Surface Book: Could Microsoft Overtake Apple for Must-Have Tech?

Microsoft (MSFT) appears to have a hit on its hands with its new Surface Book. The hybrid laptop stole the show at Microsoft’s recent Windows 10 media event and at the time of this writing, all configurations have sold out for preorder at the online Microsoft Store*.

Surface Book: Could Microsoft Overtake Apple for Must-Have Tech?

Source: Microsoft

For years now, Apple (AAPL) has been venerated as the champion of hardware design, and its laptops have been the must-have devices for many.

Could the Surface Book’s early sales success be signaling a shift, the start of a new era where MSFT is the company that takes the lead?

Changes in the Portable Market

When Apple released the MacBook Air in 2008, it rocked the ultraportable market.

Machined out of solid aluminum, incredibly thin and light, it buried the Ultrabooks that Microsoft and its PC partners were selling. It wasn’t long before any photos of the audience at a tech event would reveal a room packed with glowing Apple logos, and PC manufacturers churned out laptops that tried to mimic its metal look.

While PC sales in general have been slumping quarter after quarter, Apple has seemed largely immune to the decline. In fact, in its third-quarter earnings report Apple sold 9% more Macs than it did the previous year, despite the PC market shrinking by 12% during the same timeframe.

Software is more difficult to find for Macs, and most businesses standardized long ago on Windows. So in theory, Apple laptops shouldn’t be so prominent.

There’s definitely an iPhone “halo effect” in play that encourages someone who buys an iPhone 6S to also buy a MacBook Air. But that’s just part of the bigger picture, where Apple’s design chops have made its products must-have tech, especially for those who like it to be known (and seen) that their taste in technology is unquestionable.

Microsoft tried attacking the MacBook Air directly with its Surface tablets, but that had no effect on Apple’s sales. Eventually, the Surface began to find some success, but the tablet that transforms into a quasi-laptop has been far from a MacBook killer.

However, the Surface Book is an entirely different animal.

Enter MSFT’s Surface Book

This time, Microsoft is offering an actual laptop. It has a beautiful, high-resolution display; a high-quality keyboard; and offers the latest Intel (INTC) processors. Its case is machined out of magnesium (billed as being lighter and more scratch-resistant than aluminum) and it offers up to 12 hours of battery life.

An innovative hinge provides almost infinite display adjustment, but also lets the user release the top half altogether at the push of a button to transform the Surface Book into a thin, lightweight Windows tablet.

Nothing Apple offers can pull off this kind of trick, and attempts by other PC manufacturers look clumsy in comparison.

Apple has let its ultraportable laptop lineup lose its way recently. The display in the MacBook Air hasn’t been upgraded since 2010, making it seem woefully low in resolution. The new MacBook offers a Retina display, but is underpowered for some tasks and its keyboard is a love-it-or-hate-it proposition. The biggest selling points of that new MacBook seem to be its extreme thinness and the option to buy it with a gold case.

With the Surface Book, Microsoft is showing off design chops that have not only produced a functionally elegant piece of hardware, but also a visually impressive one.

Microsoft News reported that the most expensive Surface Book model had already sold out on MSFT’s pre-order page. Microsoft hasn’t said how many units that represented, but when there is any pre-order demand for a laptop that costs $2,699, it’s news. The fact that every model of the Surface Book had sold out for pre-orders at the time of this writing is a very good indicator that Microsoft has a hit on its hands.

Bottom Line

Microsoft has spent the past two years making big changes in the way it operates, and with the Surface Book, it’s now a full-fledged PC manufacturer as well.

It took a few iterations to get the Surface and Surface Pro tablets right, but now they’re good enough that Apple and Alphabet Inc.’s (GOOG,GOOGL) Google are not only being forced to respond with big tablets of their own, they’re blatantly “borrowing” features like keyboard covers.

That in itself is a sign that MSFT is becoming a hardware design force, but the reaction to the Surface Book shows the company’s first true laptop may be its first must-have PC.

Unless Apple does something to dramatically improve its MacBook Air line, those glowing Apples wielded by tech journalists and technology industry influencers may wink out and be replaced by the silver Windows logo of MSFT’s Surface Book.

As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.

*Preorder stock for some Surface Books has since been replenished.

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Article printed from InvestorPlace Media, https://investorplace.com/2015/10/surface-book-msft-macbook-air/.

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