year, more and more pundits are feeling as though Apple is losing the thread of the mobile revolution it started.

Whereas Apple was once the quintessential widget company, masterfully integrating hardware and software together to differentiate its products, its competition has begun adopting its integrated strategy to widespread acclaim. Meanwhile, the consequence of Apple’s runaway success and expanding product lineup is that it now maintains more platforms and services than ever before, with four full operating systems and a myriad of APIs, platforms, and even a full programming language it actively maintains.1

With the A10 through the W1 chips, Apple is a company that now has an alphabet soup of processor families that nearly outnumber its actual product line.2

But again, Apple’s perceived challenges might only be perception, the result of the company’s famous penchant for secrecy. Its rumored self-driving car project and numerous patents for innovative new device form factors might yet come to bear fruit in the next few product generations. But as Apple gradually evolves its product lineup with more subtractions than substance, many pundits are beginning to assume stagnancy rather than secrecy.

Microsoft is the new industrial design powerhouse

Microsoft reached unimaginable heights of dominance in the 1990s, building on its OEM partnerships and operating system lead to become ubiquitous within business and personal computing. But as mobile began to revolutionize the consumer electronics industry in the 2000s, Microsoft was slower to adapt, ceding ground to Apple and Google as traditional PCs lost relevance.

Part of Microsoft’s strategy in the late 2000s was to prioritize its popular Office and cloud service offerings, doubling down on the enterprise and building tight integrations into competitive operating systems like iOS and Android. But significant acquisitions of Nokia’s mobile hardware division and aggressive hiring of some of the industry’s best industrial designers have helped position Microsoft as perhaps the leading hardware design powerhouse for the next decade.3

Strategic acquisitions and aggressive hiring have positioned Microsoft to be perhaps the leading industrial design powerhouse of the next decade.

This strategy has spawned a series of new hardware products from Microsoft in the past few years, formally starting with the Surface tablet in 2012. The company built upon propriety multitouch technologies from its experimental PixelSense tabletop computers,4 and pioneered the convertible form factor and detachable keyboard that many competitors—Apple’s iPad Pro included—have come to imitate.5

With last month’s introduction of the revolutionary Surface Studio, a move clearly aimed at creatives and designers, Microsoft’s gray and magnesium-centric design aesthetic is carving out a niche for itself among industrial design aficionados. The import of this transition is that Microsoft is positioned to define the hardware form factors that Apple and Google will follow for their products—Microsoft debuts the Surface in 2012, Google and Apple introduce the similar Pixel C and iPad Pro in 2015.

While Google is keen to shoehorn virtual reality into its Android platform, Microsoft is hedging its bets between full-fledged virtual reality support in Windows 10 and more transitional—and potentially more useful—augmented reality with its HoloLens product. HoloLens blends the digital and physical worlds together with pioneering head-tracking and camera systems, allowing Windows to dynamically outline objects within physical reality on a transparent screen in front of users’ eyes. It’s a middle ground between a smartphone and full virtual reality, but could prove to be more practical than either.

HoloLens and augmented reality are a middle ground between smartphones and full virtual reality—but it could prove to be more practical and useful than either.

Just as the explosion of mobile upended the industry in the 2010s, trends are coming into focus that will define these giants’ product strategies in the next decade.

  • Google is betting big on its platforms and cloud services, and beginning to build new hardware products on top of that foundation.

  • Apple is committed to maintaining its massive library of products and platforms, but the opportunities for convergence or differentiation remain unclear.

  • Microsoft has taken the baton of hardware design innovation, while positioning itself not to miss the boat on the next big technology revolution like it did with mobile.

As these trends continue to accelerate, and as new players like Facebook and Uber begin to make enormous strategic moves, the 2020s promise to be a more volatile and interesting time for technology than even the 2010s were.

  1. Among what are ostensibly five product families—iPhone, Mac, iPad, Apple Watch, and Apple TV—the company maintains four full operating systems (iOS, macOS, tvOS, and watchOS), five ARM–based chip families (not to mention Intel chips in Macs), six styles of anodized aluminum finishes (Space Gray, Black, Jet Black, Gold, Rose Gold, and Silver), and a family of 17 dongles to support its teeter-totter ambitions with Thunderbolt, Lightning, and USB-C. And we haven’t even mentioned iPod. 

  2. iPad and iPhone have the A-series chips, which have come to set the standard for mobile device performance and power efficiency. Apple took that team and introduced the M7 motion co-processor, the S1 and S2 for Apple Watch, and the W1 to power AirPods and Beats headphones. And with last week’s MacBook Pro introduction, the company introduced a Touch Bar that necessitates a new dedicated operating system based on watchOS and a brand-new ARM chipset called the T1. 

  3. One such hire was Andrew Kim, a young industrial designer whose branding ideas for Microsoft itself went massively viral and ultimately helped land him a job at the company. Kim’s work was first seen in the redesigned Xbox One S, and he’s also part of the team bringing HoloLens to life. 

  4. Not coincidence was the fact that PixelSense was originally named “Surface,” but its legs as a $10,000+ table-sized computer system were understandably limited in the consumer space. Many of the innovations that made the original Microsoft Surface table so compelling were its interactions with real-world objects, a trend that was reinvigorated with the Surface Dial alongside the new Surface Studio desktop. For its part, he rebranded PixelSense displays live on within cable newsrooms, however, letting newscasters physically annotate election maps and data visualizations. 

  5. Alongside the Surface are Microsoft’s Lumia handsets, a line inherited from Nokia that feature enormous camera systems and serve as the flagship models for the mobile version of Windows 10. Microsoft has since evolved its Surface lineup to include a Pro variant, an innovative detachable hinge-keyboard form factor in the Surface Book, and a revolutionary sliding desktop form factor with a 28-inch drafting-table display called the Surface Studio.