The Surface Pro Launch and its Prospects

Mohsin is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

Microsoft (NASDAQ: MSFT) launched its latest hardware, the Surface Pro tablet, last weekend. As I mentioned in my previous article, the initial reviews have not been good. The pundits have criticized it for being heavier and less power efficient compared to Google’s (NASDAQ: GOOG) Nexus and Apple’s (NASDAQ: AAPL) iPad. The reviews were in stark comparison to the previous version, the Surface RT. One of the major reason reviews have not been good is that all the good qualities had already received appreciation during the Surface RT launch, putting more spotlight on negative aspects of the new device.

Despite the bad reviews, Surface Pro has been sold out at most locations. The launch of the Surface Pro was different than that of the RT model as the software giant didn’t take preorders this time around. According to reports, low availability has been due to a combination of low supply and high demand. Microsoft didn’t take preorders for either the 64GB or the 128GB versions of the Surface Pro, and reports indicate that the availability in stores was also limited. Some reports even claimed that stores received as few as only a single 128GB tablet.

The launch seemed to be doomed from the start due to a lackluster critic reviews and the blizzard hitting the East Coast.  Panos Panay was supposed to preside over a launch event at the Manhattan Best Buy to celebrate this launch, but the company was forced to call off the event due to bad weather.  In a press release the company said:

“Surface Pro launch activities in NYC have been canceled due to weather; our best wishes for everyone impacted by the blizzard.”

Shortfalls

Despite these shortfalls there is still excitement about the Surface Pro. Unlike its predecessor the Surface RT, the Pro will be able to play all legacy Windows Applications. To enable this ability the tablet has been loaded with an Intel Dual-core 1.7 GHz Core i5-3317U processor and 4GB DRR3 memory. While this increased power allows it to run heavy Windows applications, it also creates a strain on the battery life and weight. This is why the tablet is 50% heavier than Google's Nexus 10 and approximately 40% heavier than the 3rd generation Apple's iPad. The real problem is the very low battery life of approximately 3-4 hours as compared to 8-10 hours on the Nexus and iPad. This automatically gives the devices by Apple and Google an edge over the Surface. The Nexus also has an edge by having the world's largest OS, the Android, while the iPad is already the most bought tablet in the world.

Homerun

While the shortfalls are pretty obvious in terms of smaller battery life and more weight, a single quality makes it far more attractive to users. The Surface Pro will have the ability to run legacy Windows applications, something neither the Surface RT, Nexus, nor the iPad can accomplish. While most Mac users will disqualify it as a non-quality, it is a fact that more than 95% of all PC users run Windows. Although the faster and lighter Android and iOS tablets are ideal for fun and play, the majority of consumers still rely on Windows to get serious work done. The Surface Pro will be the first beautiful and elegant device available to this large target market that has been stuck with clunky and ugly devices for quite a long time. The price points are also more attractive as compared to the iPad, and while its more expensive than Google's, it has far more utility due to larger size and ability to be used as a PC alternative.

Market Share

According to data by IDC, Apple's iPad is still the leader in the tablet market. The iPad still enjoys a mammoth market share of 43%, which is a slight decline from its previous share of 46%. The dominance of Apple in this arena is evident from the fact that the second largest tablet maker, Samsung, is only at 15% of the market share. Asus, which makes the Nexus, has an impressive 5.8% of the total market share. The Surface RT has still not made a significant impact, and total shipments for the device were a meager 900,000.

Bottom-line

Therefore I believe Surface Pro is targeting the people who do not just ‘want’ a new tablet but actually need one. The device has the ability to compete with both laptops and fun-tablets, with the ability of providing the functionality of both. Whether it was intentional or not, customers chasing after an elusive and ‘sold-out’ product will always remain a good marketing strategy. I believe the Surface is start of something new, exciting, and beautiful. It is still a work in progress and has the ability to help Microsoft achieve some of its former glory. Apple's investors should be worried because Surface will give the iPad and Nexus a run for their money due to better utility.


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