With a teaser of just two rectangles, it would soon reveal to represent a display and detachable keyboard cover, Microsoft revealed the first Surface devices in 2012. Four years later, Google released the first Pixel phones, switching gears from a Nexus device program that relied on partnerships with Android handset makers such as HTC, Samsung, and Huawei. Both product launches broke with a long-established practice in the client device business of not competing with one's licensees. A company either licensed its own operating system, as Microsoft did, or used it itself, as Apple did. The desire to avoid such conflict, in fact, drove a thriving Palm Computing, Inc., to split into two companies[1] -- palmOne and PalmSource: An ill-timed mistake that stole focus from the coming smartphone wave.
But Google's and Microsoft's size, along with the maturity and scale of the products they serve, afford marketplace liberties that Palm never had. Of course, the first-party Surface PCs and Pixel phones compete with those of those company's licensees. But the ecosystem stewards may also posit that first-party efforts help the competitive standing of licensees, an argument we'll get to in a moment. Indeed, one way to evaluate the success of these programs is through a framework of three "Bs" -- Business, Beacon, and Breach.
BUSINESS
Many companies such as Intel and Qualcomm develop concept products or reference designs, but there's a whole other level of investment in creating products that drive a business, particularly when they are asked to move the needle in businesses the size of Google and Microsoft. Even in the cases of Pixel and Google, where the device business serves other purposes, having business targets in place helps quantify progress versus other world-class companies.
After a disastrous start, the Surface business is thriving at Microsoft.