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Microsoft doubles down on 2-in-1, enterprise-first Surface strategy

Redmond wakes up and smells the coffee to focus on business and notebooks, ignores consumers and gives short shrift to tablets

May 20, 2014 02:39 PM ET

Computerworld - Microsoft today doubled down on the strategy to push its in-house Surface as a two-in-one device that does duty as laptop or tablet, serving not consumers but business customers.

Rather than dive into the consumer market with a smaller-screen Surface, as most expected, Microsoft instead rolled out the Surface Pro 3, a third-generation convertible, or two-in-one, that starts as a tablet, but with the addition of an optional keyboard, ends as a lightweight notebook.

That strategy, which was muddied when the company first launched the Surface line in 2012 -- Microsoft actually debuted its pure-tablet play, the Surface RT, first -- has been clarified. Today, Microsoft aimed the Surface squarely -- almost exclusively -- at commercial customers, those in business or heavily tilted toward productivity.

The laptop mode of the Surface Pro 3 got the bulk of the attention from Microsoft's Panos Panay, the executive who leads the Surface team. "You've been told to buy a tablet, but you know you need a laptop," said Panay. "This is the tablet that can replace your laptop."

Analysts didn't miss the shift, which ignored the consumer market -- Microsoft didn't breathe the words "Windows RT" -- and stressed the commercial.

"I saw today as a realization that they can't be a head-to-head competitor with all the tablets out there," said Jack Gold, principal analyst at J. Gold Associates. "In that sense, they're focusing on a winning strategy. Who is my installed base, how do I satisfy that installed base, and how do I do that in a way that doesn't conflict with my OEM partners?"

That left Microsoft fixated on the enterprise, the company's specialty. "Instead, it has concentrated on its key strength: business users who look at tablets as extensions and or replacements for full laptop capability," said Gold.

The Surface Pro 3, as Microsoft dubbed the new 12-in. tablets, will start at $799 for a model with 64GB of storage space, 4GB of system RAM, and an Intel Core i3 processor, then slide up the price scale through $999, $1,299 and $1,549 before hitting $1,949, with the higher-priced models boasting more storage, more RAM and faster processors.

But to be what Microsoft says the Surface Pro 3 is, customers will have to fork over another $130 for a keyboard cover, which still is not packaged with the tablet.

"I think they're finessing what they've done before, evolving their tablet strategy," Carolina Milanesi, chief of research at Kantar WorldPanel Comtech, said when asked for her take on today's unveiling. "But it also goes back to where they can make money. Surface was never intended to be a mass market device."

True. By skewing toward corporate, Microsoft avoids the price war in the consumer tablet market, and according to the company, also avoids Apple's iPad, which it dismissed as a productivity platform in several subtle -- and some not so subtle -- ways.

Surface Pro 3
Microsoft today pitched the new Surface Pro 3 as a notebook that just happens to be a tablet. But customers still have to fork over more for the keyboard, pricing the least-expensive model at $929. (Image: Microsoft.)


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