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The release strategy of the Surface family of tablets suggested that Microsoft (NASDAQ:MSFT) intended for it to be a harbinger, not a panacea. Part of the announcement for the Surface tablets specifically said it was meant to be the "ultimate stage for Windows". The launch strategy was so convoluted that you wondered if Microsoft was actually trying to sell the darn thing. It reeked of reluctance -- especially of the fear of pissing off partner OEMs. It was even more burdened by the fact that Microsoft inserted complexity where others seek simplicity by creating RT and PRO versions.

I don't have any insights into what Microsoft planned to define as success, but I suspect that the RT's market performance was not it. It was backwards in that it tried to compete with existing tablets without necessarily adding value to the proposition. It failed because it did not fundamentally impact the tablet landscape in units sold or excitement. The Pro, however, seems to be starting where the RT ended. It seems to be tickling fantasies of what could be -- and that, to me, is success. Setting the stage for Windows meant that the Surface's mission would have been accomplished if it raised curiosity in the form of questions from individuals, corporations and OEMs. Questions like:

  1. Is this thing a laptop, a tablet or both? (individuals)
  2. Can I order one for work? (corporations and individuals)
  3. Can I use it across the windows platform and in conjunction with other windows devices? (corporations and individuals)
  4. This thing actually competes with MacBook Air but with a better price point? (individuals)
  5. How could Microsoft beat us in hardware design? (OEM's)
  6. Why aren't we the leaders with alternate form factors? (OEM's)

What are the experts saying?

I am neither in the "Get free Surface Pro for review camp" nor in the "Buy Surface Pro for review camp". I am in the camp, however, that can scour the internet to find out exactly what the folks in the various camps are saying since they or their employers have the clout and / or the following to get the machines. I am going to mix the good and bad reviews because I am partially of the school that says all PR is good PR.

  1. Microsoft's Surface Pro Sells Out: But How Many Did They Release? Forbes
  2. LA Microsoft Store not mobbed, but Surface has a following - cnet
  3. Surface Pro sells out at Microsoft's online U.S. site - nbcnews.com
  4. Microsoft blows Surface Pro launch, but Best Buy (NYSE:BBY) and Staples (NASDAQ:SPLS) provided excellent customer service - zdnet
  5. The Surface Pro's gutsy design successfully reinvents the Windows 8 laptop by cramming an Ultrabook experience into the body of a 10-inch tablet - cnetasia
  6. Microsoft's Surface Pro Available Storage: Still Confusing - pcmag.com
  7. Surface Pro scarcity angers Microsoft customers - ghacks.net
  8. Microsoft Surface Pro: Not a Tablet, Not Yet a Laptop - Yahoo
  9. 128GB Surface Pro only has slightly less usable storage than 128GB MacBook Air - Yahoo
  10. Surface Pro: Hefty Tablet Is a Laptop Lightweight - allthingsd

There is more to these headlines in the form of pertinent commentary about the Surface Pro. If you would like to indulge yourself in the commentary, click on the links and do that. The core complaints are about battery life, weight, cost, and the overall user experience. But, it is clear that the Pro is doing at least three things in regards to the mission of "setting the stage":

  1. Identifying the issues
  2. Generating excitement
  3. Opening up possibilities for the future

Who does this impact?

Microsoft:

An adjacent news bit that came out earlier in the week was that Microsoft is moving to unify its mobile and desktop software platforms. This move, along with Windows 8, brings together the front end and back end of the PC, tablet and mobile platforms. If the Surface Pro is only modestly successful and the OEM partners are able to introduce different form factors, I would be willing to bet that this will raise the tides and boats for Microsoft and all their partners. This may finally be the key that opens the locked value that everyone knows exists in the company. Motley Fool addressed the 1.13% bump in Microsoft's stock price:

"The Dow didn't hold back Microsoft, though, which climbed more than 1% after its Surface Pro tablet launched over the weekend. Sales were strong, although reviews were mixed, with many impressed by the functionality of having full-blown versions of popular software programs available. The question is whether, at a fairly hefty price point, customers will be willing to pony up for the tablets rather than accepting cheaper laptops as substitutes. This weekend, the answer was yes, but Microsoft needs much more than a few days of positive results to convince investors that its long drought is over."

I agree, but I also think that all potential investors should keep their ears open for sentiment -- not sales numbers. The Surface Pro only needs to distort perception in the market to have achieved its goal, and it is on its way.

Intel (NASDAQ: INTC)

Hurray to the Surface Pro! Anything positive about the Surface Pro should be orgasmic to Intel. Intel has had to endure the shame of having a knife in a knuckle fight and still coming out with a bloodied nose. If today's Surface Pro is not too bad, the "Haswell" should mop up and take it to the next level. If it does what it expected to do, it should enable future Surface Pros or similar devices to be as light and compact but more capable than current RT models. Models that can compete directly against the iPad with a full complement of the Windows suite of products, and these will be game changers in terms of value proposition and design elements. Combine these with Ultrabooks and convertibles and you get the scale needed to maximize R&D dollars for Intel.

The fact of the matter is that sooner or later Intel is going to figure it out at the expense of ARM. Any bit of excitement about the Pro sets the stage for Intel. If the "Haswell" turns out as advertised, it will be adios to RT because it will make it redundant.

BlackBerry Limited (NASDAQ:BBRY)

I am not one to wish for the death of a company that hires lots of people. But, if Windows phones and tablets take off, I cannot see how the new BlackBerry Limited survives in its current state. It was able to compete against Palm and the old Motorola because at the time it was a hardware/software business with phones. Today, it is an ecosystem driven space and standalone companies have to fight that much harder to survive.

Unfortunately, there is a better chance of a new entrant making progress within an ecosystem than an incumbent like BBRY regaining its old luster. I do not see why anyone would buy BBRY at current prices, or why it was able to rally as much as it did. My guess is that once the BlackBerry Z10 hits the U.S. market and does not sell out as fast as current market leaders, the stock will take a beating.

Conclusion:

ARM Holdings (ARMH) - that did not last very long, did it?

Nokia (NYSE:NOK) - Do not build an RT tablet, you have more leverage than HTC and you should learn from Microsoft's mistakes.

Usually companies will launch an actual product before the "diet" or the "light" versions. Microsoft did it in reverse, much to the chagrin of its customers who wanted capable alternatives to existing tablets. Machines that were lightweight for personal use or that could fit into the technology and security infrastructures at work. There will continue to be questions around leadership at Microsoft, or if it is better off in parts. I don't care about those questions at this time. If the Surface Pro outsells the RT by a reasonable number, it will be a catalyst of another Wintel era but this time with mobile. If that happens, go long on MSFT, INTC and NOK. They will be the short-term beneficiaries from a healthier Windows environment.

Source: Microsoft's Surface Conundrum: RT And PRO