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Microsoft Needs 3 Surface Tablets: 3 Reasons

Microsoft is having trouble selling the Surface tablets it already makes. But here's why adding a third would be a smart move.

10 Ways Microsoft Could Improve Surface Tablets
10 Ways Microsoft Could Improve Surface Tablets
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Nvidia CEO Jen-Hsun Huang said Thursday that his company is working with Microsoft on a new Surface RT tablet. Given that earlier reports have indicated Microsoft is also testing devices with Qualcomm's Snapdragon 800 chip, it's looking increasingly possible that the company will replace its underachieving Surface tablet with not one, but two new products.

Microsoft reported in July that its Surface RT and Surface Pro, which respectively debuted in November and February, had only $853 million in revenue combined. Apple, in contrast, needed only three days last November to sell three million iPads, and it sold 14.6 million in its most recent fiscal quarter.

Given these challenges, it might seem counterintuitive for Microsoft to expand a product line it's already struggling to sell. It might be better to shore up the existing lineup before burning through the extra R&D, factory and advertising money that additional models would entail.

[ Where does Microsoft's struggling tablet fit in? Read Why Schools Could Save Windows RT. ]

Then again, if the current tablets' respective market positions aren't working, a shake-up might be precisely what the Surface brand needs. Here are three reasons Microsoft should make three different Surface tablets.

1. Three tablets would provide an entry point and an upgrade path.

When Microsoft first priced its Surface tablets, it made a colossal miscalculation, assuming that it could simply follow Apple into the high-margin device business. If Microsoft had released a tablet three years ago, perhaps this plan would have worked. But Microsoft was late to the game and Apple has an entrenched user base in the premium market. Consequently, Microsoft needs to follow something more akin to the Android model: produce budget-friendly flagship products that increase adoption and funnel users toward the costlier, more profitable devices. Three Surface models would allow Microsoft to pursue this sort of strategy.

From a components standpoint, a 7-inch Surface RT tablet with a Qualcomm chip shouldn't cost much more to produce than the Nexus 7. If Google can afford to price the Nexus 7 at $199, then Microsoft can certainly aim for similar build quality at a similar price. The Snapdragon chip should provide LTE support, allowing Microsoft to produce an ultra-mobile tablet that better highlights the company's cloud-based assets, such as SkyDrive and Bing apps. Support for Office, including Outlook, meanwhile means the device could be useful not only for content consumption but also as a BYOD companion device.

If the price is right, Microsoft could significantly boost Windows RT adoption, which would in turn lead to increased developer investment in the Modern UI. More developer activity would send benefits rippling across the entire Windows 8 ecosystem.

A second Surface RT model could provide both a bigger, nicer screen and an upgrade path for those who like the smaller RT model but need a device that's more suitable for heavier Microsoft Office tasks. It's hard to know how much demand there is for this sort of device, given that some Atom-based Windows 8 tablets could soon cost as little as $300. Unlike Window RT models, Atom-fueled machines can run desktop apps.

Nevertheless, if Microsoft can boost adoption with a low-cost RT model, it could at least buy itself the flexibility to continue developing larger more, capable RT devices.

The Surface Pro, meanwhile, will eventually gain a Haswell chip, leaving it as a premium model with long battery life and the ability to run x86 apps.

Thanks to Microsoft's cloud investments, the devices should sync well together, which could encourage some users to own multiple Surface tablets, and to use them in tandem.

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User Rank: Ninja
8/12/2013 | 5:08:46 PM
re: Microsoft Needs 3 Surface Tablets: 3 Reasons
Has Microsoft ever been idealistic? From Bill Gates purchase of DOS to the class action lawsuits stemming from customers paying for Windows even if they didn't order it with a new desktop, hasn't Microsoft ALWAYS followed the money?
Even when they almost "missed" the Internet and had to "innovate" by adding IIS (an HTTP server) to Windows NT, they demanded license fees for every seat that hit the server or a pretty hefty CPU license fee. (In terms of licensing, they viewed HTTP the same as SMB). I believe they used to offer an "Internet Connection" license when businesses used IIS for public sites, but IMO, it's few and far between that MS has given away anything. True, they did give away Internet Explorer but I don't know if anyone can call IE the produt of an idealist. Starting with IE4, Microsoft started offering very alluring but proprietary extensions that to do this day still cause forward compatibility issues and force many corporations to keep older versions of IE on their desktops.
Understand that they operate in a free country and they can create whatever products they desire and charge whatever the market will pay. I have no problem with this. I'm just tossing out the view from the other side since I've never thought of them as idealists.
Regarding Windows XP, if someone purchased it in 2001 and has either kept that same PC or transferred their XP license to more modern hardware, it's hard to argue that it wasn't money well spent. Microsoft has continued to release free security fixes for over a decade. I still don't think that qualifies them as idealists.
User Rank: Author
8/12/2013 | 3:25:48 PM
re: Microsoft Needs 3 Surface Tablets: 3 Reasons
A $200 or $300 Microsoft tablet would change the nature of this whole discussion. An attractive entry-level price point has to be an option at holiday shopping time this year. But match the Nexus price? That's going to be hard for MS.
User Rank: Apprentice
8/11/2013 | 2:36:21 PM
re: Microsoft Needs 3 Surface Tablets: 3 Reasons
I agree
Microsoft gave it their best shot and RT was a 100% total failure while the Pro version got picked up a little, although very little, by IT guys who don't like the idea of supporting a new ecosystem. So I would say RT is going to continue losing money for Microsoft for as many years as they decide to sell it. I don't think there's a lot of promise for Pro either. IT pros will buy the thing, but eventually longer term they'll be transitioning to probably Linux. If MS wants to stay in the game, they ought to be working on a Linux operating system of their own; otherwise, they're going to experience a long drawn out decline into oblivion, sorta like cobal.
User Rank: Apprentice
8/11/2013 | 1:02:49 PM
re: Microsoft Needs 3 Surface Tablets: 3 Reasons
why it would not work:
1) people does not like tiles, offering it in 3 sizes is not an answer
2) OEM are now competitors to MS (we'r a device company now, nuff said), any hw release from ms will not excite them, if not in order to issue a non ms based counteroffer to kill the competitor
3) fanfare did not work with major version, repeting the same strategy again and again meets the Einstein's definition og Ballmercy.
User Rank: Apprentice
8/10/2013 | 6:05:18 PM
re: Microsoft Needs 3 Surface Tablets: 3 Reasons
Surface Pro, cool running Haswell with Intel Iris Pro 5200 graphics, 1TB SSD, Thunderbolt, LTE for data instead of just WiFi. That would be a real "Pro" device. Join RT and WP, because what WP should do, RT does. A 6-6.5 inch RT/WP device would be great.
User Rank: Apprentice
8/10/2013 | 5:29:48 PM
re: Microsoft Needs 3 Surface Tablets: 3 Reasons
boy ME, you must love fantasy football too.

Surface RT is dead as a dodo. simply because no one needs it - at all. if you want a cheap commodity tablet, you get some Android. if you want ecosystem, you get iPad. they both have XBox apps even.

the RT is a total rerun of the Zune flop, except worse - the Zune never saw a $1 billion write-off. pull the plug.

now the Pro does have a definite global niche market - all those die-hard Windows IT guys. there has to be at least a million of them and i'm sure every last one will buy it. most already probably have. after that, well, we'll see.
User Rank: Apprentice
8/10/2013 | 4:41:02 PM
re: Microsoft Needs 3 Surface Tablets: 3 Reasons
MIcrosoft has enjoyed and benefited well from a 30+ year hegemony. They've morphed (as Google is presently doing) from an idealistic business trying to make a change for the better into a greedy capitalistic monster.

I don't mind seeing MS decline as there are a dozen idealistic and REALLY creative young companies ready to fill the void. It's time.
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