Seeking Alpha
Long/short equity, special situations, momentum, research analyst
Profile| Send Message| ()  

Many have asked our opinion about Microsoft's new iPad competitor, the Surface. Do we finally have a legitimate contender to iPad? Before I answer that question, let's go back to Monday afternoon prior to Microsoft's secretive announcement. We were discussing what we would do if we were in Microsoft's position and decided that they had a real opportunity to beat Apple to the punch with a TV. It seemed logical that the lack of a Mac TV announcement at the WWDC opened the door for Steve Ballmer to one up his rival. Microsoft is actually in a great position to do so because of the success of the Xbox gaming platform that is already thriving in the living room. If they simply leveraged the Xbox technology into a TV format, they would have a legitimate iTV product. Xbox TV has a nice ring to it. Of course none of that happened. Instead they released an inferior tablet 28 months late.

Top 10 Reasons Microsoft Surface is Dead on Arrival:

10-The Surface is a bad laptop. Microsoft is trying to label this thing as a laptop that looks and feels like a tablet. If it's a laptop, it's specs are terrible. Am I going to use the Surface keyboard for business instead of using a laptop? No way. Don't be confused by Microsoft PR, this is certainly designed to be a touch screen, portable tablet.

9-The Surface is an inferior tablet. So this is why they're trying to sell it as a laptop. Microsoft has always struggled with touch screen technology; it was no surprise to watch the hired gun demo guy pause his presentation and replace his Surface with a new one because it froze up. So embarrassing and yet so expected. It's been 28 months since Steve Jobs unveiled iPad and Microsoft thinks now is the time to copy Apple with a worse version of the original iPad? Really? Will developers sprint to develop apps for the Surface after years in Apple's iOS ecosystem? The success of mobile devices has little to do with the features of the hardware. Many beautiful phones with increased functionality have tried to supplant iPhone but none have had any success to speak of. The Surface and its lack of a credible mobile ecosystem make it a bad laptop that runs on Windows 8.

8-Price. Another reason why we think Microsoft is trying to label the Surface as a laptop is because they want to price it like an ultra book. Good luck selling any of these things for over $499.

7-Lost in a sea of Android. Even though Microsoft is using Windows 8 it has done nothing in the public to differentiate itself from the sea of Android tablets that have tried and failed to compete with iPad. The stigma surrounding these products is the same, consumers don't trust the OS and apps to work seamlessly with the hardware. If Microsoft's glitch in its presentation is a sign of things to come then watch out below.

6-iPad mini. Amazon had a good niche going with its inexpensive tablet until consumers discovered it was an inferior product. What happens when Apple releases a $249 iPad mini? An amazing product at the optimal price point will overwhelm the market. Every kid on earth is going to be asking for an iPad mini this holiday season. Once again, Microsoft is missing out on the hot trend.

5-The future is voice, not keyboard. Apple knows that Siri isn't perfect. The reason why Apple continues to press forward with Siri is because they know they have to. Interacting with gadgets via voice is the next step in tech evolution. The fact that Microsoft is hyping the Surface's attached keyboard as a selling point is comical. Didn't Research in Motion already try this strategy with the Blackberry? Keyboards are out. Voice is in.

4-Surface is a stupid name. Can you imagine a flight attendant telling the passengers to turn off all mobile devices, iPad's, and Surfaces? Surface is the kind of name that someone comes up with if they are trying to be too clever. Maybe the name would be legit if it was a true touchscreen tablet without the mess of a keyboard but apparently the keyboard is the new hot feature here! The iPad's perfectly integrated touch iOS/iPad is actually more like a surface than the Surface. Ouch.

3-Memories of Zune. How can anybody trust Microsoft after the Zune fiasco? The Zune received excellent reviews before it came out, similar to what we're seeing with the Surface but it's all a bunch of garbage. Consumer trust has been lost which makes it especially risky for enterprise to adopt a new piece of Microsoft hardware that could potentially be extinct two years from now.

2-The Microsoft brand has lost its cool factor. Apple has made it cool to be a geek. Look at the way today's NBA superstars dress for their post game interviews, the thick black glasses and retro suits are geek chic. Everyone wants to be a tech nerd in this day and age but nobody wants to own the stuff that the real geek's used before geek was cool. Do you follow? Microsoft had its time in the sun but lost its way. This company has a long way to go before it regains cool credibility.

1-Steve Ballmer. The only explanation for Ballmer still being the CEO of Microsoft is that he must have photos on Bill Gates. I can't come up with any other rational explanation. No one but Ballmer could have survived this ten year period. He's done nothing but lose market share, lose stock price momentum, and he missed the mobile revolution. He missed the mobile revolution. I'll say it one more time...he missed the mobile revolution. Do I even need to mention the Microsoft retail stores? No I don't.

For a moment during Monday's top secret announcement I was hoping that Microsoft would have a little pride and show off some unique innovation of its own. Instead all we got was the same old Microsoft. What does it mean? It means that Apple stock will continue onward and upward to new off-the-charts highs as they provide a tech crazed world with an iPad mini, iPhone 5, and eventually a Mac TV. The Surface is dead on arrival.

Source: Top 10 Reasons Microsoft Surface Is DOA