Three Points to Define a Surface
Douglas is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
In geometry, while two points can define a line, it requires three to define a plane or a surface. After the launch of the new Microsoft ) Surface, there are three critical points which are needed to fully define the scope of the new device’s success. The inclination for most critics is to apply the same standards and metrics that have been used in recent Apple ) launches as legitimate measures of this rollout. While Apple and the iPad have undoubtedly set the standard on consumer electronics, the potential for creative destruction represented by the Surface – thank you, Joseph Schumpeter – demands that the correct questions get asked.
Point One: Hype and Initial Sales
As many analysts and journalists are immediately pointing out, a visit to Microsoft’s Times Square store on launch day did not reveal the type of pandemonium commonly associated with Apple launches. Company officials have stated that they are targeting a gradual build rather than a meteoric explosion, but, in fairness, that may just be good PR. While this launch is critical for Microsoft, the company has neither developed Apple’s celebrity appeal, nor is it unveiling an obviously new type of device – at least not on the surface.
The Surface has the potential to be the first legitimate hybrid between a laptop and a tablet, but for that reason it is a little complicated. Getting consumers to change their synapse pathways is not a simple proposition. The product is a laptop that doesn’t completely function as a Windows laptop does – we have to wait for the Surface Pro – and yet, one of its top selling points is that it is a tablet that can run Microsoft Office applications. Approaching the Surface as just a laptop is potentially disappointing, yet Microsoft does not want it thought of as a pure tablet. Patience as the proper perspective develops is critical.
Point Two: App Offerings
While any argument that Microsoft is currently in a position to offer either Apple or Google ) any real competition in terms of app availability is naïve, Google was once in the same position relative to Apple. Critics said Google had no chance of ever competing with Apple, and yet Android has become the most popular smartphone platform in use today. Whether Microsoft will even attempt to compete is another question altogether.
Microsoft’s competitive advantage is that its PC applications are the most relied upon business applications in use globally. Google has been making a serious challenge with Google Apps, but Microsoft has a significant legacy advantage. The ability of business professionals to integrate existing documents should not be underestimated.
Point Three: Pricing
One of the initial criticisms that the Surface has received is that it is at the high end of the price spectrum, especially when compared to Google and Amazon ) options like the Kindle Fire HD. This is where the functionality of the Surface must become an integral part of the conversation. While the $600 starting price is high in the sense of pure tablet costs, relative to what the device may replace, it is more than fair. If you are able to now buy a Surface instead of both a tablet and a laptop, there are significant cost savings that can be achieved with a Surface as a substitute for both. Members of the Apple faithful will point out that many companies have already integrated iPads into their arsenal, but the Surface should go a step further and may redefine the conversation; Google and Amazon tablets have not really penetrated the business world sufficiently to be considered in this context.
The Three Points Defined
I am not looking to spark the ire of those Apple believers who will undoubtedly respond in force, but the Surface is a unique device that should be viewed as such. Using the same metrics and considerations as apply to the iPad, or other tablets, loses the point of what Microsoft is attempting. Most users who have interacted with the Surface are impressed, but the true test will be how the device performs over the initial few months. The trade takeaway is that Microsoft has become a real part of the conversation and should be included in your core portfolio.
Mr. Ehrman has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple, Amazon.com, Google, and Microsoft. Motley Fool newsletter services recommend Apple, Amazon.com, Google, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.
