Microsoft resurrects the Surface with third try

Pitches new tablet-notebook as a smaller, cheaper alternative to the Surface Pro 3

Surface 3

Surface 3

Credit: Microsoft

Microsoft today announced the Surface 3, a new entry in its not-a-tablet-it's-a-notebook line, pitching the smaller device as a "more compact and efficient package" than the Surface Pro 3.

The Redmond, Wash. company today began taking pre-orders for the Surface 3; the Wi-Fi-only models will go on sale May 5. Devices that include built-in connectivity to mobile data networks will ship in late June.

The Surface 3 -- successor to the Surface 2, before that the doomed Surface RT -- is also priced lower than its larger Pro sibling: $499 to start for a model with 64GB of on-board storage space and 2GB of RAM, $599 for the configuration that doubles both of those numbers. The $499 was the same price as the low-end 32GB Surface RT in October 2012.

Microsoft's Surface Pro 3 begins at $799, and climbs to a top-tier price of $1,949.

Those prices, however, are sans a $130 keyboard, mandatory to make any Surface laptop-like. "It's a mistake not to bundle a keyboard," said Bob O'Donnell, chief analyst at Technalysis Research, last week in an interview. He doubled down on that today, again criticizing Microsoft for selling the keyboard separately.

The low-end Surface 3 with an accompanying Surface 3 Type Cover runs $629. By comparison, a 64GB iPad with a third-party keyboard costs about $700.

Microsoft touted the new device as a smaller, cheaper alternative to the Surface Pro 3, saying it's suitable for "less intense" tasks like browsing, casual games and working in Office.

"There's clearly interest in 2-in-1s in general, and a less expensive 2-in-1 than the Surface Pro 3," said O'Donnell today, repeating what he said last week. "The Pro is at a price point above what some people want to spend."

Although others last week were bearish on the idea of a non-Pro addition, O'Donnell was more upbeat. He remained that today. "I think [the Surface 3] helps Microsoft, it certainly doesn't hurt," O'Donnell said.

The Surface has had a troubled past, bleeding money almost from the start. Within nine months of Surface RT's 2012 release, Microsoft took a $900 million write-off to account for a glut of tablets it had to heavily discount. And even though Microsoft aggressively promoted Windows RT -- the Windows 8 offshoot that could not run traditional Windows applications -- it was adopted by few OEMs (original equipment manufacturers) and then quickly dropped by those who did.

Microsoft killed the Surface 2 earlier this year, and said it would not offer a Windows 10 upgrade path to either that or the original Surface RT.

Unlike earlier incarnations, the third Surface runs Windows 8.1 and so can handle legacy Windows programs. That was one of the biggest beefs about the Surface RT and its 2013 follow-up, the Surface 2. Surface 3 buyers will be able to upgrade to Windows 10 free of charge when Microsoft releases the new OS this summer.

The Surface 3 features a 10.8-inch screen with a 1920x1280-pixel resolution -- the Pro 3 boasts a 12-in. display with 2160x1440-pixel resolution -- relies on an Intel quad-core Atom processor, and weighs in at 1.4 lbs. (The Surface Pro 3 tips the scales at 1.8 lbs.) The Surface 3 also comes with a one-year subscription to Office 365 Personal, which lists for $70.

Microsoft hoped to sell the new tablet to a wide variety of customers, including consumers, students and corporations. "Not every business needs the power of Surface Pro 3, or it's not needed in every part of the business," said Panos Panay, the top executive on the Surface team, in a blog post today. "For those organizations, Surface 3 will be a strong choice."

"I think it can cross boundaries," agreed O'Donnell. "I think there are businesses that are also price and cost sensitive. They may be interested in something less expensive than the Surface Pro 3."

Surface 3 Microsoft

The Surface 3 starts at $499, 38% less than the low-end Surface Pro 3 tablet-slash-notebook. A $130 keyboard is extra. 

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