Rambling 'Round
Zzzz…Microsoft 'Surface' tablet for the U.S. market is a yawn
Junko Yoshida
6/20/2012 10:13 AM EDT
PARIS – As I see a lot of ink spilt in the media over Microsoft’s upcoming Windows 8 (and/or Windows RT) tablet dubbed “Surface,” I can’t help but wonder where on earth Microsoft plans to sell this product.
If Microsoft truly wants to change the game on the global tablet scene, the software giant should aim it squarely at emerging markets – China, greater Asia, India, Brazil and Africa. Further, Microsoft should price the new tablet suicidally cheap, rather than making it “cost competitive” with tablets already on the market.
After all, this is Microsoft’s own hardware (likely to be manufactured by Foxconn) built on its own software (Microsoft doesn’t need pay itself royalties).
When market intelligence tells us Apple is making more than a 50-percent profit on its iPad, surely Microsoft has room to shave its margin on the Surface tablet.
I have every confidence that Microsoft can make its hardware cost-effectively. It’s not as if the company is a stranger to the hardware business. For 10 years now, it’s been offering its own game consoles, X-Box, produced by Foxconn.
The difference, though, is that Microsoft didn’t invent X-Box to make money in the hardware business. The end game was to develop great video game software as the real cash cow.
So, what’s in it for Microsoft, with these Surface tablets? What sort of business model does Microsoft have that will create a revenue stream beyond hardware sales?
The fact that Microsoft didn’t even let Nokia – the only partner for Microsoft’s Windows 8 in the mobile market – design the first Windows 8 tablet model makes me believe Microsoft is taking the tablet war personally. The software giant must see its reputation at risk. The last perception Microsoft wants is that it’s a company that’s lost its innovation mojo. Worse yet would be a rap as just a me-too company, knocking off Apple’s iPad or Samsung’s Galaxy tablets.
But let’s face it. Microsoft is already late to the party. The Surface tablet is a me-too product.
The real target for Microsoft’s tablets shouldn’t be Apple’s iPad, but Android-based tablets. While Android tablets have yet to dent he U.S. market, Android is not going away any time soon especially in the global market. Instead, it’s invading the world with a mission and focus.
Look no further than the “One Tablet Per Child” initiative in Thailand. Under a deal originally struck between two governments (Thailand and China), Shenzhen Scope Scientific Development Co. in China won a contract to supply 900,000 tablet computers for first graders in government schools in Thailand.
The government in Thailand selected Shenzhen Scope which promised to deliver Android 4.0-based tablets under a unit cost of THB 2,482 (US$81), excluding transportation expenses. Other Chinese vendors who bid for the One Tablet Per Child project included: TCL Cooperation ($89), Haier Information Technology (Shenzhen) Co at $105, and Huawei Technologies Co. which proposed a tablet at $135.
The project, originally proposed as an election campaign promise (always a bad idea) from the Pheu Thai party last summer, is already fraught with problems and under fire – including its selection of a tablet supplier. However, many observers believe this is just one of the hiccups along the way.
Nonetheless, what awaits Microsoft’s Surface tablets is a brave new world in the emerging markets. Without properly addressing the real need for such products on the global market, Microsoft may be missing a much bigger opportunity. Going after iPad in the developed nations is almost a yawn. If indeed the Surface tablet can offer a far better user experience than that of Android, Microsoft has to go after Android tablets – at a great price – in the geography where Android has already taken over.
Related stories:
-Et tu, Ballmer, or M’soft’s stab at tablets
-Microsoft picks both ARM and Intel for tablet
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Bert22306
6/20/2012 3:17 PM EDT
Well, from my perspective, a "tablet" that is in fact a very thin and very light PC, with a real keyboard, has something to offer that the iPad cannot. I'd rather go with one of those than with a laptop, perhaps.
I agree that this set of feartures should make it even more attractive to developing world markets. For example, any idea of "a tablet per child" makes a whole lot more sense with a really useful tablet, than with a tablet whose primary role is information consumption.
Plus, I really much prefer the 16:9 screen to the old style 4:3. But that's mainly a quibble.
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BobsView
6/20/2012 3:34 PM EDT
Frankly, tablets are a big yawn for me. What can you do on a tablet that you can't do on a laptop? And there is lots that you can do on a laptop you cannot do on a tablet. Sure it's smaller and lighter, but tha lack of a keyboard, hard drive, and USB port (on the iPad) is a big problem for me. Until they get more power in tablets, a lot more power, count me out for one of those.
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Frank Eory
6/20/2012 3:50 PM EDT
I had many of the same thoughts before I got an iPad. But don't underestimate the significance of smaller and lighter.
I can and do take my iPad just about anywhere, including places I would never dream of taking a laptop.
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junko.yoshida
6/21/2012 4:08 AM EDT
I agree. Believe me or not, I now take my iPad along with my PC on the road. Why? Strangely enough (and I had never thought of this before I bought iPad), when I am using iPad, that's simply for my own personal pleasure. I don't do my work. I read magazines, websites, speak to my friends and family on skype, etc., but I don't feel compelled to write a story and post it on our website. iPad gives me a personal space -- and that's a relief to me.
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Paul.Tamura
6/21/2012 7:50 PM EDT
I bought an iPad and found that it's actually a toy, not a laptop replacement. The Surface seems to compete as much with ultrabooks as with tablets.
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xorbit
6/20/2012 3:39 PM EDT
Microsoft lost its mojo a long time ago. The reason they dominate the PC market is legacy, not great products. There is no legacy to help them in the phone and tablet markets, so their paltry market share there is a better reflection of the quality of their software.
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C VanDorne
6/20/2012 4:30 PM EDT
I will never be accused of being a Microsoft cheerleader but I disagree that they shouldn't bother competing with the iPAD. We are all competing with the iPAD, every market segment. We have no choice and that especially goes for Microsoft. And if there is one company on the face of the earth that, coupled with that competitive mandate, has the resources, market recognition and position to effectively compete with Apple, it's them.
That the tablet is "me-too" I ask this: what can be done in a tablet format to differentiate anyone? Apple invented it and it's basically a computing LCD slab that doubles as a Li-Ion storage device. About all that can be done is adding features that are annoyingly absent with the other guy. It look like they’ve done that.
Plus as a hardware guy I just LOVE that the world’s biggest SOFTWARE COMPANY had to turn to my contemporaries - HARDWARE ENGINEERS - to save their skin. Bit-heads beware! Heh, heh.
Steve jobs new this. He knew that ones and zeros don't just dance around the ether on their own. They need a platform and if one controls the hardware, one controls the ones and zeros. It took him 40 years to prove it and by virtue of this action Microsoft is publically admitting that he was right. It's a good day for hardware engineers everywhere.
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junko.yoshida
6/21/2012 4:12 AM EDT
OK. I too love the irony that the world's largest software company is turning to hardware engineers to save its skin. Well put.
But nobody really answered my question.
So, what’s in it for Microsoft, with these Surface tablets? What sort of business model does Microsoft have that will create a revenue stream beyond hardware sales?
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Frank Eory
6/21/2012 10:45 AM EDT
Maybe MS views this as a necessary play to continue making big profits in software, with some modest profits in hardware as well.
MS's desktop business model was expensive software on cheap hardware. For notebooks, it's expensive software on moderately priced hardware.
But as tablets continue to take market share from desktops and notebooks, for MS to not be part of that is a disaster for software profits.
So why not just rely on the Dells and HPs and Acers of the world to just provide the hardware platform? Maybe because MS can provide a more competitive complete solution -- it doesn't pay itself royalties. Or maybe it's a case of wanting to get more of its high-value software (like MS Office) pre-installed on that platform, which the OEMs typically don't do. They could get a higher price for a Surface that comes pre-loaded with the full Office suite.
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junko.yoshida
6/21/2012 10:55 AM EDT
Ok. You and Bolaji convinced me that this is a defensive play on the part of Microsoft. So, the killer app for Surface is pre-installed Microsoft Office.
I agree. That makes sense. Thank you.
But that's exactly why I go Zzzz.... why would any consumer get excited about pre-installed Microsoft office in his tablet?!!!
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Frank Eory
6/21/2012 11:10 AM EDT
Think about your earlier comment, how you only use your iPad for personal pleasure, not for work.
Now imagine you have a tablet that can replace your notebook in every way -- for personal as well as for work use.
I think that's the play, the "killer app" for MS -- on your next notebook upgrade cycle, instead of another notebook, you buy a Surface, and it mostly runs on the MS software you have always used for work.
Now instead of getting on that plane with a MS-powered notebook for business and an iPad for pleasure, you ask yourself, "do I really need both of these?" and you leave the iPad behind.
I think that's the hope and the dream for MS. One tablet for all needs.
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Robotics Developer
6/21/2012 4:44 PM EDT
I would think that the "killer app" is not the tablet but the combination of the tablet replacing the laptop AND the iPad through a combination of localized power/storage and cloud computing for bigger jobs. Just a thought perhaps MS is "looking to the clouds".
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Bert22306
6/21/2012 5:31 PM EDT
Conversely, Yunko, a tablet that *is* actually a PC is the only tablet I'd be interested in. And more to the point perhaps, it would stop my chronic complaining about the (previously) ridiculous term, "post-PC era."
In the very first repsonse to this story, I'd suggested this is a tablet that is actually a PC. But perhaps stating this as "it supports Office" was a more descriptive way of putting it. Either way, a tablet that finally DOES have a prayer of replacing a PC, at least a laptop PC. Good deal!
You can do all the readings of headlines and other such, like a tablet, and a whole lot more.
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D-FlipFlop
6/22/2012 9:54 AM EDT
I agree with Frank, Robotics, and Bert. If they can make the Surface help do some productive work then that will be a big plus.
For me, I switched from iPad to Android tablet just because of it's boring UI and enclosed ecosystem. If Surface can beat Android tablets at that and deliver a "productive" tablet with a well backed apps ecosystem, I would buy it in a heart beat!
All of the above would still not matter for the mindless sheep who just flock to Apple devices based on what's cool these days.
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mcjw
6/26/2012 4:45 AM EDT
The business model is based on the 30% cut (minus incentives for the most popular apps) in app store and media sales, much like CD, MD, VHS royalties. Except now the platform derives not just content, but more broadly apps and advertisement.
Imagine Sony pushing the MiniDisc format, but delegating the Walkman hardware to Goldstar.
Even if Microsoft has a higher BOM and lower economies of scale than others, I see their effort as an marquee presence (among other implications) and a free case study for all other OEMs. Think of it as the spearhead, but not the whole spear. Once the reputation is established and the ecosystem populated with hardware at multiple price-points, low-end buyers can settle for cut rate whitebox designs from Axxs and Axxr, while still benefiting Microsoft with apps, ads, and content purchases.
So it's a bit like the Xbox/Inkjet pricing model, or VHS/DVD/Bluray.
Lastly, most commentators and Junko talk specifically about the ARM version, while the really interesting device is the Pro.
iOS and Windows RT has more limitations to drive you into the ecosystem (at least Microsoft has the decency to include memory card expansion, unlike Apple). Microsoft's problem is that Windows is too versatile: you can Adblock in Firefox, you can install open source software, you can use all 25GB of Skydrive, and you can pretty much do anything and not pay a cent to Microsoft (outside the OS license). So that will be the one I buy. With a LCD monitor, hard drive, power adapter, and keyboard mouse at home and work, I can take all the computing power I need anywhere, in a device 220 grams more than the iPad, usable in any position (modes), and perhaps "for recreation" buy some apps under RT, too.
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BobsView
6/20/2012 4:58 PM EDT
I agree, smaller and lighter can indeed be a compelling reason to buy a tablet. Many times, in planes, trains, and automobiles, and even when waiting in long lines, I am tempted to use my laptop but don't -- because it's too much trouble to set up. A tablet is definitely better for times like that. Perhaps Microsoft's new entry will make tablets even more compelling and they will become an irresistible purchase for those of us that are holding out.
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RTewell
6/20/2012 6:39 PM EDT
Sign me up!!! I can't wait to get my hands on one of these. Maybe it is the era in which I grew up developing software...but developing using MS tools has for me been FAR easier than the Linux tools and the Mac tools (both of which I own and use regularly).
Apple has to TELL me that I will love XCode on their web site. "Tools you'll love to use." Ummm...not so much.
As a developer I think the possibilities are crazy with Surface. The graphics are going to be great...the underlying OS will be pretty rock solid...all in all from a DEVELOPER standpoint I can't wait.
As for users...if MS can get a HUGE number of quality apps on this thing, it might just work out. A LOT of people were naysayers about the XBOX when MS launched it...and it is arguably now the premier gaming platform (don't give me any guff about PS3 - I own both and play on both so I know from whence I speak).
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ibm221
6/20/2012 8:42 PM EDT
The sources also estimated the end-market price of the Windows 8 Pro-based Surface tablet PC with Ivy Bridge processor to be at least above US$799, while the Windows RT-based model, featuring Nvidia's Tegra 3, will be priced above US$599.
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hm
6/20/2012 9:06 PM EDT
This time, Microsoft will have difficult time for Surface. There is no legacy requirement to purchase Surface and Apple, Samsung will give very good alternate to customer. Price mentioned above is also quite high.
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BobsView
6/21/2012 8:17 AM EDT
I am really amazed that Microsoft has entered the tablet marketplace and risk alienating itself from the established players like Samsung.
But to answer Junko's question, maybe Microsoft believes the current players are not getting it right. Maybe they feel their software is not performing to full potential because the current players have designed too many compromises into the hardware. Thus the problems with security, locking up, etc.
I have always felt MS should follow the Apple model for high-end equipment and design it themselves so they can optimize the software for a particular architecture, something they cannot do when the software has to work on a dozen different platforms and, at the same time, be backwards compatible.
So maybe that is their motivation, to finally "get it right" and end the endless barrage of complaints.
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bolaji.ojo
6/21/2012 9:42 AM EDT
Junko, Microsoft is primarily a software vendor, notwithstanding its XBox and keyboards, etc. In order for the company to continue to dominate in the software arena it has to enter the tablet -- as in Microsoft Inside. Many people use tablets only for surfing the web but it can also be used for various applications, including Microsoft Office.
That's why Microsoft is going into tablets. It needs to sell its Microsoft Office and other applications. So far, the tablet developers aren't incorporating Office into their devices. Microsoft has to pave its own way. That's the only way Microsoft won't have its products sidelined.
Microsoft must be in the hardware market to safeguard its software business.
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junko.yoshida
6/21/2012 10:22 AM EDT
Hmmm, Microsoft office on my tablet. OK. Since Apple did such a great job brainwashing us that media tablets are for medai consumption only, seriously, I hadn't given much thoughts aobut Microsoft office on tablets...Would I like it? Personally, no. (Because I really don't want to work when I am using my iPad) But would this make a business sense for Microsoft? Probably yes.
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bolaji.ojo
6/21/2012 9:43 AM EDT
One more point. The best place to market the Surface is in North America. That's where consumers can afford to load office in tablets.
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D-FlipFlop
6/22/2012 1:46 PM EDT
The entire article rests on the assumption that tablet market is saturated and that Microsoft won't be able to take away any share from Apple. It's a steep challenge, but not an impossible one. May be the mind barrier is the biggest challenge for Microsoft here. They need to do good job at brain washing people!
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bolaji.ojo
6/22/2012 4:31 PM EDT
Getting the buyer to believe Microsoft Surface is a viable alternative to the iPad is key to successfully marketing the product.
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IDontUseTheForumSoWhyAmIForcedToMakeANickname
6/22/2012 4:51 PM EDT
A number of you managed to "see" and "get it". The biggest thing holding back tablets is the lack of an easy to use external keyboard. Pointing is done via your finger and I think we can all agree that this is a perfect replacement for a mouse. The tablet was never designed with typing long documents in mind. It is more akin to push technology where content is delivered to you but never stored or input.
The ipad was merely a large, phone free, version of the iphone. Microsoft started from the other direction and created tablet from a laptop. I think they realized that not everyone buys tablets to watch movies and chat online. Some people actually wanted it to do something productive ... like make a document.
Based on Junko's comments, the ipad is just a relaxing, do-nothing sort of device that is there to entertain you (ok, some liberties taken). But what is the percieved value from everyone else with one? Likely the same. If MS markets this correctly, they should appeal to power users and business types ... The simpliest way to sum it up is apple has positioned itself to appeal to the painter, poet and musician. MS is now going after the accountant, manager and engineer.
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arturi
6/24/2012 10:32 AM EDT
At least Microsoft can now control the full user experience, just as Apple. With the Surface as a stable testbench for windows 8 I expect the user experience to be as good as in the Ipad. No excuses for blue screens of death anymore.
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arturi
6/24/2012 10:34 AM EDT
At least Microsoft can now control the full user experience, just as Apple. With the Surface as a stable testbench for windows 8 I expect the user experience to be as good as in the Ipad. No excuses for blue screens of death anymore.
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Charles.Desassure
6/24/2012 9:03 PM EDT
Well, I plan to purchase an Apple iPad at the end of the month. Microsoft is doing what other companies in the tablet field are doing...Playing the field to see what will work and what will not. We call it research, trust me; it will not impact Microsoft financial line.
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Traces
6/26/2012 8:04 AM EDT
Why is M'soft making hardware? Ignoring the obvious issues of margins and Windows market share, have you seen what the PC hardware vendors are making? Seriously, the basic idea of user experience being important is lost on these people; they seem to think they can continue to knock together ill-fitting crapware and it'll sell.
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ReneCardenas
6/26/2012 2:34 PM EDT
So MS better watch its back, since Google is not too far behind to cater to the data generators.
I can wait to see MS Office vs. Open Source battle for users...
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Duane Benson
6/27/2012 1:39 PM EDT
I need a fraction of the power of my laptop when I'm on the road. But, I need that fraction to work well and be easy to use. A full feature set where every feature has a fraction of the utility of a full-machine will not cut it. A soft keyboard doesn't meet the easy to use part. As it is, I take my laptop, but it's heavy and too big to use on a plane even though it's not a particularly big laptop.
I wouldn't expect a tablet to replace my laptop (or home desktop) for all purposes, but as a tool to watch movies or write with, it would be much more convenient than a full-size machine.
I really don't expect any significant changes in the tablet landscape with Microsoft in it. Maybe they've put more utility into it than the other players have, but I doubt it. And, I'm sorry, but Windows8 is just ugly, in my opinion. I've used the preview version and the only conclusion I can draw is that not only am I not likely to find it easy enough to meet my useability requirements, but it's more likely to send me after an Android tablet or iPad if I finally decide to buy a tablet.
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