In the 1990s, there was a company named Compaq in Houston, Texas. Compaq had many friends who liked to sell its stuff, which were mostly PCs. The friends, called VARs and retailers, made a little money, too. Everyone seemed happy, and Compaq grew and grew.\n\tFounded in 1983, Compaq Computer became the largest PC maker in the world. In 1998, Compaq held 13.8 percent of the global PC market share, followed by IBM with 8.2 percent.\n\t\n\tThen came a new kid on the block named Dell, and Dell didn\u2019t like Compaq\u2019s friends. Dell liked the Internet, especially the e-commerce part of it. Dell could sell its PCs directly to customers cheaply because it didn\u2019t have to go through Compaq\u2019s friends.\n\tIn 1996, Dell began selling computers through its website. In 2001, Dell took over the top PC maker spot from Compaq.\n\tWhat was poor Compaq to do? Sell its stuff directly just like Dell? This would mean abandoning friends who stuck by it over the years. Compaq thought hard and long about this \u2013 until it was too late. While Compaq was thinking, Dell was selling. Compaq quickly became vulnerable as business waned. Hewlett-Packard bought Compaq in 2001.\n\tCompaq\u2019s continuing decline led to Hewlett-Packard acquiring the company for $24 billion. \n\tNow, a modern counterpart\u2026\n\tThere once was a giant company named Microsoft in Redmond, Washington. Microsoft had many big friends \u2013 a gang, really \u2013 who liked to put Microsoft\u2019s expensive software into their hardware and sell these PCs at various street corners. The friends, called OEMs and retailers, made bank.\n\tLast year, Microsoft posted $18.7 billion in Windows revenue and $23 billion in Office revenue. According to former Nokia executive Horace Dediu\u2019s math, Microsoft gets a total of $78 operating profit per PC.\n\tEnter the new "loner" kid on the block named Apple, and Apple didn\u2019t want to play with anybody when it came to its PCs, not OEMs or retailers. Apple didn\u2019t want to play by the same rules. In fact, Apple wanted to change the game and created a magical device in 2010 called the iPad \u2013 a consumer tablet that competes with PCs yet is not a PC.\n\tApple gives away software but still gains $195 in operating profit per iPad sold, according to Dediu. While PC sales still dwarf iPad sales, iPads are catching up. Piper Jaffray predicts tablets could overtake notebooks by 2015 and total PCs before 2020.\n\tMore importantly, Apple did not put expensive software into the iPad. Instead, Apple made iPad apps dirt cheap and iOS upgrades free. Dollar apps? WTH? This made Microsoft, which charged a lot for its software, look like a chump who's stealing other kids\u2019 lunch money.\n\tRead: CIO Challenge with BYOD: Don't Fall Down the Rabbit Hole\n\tWhat was a disrespected Microsoft to do? Create a tablet all by itself just like Apple? This would mean abandoning buddies who stuck by it over the years. Well, Microsoft did just that. This week, Microsoft showed off its cool Surface tablet with software and hardware coming out of Redmond.\n\tMicrosoft had to build Surface on its own in order to collect higher margins, Dediu contends. Under the old model, tablet makers would have had to pay $55 for a Windows license and $68 for an Office license per tablet for Microsoft to sustain its margins \u2013 but they\u2019d never be cost competitive with the iPad. \n\tWith Surface, Microsoft\u2019s hardware gang wasn\u2019t happy. The felt like Microsoft kicked them to the curb. So will they leave Microsoft to fend for itself in the rough-and-tumble world of computers? No one knows what the consequences will be, or how Surface will do against the iPad.\n\tOne thing, though, is for certain: Unlike Compaq, Microsoft chose not to wait around for its fate.\n\tThe end.