Based on the amount and type of responses to the article, it seems that I struck a nerve, so I wanted to explain exactly why I feel the Surface line of tablets are critical to Microsoft's future.
Let me start by saying that I have reviewed a Surface RT (here, here and here) and played extensively with a Surface Pro. While each device has its pros and cons, I cannot say enough good things about both devices.
Here are the pros and cons of the Microsoft Surface devices:
- Durable, stylish and well made.
- Innovative features (kickstand, pen etc).
- Dual use (Laptop/Tablet).
- Extensible (use with a monitor, TV).
- Enterprise ready.
- Too expensive (both RT and Pro).
- Short battery life (Surface Pro).
- Jury's still out on Windows 8/Windows RT.
- Storage capacity is low (64GB and 128GB) for a PC.
You could add a few more items to both lists but in general, those are the main ones.
The truth is, on balance, the Surface Pro is a fantastic first effort from Microsoft and should be applauded. With time, I expect the quality of the devices to get even better. In addition, I also expect Microsoft to cave to market forces and lower the prices of the devices.
I absolutely think that this version of the Surface Pro and subsequent refined versions are exactly what businesses all over the world have been waiting for.
The future of computing lies in mobility. OEM's need to create mobile devices that are slim, sleek, aesthetically pleasing, powerful, portable and have dual use.
The Surface Pro delivers on most of those requirements.
- In an office setting, it can be docked to a keyboard, mouse and large monitor for a full day's work (eliminating screen size and battery life limitations).
- For meetings, it can be undocked and taken to a conference room to use for note taking with a pen.
- For security, it can be managed by Microsoft Enterprise tools on corporate networks.
- For compatibility, it also can be used to run tablet apps from the Windows Store or traditional x86 desktop applications.
You have to admit, that's pretty impressive.
If Microsoft is aggressive with sales and flexible with pricing, there is no reason why companies worldwide won't be scrambling for this device.
Here's the challenge.
I believe that despite all the benefits I articulated above, we are in the very early stages of a product launch where public opinion can go either way.
As human beings, we collectively look for social cues to see what experts, bloggers, analysts, friends and family think about a product and after a short while, our opinions are formed and hardened.
The Surface Pro can be a market leading device if Microsoft is disciplined about messaging, marketing, sales and pricing.
More importantly, if properly positioned, this can be an iPad killer.
Yes I said that and I mean it.
I actually think that Apple (NASDAQ:AAPL) is terrified about the Surface catching on because the company has nothing comparable. While the Apple iPad is the leading tablet on the market today, it has several weaknesses.
- OS/UI - iOS is still primarily a tablet OS which makes the iPad vulnerable to the "just a media consumption device" charge.
- Dual Use - It's pretty much designed to be just a tablet.
- Enterprise readiness - While this is getting better, iPads and iPhones still need work to be managed easily on corporate networks.
In a sales call or meeting, making the case for the Microsoft Surface Pro is slam dunk against the iPad.
Here's an interesting scenario for you to ponder.
If Microsoft is able to start to make serious inroads in the business world, maybe workers and executives use their Surface Pros for recreation as well (buying games from the Windows Store - more revenue for Microsoft).
Maybe those workers take their Surface Pros home and show their families and friends.
Maybe their kids decide it's cool and buy a Surface RT.
Maybe schools decide to use the Surface as an educational tool based on interest from the kids.
Maybe Surface sales build slowly but steadily and by next year, Microsoft are able to release a second generation Surface Pro that's sleeker, faster, cheaper with more storage (256GB to 500GB).
And on and on it could go...
There is a fantastic business case to be made for the massive success of the Surface.
Here's the problem.
All of this is contingent on Microsoft and its leadership actually really wanting all the things I have articulated above.
Unfortunately, it's not clear to me that the company does want that.
In my opinion, Mr. Ballmer's comment indicates that the company may still be too concerned about alienating OEMs to aggressively sell the Surface and Surface Pro.
That would be the worst of both worlds.
Building a great device but showing restraint in the hopes that OEM partners get the hint is awful strategy. It basically is a strategy that will give Google (NASDAQ:GOOG) and Apple time to create their own superior hybrid devices.
Google and Apple (combined) already have over 1.4 million business and causal software applications available in their application stores.
If those companies are also able to create a next generation hybrid device, they would cement their positions as leaders of the mobile era and Microsoft would probably never be able to catch up.
From an investment perspective, I would recommend that investors watch very closely to see how aggressively Microsoft sells and defends the Surface line.
If the Surface line is allowed to fail or lag behind competitors, it's a clear sign that Microsoft will not be a leader in the coming mobile revolution.
If that is true, you just might want to invest your money elsewhere.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: While I have no business relationship with Microsoft of any sort, I am the owner and editor of several Windows websites (Windows8update.com, Windows8enterprise.com, among others), and I write primarily about Microsoft for a living.