Reports that Qualcomm will provide the processor for a second-generation Surface tablet also suggest not only that Microsoft could launch a new Windows RT tablet imminently, but also that the company is planning multiple models.
Huang revealed Nvidia's role in the Surface follow-up during an interview with CNet. He stated that Microsoft Outlook, which is not available for current Windows RT models, will be "the killer app." Microsoft announced in June that Windows RT 8.1 will add Outlook support.
Outlook compatibility is a significant addition, given Windows RT's relatively bare-bones native Mail app. If nothing else, it makes Windows RT a more attractive BYOD option that will easily sync with the business systems at many companies.
[ How many of these improvements will Microsoft make to the new Surface? Read Microsoft's Next Surface Tablets: 7 Must-Do's. ]
Nevertheless, one hopes that Microsoft has bigger and bolder plans for "killer apps." Unlike Windows RT tablets, devices that run the full version of Windows 8 already support Outlook. With Acer recently cutting the price of its 8-inch Iconia W3 tablet to $299, Win 8 tablets are also becoming relatively budget-friendly. If Outlook were in such hot demand, shouldn't the cheaper Windows 8 tablets be selling better?
It's important for Windows RT's long-term prospects that the next Surface perform better than the current model, which has posted notoriously poor sales. In an attempt to boost adoption, Microsoft recently slashed the device's price by $150, bringing the base model down to $349.
Microsoft's Surface Pro, which runs the full version of Windows 8, was also recently discounted. It dropped by $100, making the base model $799.
The Surface RT's price reduction necessitated a $900 million write-down in Microsoft's most recent quarterly earnings. This sum exceeds the $853 million in revenue Microsoft has earned from both its Surface tablets, according to the company's annual 10-K report to the SEC. It is also exceeded by the $1 billion the company added to its market budget to advertise Windows 8 and Windows RT.
The poor performance has taken a toll. Citing poor demand, OEMs have largely abandoned Windows RT, which accounted for only 0.5% of tablet shipments in the second quarter of this year, according to IDC. Microsoft needs to reassure device makers that Windows RT's Modern UI can attract users.
To do so, Microsoft might be expanding the Surface lineup.
Bloomberg, citing sources with knowledge of Microsoft's plans, reported in June that Qualcomm's Snapdragon 800 chip would fuel a future Windows RT model. The Verge subsequently corroborated the report, citing sources.
Bloomberg also said Nvidia would continue to supply parts for certain Surface versions. This led to speculation that Microsoft will produce at least two Windows RT devices, perhaps a smaller model with the Qualcomm chip and a 7- or 8-inch screen, and a larger model with an Nvidia chip and a form factor more like that of the current 10-inch.
Price has been an obstacle for Surface tablets so far, but with an expanded family, Microsoft could have more flexibility to compete at the low end of the market. Google's Nexus 7 has been praised as a great value at $199, for instance, and if Microsoft prices a Qualcomm-powered Surface RT model at around the same price, Windows RT's fortunes could turn.
Microsoft has been typically tightlipped about the new Surface tablets, but it has dropped a few hints that devices are coming. In July, a slide shown during a presentation at Microsoft's Worldwide Partner Conference included references to not only updated Surface tablets but also new Surface accessories that will come in a variety of colors.
Microsoft CEO Steve Ballmer also reportedly told employees an internal town hall that new devices are in testing. At the same meeting, Ballmer reportedly also conceded that Surface sales have been a disappointment.
While details about future Surface RT models have started to flow, rumors about a refreshed Surface Pro have been relatively scant. Still, any Pro update would presumably include one of Intel's new Haswell processors, which should solve at least one of the device's major shortcomings: lousy battery life.