Under the Skin of Microsoft’s Surface

by Brad Moon | June 19, 2012 2:59 pm

Microsoft (NASDAQ:MSFT[1]) managed to pull an Apple (NASDAQ:AAPL[2]) yesterday, with a highly anticipated mystery event that had analysts guessing for days. That’s only fitting, given that Microsoft is also taking several other pages out of Apple’s playbook — by leaping into tablets[3], offering its own hardware and taking steps toward providing a completely integrated user experience.

Until Apple released the iPad in 2010, the tablet PC was a Windows device. Microsoft released a Tablet PC edition of Windows XP in 2003 and continued to support tablet functionality through subsequent Windows versions, although the segment failed to take off and has been mostly forgotten.

But Microsoft has long been openly experimenting with tablet hardware. Bill Gates demoed the table-size Surface[4] at CES in 2008, the Courier[5] tablet/e-reader hybrid was frequently in the news through 2009 and Steve Ballmer was pitching Windows 7-powered slate tablets[6] to compete against the iPad at CES 2010.

Yet, little has happened on the Windows tablet front since the iPad.

Apple has been allowed to run away with the market. Devices powered by Google’s (NASDAQ:GOOG[7]) Android, such as Samsung’s Galaxy TAB provide the closest thing to competition. Research In Motion’s (NASDAQ:RIMM[8]) PlayBook tablet famously crashed and burned. Amazon’s (NASDAQ:AMZN[9]) Kindle Fire racked up impressive sales over the holidays, but this was based on a price that was less than half the cheapest iPad’s, and Amazon’s device is less a full-featured tablet than an enhanced e-reader/Web browser/multimedia device.

When Microsoft announced a press conference, tablet rumors quickly built, but many of them involved Barnes & Noble (NYSE:BKS[10]). Logical, given that Microsoft invested $300 million in the maker of the NOOK tablets. Perhaps a new NOOK was coming that would run Windows 8 to compete against Amazon’s Kindle Fire.

Instead, we got Surface [11](not to be confused with the early table-size project), a pair of Microsoft-made tablets that follow Apple’s approach of controlling the hardware and operating system to maximize the user experience.

So, how does Surface stack up to the iPad? That’s a tricky question, and for multiple reasons. First, Microsoft has chosen to develop two different products: one aimed at the consumer market and one at business users. The company also failed to provide key information such as price (a vague “competitive”), release date (when Windows 8 is available for the consumer version, three months later for the Pro model), battery life, processor specifics, display resolution, RAM and whether the devices will offer 3G/4G connectivity or just Wi-Fi.

That’s a lot of variables, any of which could make or break it when compared to an iPad. So, here’s a rundown of what we do know:

Among the companies that will be intently watching the Surface are Samsung, as well as ultrabook manufacturers. To date, whenever a potential iPad competitor has come along, it has largely grabbed market share from the companies that fight over Apple’s leftovers instead of cutting into iPad sales. If the Surface RT does well, it’s also likely to take a chunk out of Samsung’s sales.

But it seems less likely to hit the Kindle Fire because Surface’s capabilities, size and expected price are targeted more at the full-size, full-feature tablets. However, the Intel-powered Surface Pro could well end up as a direct competitor to Intel’s ultrabook initiative.

The Surface represents a gamble on Microsoft’s part. Clearly, with the upcoming Windows 8 release it wishes to avoid the OS version mess that Android can be[14] on tablets. Manufacturing tablets itself — as Apple does — is the way to do that, but it risks angering Microsoft’s traditional PC hardware partners.

Two hardware versions running different OS versions also risks confusing both buyers and developers. But the early reports are the hardware looks good, and the keyboard/cover looks to be winner.

With the Surface, Microsoft may just manage to make the tablet market competitive again.

  1. MSFT: http://studio-5.financialcontent.com/investplace/quote?Symbol=MSFT
  2. AAPL: http://studio-5.financialcontent.com/investplace/quote?Symbol=AAPL
  3. leaping into tablets: https://investorplace.com/2012/06/microsoft-declares-war-on-the-ipad/
  4. Surface: http://www.engadget.com/2008/02/05/microsoft-looking-to-bring-surface-home-sooner/
  5. Courier: http://www.engadget.com/2009/09/22/microsofts-courier-booklet-emerges-said-to-be-in-late-prototy/
  6. slate tablets: http://gizmodo.com/5442200/hps-windows-7-slate-device-revealed-by-steve-ballmer
  7. GOOG: http://studio-5.financialcontent.com/investplace/quote?Symbol=GOOG
  8. RIMM: http://studio-5.financialcontent.com/investplace/quote?Symbol=RIMM
  9. AMZN: http://studio-5.financialcontent.com/investplace/quote?Symbol=AMZN
  10. BKS: http://studio-5.financialcontent.com/investplace/quote?Symbol=BKS
  11. Surface : http://www.microsoft.com/surface/en/us/default.aspx
  12. ARMH: http://studio-5.financialcontent.com/investplace/quote?Symbol=ARMH
  13. INTC: http://studio-5.financialcontent.com/investplace/quote?Symbol=INTC
  14. OS version mess that Android can be: https://investorplace.com/2012/05/android-fragmentation-getting-worse/

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