Microsoft Surface Pro highlights flawed two-for-one strategy

Microsoft Surface Pro highlights flawed two-for-one strategy

Symbol of one-Windows-two-devices plan to break out of diminishing PC business

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Microsoft's upcoming Surface Pro tablet sums up the company's seeming strategy with Windows 8: That business users can do with one device what they currently accomplish with two.

"The Surface Pro is designed for people who want a premium, thin and light notebook experience but secondarily want a tablet experience," said Patrick Moorhead, principal analyst with Moor Insights & Strategy.


"The Surface Pro is a symbol of Microsoft's vision with Windows 8, a reference device if you will," echoed analyst Sameer Singh, of Tech-Thoughts.

The two-in-one strategy runs through Microsoft Windows 8, the operating system whose most distinguishing feature is its split user interface (UI) personality: a traditional Windows-style mode and a touch-first, tablet-centric UI.

It's no accident that the Surface Pro, unlike its less-expensive sibling, the Surface RT, runs Windows 8 rather than the Windows RT spin-off, and relies on an Intel processor, not one based on the ARM architecture that powers virtually all tablets. Where the Surface RT is limited to tablet-style apps, the Surface Pro runs not only those, but also the enormous library of Windows applications - the same that run, for example, in Windows 7.

Essentially, Microsoft is arguing that customers can have their cake and eat it, too, with a tablet and a PC, in one device, powered by a single operating system. The strategy is at odds with Microsoft's biggest OS rival, Apple, which maintains two different operating systems for its tablets and personal computers.

But while Microsoft has called its approach "no compromise," the strategy is, in fact, rife with compromise. The Surface Pro - officially, the name of the tablet is "Surface with Windows 8 Pro" - is neither a tablet nor an ultrabook, but bits of both.

"The Pro is an ultrabook, only with more severe design constraints," said Ezra Gottheil of Technology Business Research, who covers both Apple-made and Windows-powered mobile devices, referring to the Pro's thin form factor and light weight.

Customers who simply want a notebook/ultrabook replacement are not the Surface Pro's target. Those users will keep what they have or, when they upgrade, buy another lightweight laptop like Apple's MacBook Air or any of a growing number of Windows-based options. Instead, Microsoft is betting there's a large number of business computer users who need - or at least want - a two-in-one device that serves adequately as both notebook and tablet.

The dual roles mean that the Surface Pro is, by nature, expensive. "It's a premium product at a premium price," noted Gottheil.

Those prices, which Microsoft revealed last week, speak to the all-in-one strategy as well, because they give the Surface Pro little chance of competing with pure tablets.

Microsoft has pegged US prices of the Surface Pro at $899 for a model with 64GB of flash RAM-based storage space, and $999 for a unit with 128GB. The prices do not include a keyboard-cum-cover, which Microsoft sells at $120 and $130, with the lower-priced version assigned to the membrane-style Touch Cover and the higher to the more traditional moving-keystroke Type Cover.

With a keyboard - and few buyers will eschew one - the Surface Pro prices out at between $1,019 and $1,129. That's not tablet territory.

"Microsoft won't drive a lot of volume with Surface Pro compared to the iPad and 7-in Android tablets, but will profitably sell units more in line with ultrabook levels," said Moorhead.

Microsoft has never disguised the fact that the Surface Pro would be a tablet with ultrabook characteristics, or sell at a price commensurate with ultrabooks'. In June, when the company surprised the industry, including its OEM partners, by introducing its own hardware, it said that the Surface Pro would sell for about the same as Intel-powered ultrabooks, whose prices have hovered at $1,000 and beyond.

The problem for Microsoft is that the outlook for ultrabooks, which the Surface Pro emulates, is dim. Windows ultrabook sales have been disappointing this year, and show little sign of improving sans dramatic price cuts. Such a move, failing similar discounts by Microsoft, would leave the Surface Pro high (in price) and dry.

In October, IHS iSuppli downgraded its estimate of 2012's ultrabook sales, cutting its projections by more than half from 22 million to 10.3 million, citing too-high prices. iSuppli argued that sales won't take off until prices fall toward the $600 bar, perhaps in 2013.

"Surface Pro is really a PC, and potential buyers will also be considering notebooks and ultrabooks," noted Moorhead.

Even without the current sales issues with ultrabooks, Microsoft's strategy of putting two devices into a single chassis may have little chance. By trying to make Windows 8 all things to all people - and make it fit for use in a wider range of devices - Microsoft has set itself a bar that will be very tough to jump considering the current state of computing.

"The real question is, 'What is the point of a two-in-one device or touchscreen PC?'" said Singh. "Legacy applications are not touch optimised, so using them on a Surface Pro, even with a Touch/Type Cover, is a sub-optimal experience compared to a traditional laptop."

And while the app count in the Windows Store - the sole source of Windows 8 and Windows RT tile-style software - has climbed dramatically, Microsoft is still working with a handicap.

"Windows 8 doesn't really offer a vibrant app ecosystem, at least for now, that takes advantage of touchscreen capabilities," argued Singh. "So the touchscreen is basically an additional expense with little to no practical use for x86-based devices."

That means that the Surface Pro must succeed as an ultrabook first and foremost, agreed analysts. "If the Surface doesn't sell as a PC that can manifest itself as a tablet, then it's nowhere," said Gottheil.

In fact, few experts give the Surface Pro much of a chance of selling in any appreciable number. By extension, that means there's little chance for Microsoft to break out of the flagging PC business to a wider product constituency of tablets, or to create a viable two-in-one category.

"At the end of the day, Microsoft's problems with the Surface and Windows 8 have been caused by a flawed mobile strategy," asserted Singh. "Microsoft sees the tablet as an extension of the PC, but doesn't seem to understand the fact that the gap between touch-optimised and non-touch-optimised applications renders that logic invalid. Microsoft is attempting to position the Surface Pro as a laptop/PC replacement but unfortunately, replacing a PC doesn't seem to be necessity anymore."

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Comments

  • Brian M Walker I also do not agree with this review You are looking at the next evolution of computing and is needed to perform the transition from Keyboard amp Mouse to the Touch Voice and Gesture future If Apple had done this people would just eat it up but because you and so many have already given up on MSFT and I guess thefeel they should just roll over and die You have lost sight of the fact that people are still running x86 apps that must be used daily These apps are business tools used to make companies money Money also savedby use ofEnterprises pricingthat will never been seen by Apple Enterprise get a manageablecost effectivedeviceEnd users get Touch and Legacy use of needed tools and access to Office suiteanywhere Developers have a great new ecosystem to push apps to a much larger audiencelet the peoplehave there cake and eat it tooIf it was an Apple youd eat I am sure of it
  • efigalaxie What the review fails to take into account is that applications going forward are likely to be touch optimized The people who do not need legacy support can go with RT I type this on an Asus Vivo Tab RT I find the little tablet to be superior to iPad for practical work I have an accessible file system The iPad has a per app file system in which a file is handed off app to app with each handoff resulting in a copy of the file I have had and used an iPad since they came out Awesome machine It would be more awesome if it wasnt intentionally hobbled by Apple The Surface Pro will run ALL the ARM stuff It will also run the legacy x86 stuff Also x86 stuff can be done that takes advantage of touch and is sold independent of the Microsoft app store I am frankly more interested in the Acer W700 than Microsofts own Surface Pro Acer W700p - core I5 4gb 128gb ssd usb3 micro sd mini hdmi out Comes with a home dock Bluetooth keyboard folio case mini hdmi to vga adapter Also has front and rear cameras 1150 So I can use this like a primary pc I have a large monitor at home external drives keyboard and mouse All plugged into the dock except the video I come home slide the tablet into the dock plug in the video cable Boomfull function home pc I leave home pull the tablet out of the dock use it as tablet only or with any Bluetooth keyboardremember one is included Much is made of the fact that at 1920x1080 things are tiny on a small screen There are ways to overcome that and they are not horribly difficult I am in the Badge ID Access Control Cctv EEMS IT umbrella field Many of the things used will never be released for iPad Android Mac or WinRT I LIKE the tablet experience but I have real work to do The surface pro or devices like it such as Acers W700p will allow me to do everything in a single core device I know this is true because I have a Fujitsu T900 with 8 pro The weight and the bezel around the screen that interferes with some swipe in gestures is the only thing that ruins that for me Otherwise I would already have my optimal device Core I7 8gb ram 120gb ssd dual digitizer screen 2nd battery in media bay for 8 hour battery life full port complement including usb3 in an express card adapter Yes adoption is going to be slow at first I was there for the transition from the command line to windows I was there for the Commodore Vic20 and 64 TRS80 variants Sinclair etc I first saw a gui OS overlay on the C64 As soon as I saw it I knew it was the future The first time I held an iPad I knew touch was the future The Xbox360 presages another transition straight into a user interface much like that shown in the movie Minority Report Full voice control integration is also on the way
  • Josh_Hart Unfortunately I dont agreeMS tablets will explode in the enterprise business users scene I expect to see high sales in certain business verticals in Q3 of 2013
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