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By Steven Burke and Matt Brown on October 7, 2015 on crn.com

Hewlett-Packard and Dell, which helped build the once-undisputed Windows operating system monopoly by partnering closely with Microsoft for years in the PC market, are now publicly welcoming Microsoft’s Surface Book as their newest competitor in the intensely competitive laptop market.

“Microsoft’s announcement will help establish a super-premium segment for Windows PCs,” said HP in a prepared statement provided to CRN. “We think it’s great that Microsoft is investing to build an underdeveloped segment. Today, less than 1 percent of the total consumer PC industry is Windows PCs over $1,500, and Apple dominates the premium segment. If Microsoft invests in building that segment, it is good for HP and creates opportunities for us to expand our high-end business.”

HP, Palo Alto, Calif., said Microsoft is defining the market for higher-end PCs in the same way it helped define the tablet market with the Surface product. “Just like Windows in the tablet segment, where Microsoft built the category with Surface, we are able to leverage their investment with devices such as the exciting HP Spectre x2 and the award-winning HP Spectre x360,” according to the HP statement.

Round Rock, Texas-based Dell, which received a $2 billion loan from Microsoft as part of its $24.4 billion leveraged buyout two years ago, praised the new Surface Book as a way to drive greater awareness of Windows 10. “Microsoft is a great partner,” said Dell in a prepared statement provided to CRN. “We cooperate in many areas and compete in others. It’s part of the modern way of doing business today. Look, it’s a Windows 10 world and greater awareness of the benefits of Windows 10 is good for our customers, Microsoft and for us.”

The upbeat statements from Dell and HP come just one month after the two vendors inked a deal to resell Microsoft’s Surface Pro tablet, putting themselves in the position of selling the Microsoft tablet and their own tablets. That Surface Pro tablet reseller pact also potentially puts them in direct competition with their own partners that may have to sell an HP or Dell product against their primary vendor selling an alternative product line.

HP and Dell solution providers said the sanguine response to the Surface Book from the two vendors is a sign of the power of the $93.6 billion Redmond, Wash.-based software giant, which licenses its operating system and Office 365 software to those companies.

[highlight type=”one”]”If I am Dell and HP, I have to be cautious as to how I address this as a company based on the fact that Microsoft is the underlying software architecture in most of the laptops and PCs that HP and Dell sell,” said Bob Venero, CEO of Holbrook, N.Y.-based solution provider Future Tech, No. 232 on the CRN 2015 Solution Provider 500. [/highlight]

[highlight type=”one”]Venero said Microsoft, for its part, needs to make sure it does not take its eye off its “bread-and-butter” software business at it ventures more deeply into the hardware market. “This could cause them to take their eye off the ball,” he said. “The hope is they continue to be laser-focused on enhancing and supporting their OS.”[/highlight]

[highlight type=”one”]Venero said he does not see Microsoft as a hardware innovator in the same mold as hardware stalwarts Dell and HP. “I don’t agree that Microsoft is defining the market for higher-end laptops,” he said. “Dell and HP have done that much more effectively and efficiently with the [Dell] XPS line, the [HP] Spectre line and their other products.”[/highlight]

[highlight type=”one”]Furthermore, he said he expects Dell and HP to out-innovate Microsoft. “Dell is going to create and drive the market,” he said. “HP is going to create and drive the market. The partner community is going to create and drive the market. Microsoft needs to make sure they are supporting that from a girth perspective vs. the niche perspective they are embarking on with Surface Book.”[/highlight]

managing director at a West Coast solution provider, who did not want to be identified, said he expects Microsoft’s entry into the laptop market to force Dell and other hardware OEMs to be more innovative. He predicted Dell and other OEMs would fight it out with Microsoft in specific areas such as wireless video capabilities, battery life and form factor. “It’s going to be pretty game-changing over the next couple of years,” he said.