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

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That's smart, said Gold, who pointed out that the Surface Pro 3's high prices -- stratospheric for the tablet market, high, too, for the Windows notebook market -- matter less to corporate customers, who are interested in how a device can boost productivity, not its base price.

Microsoft has had a profit problem since the Surface introduction, losing at least $1.2 billion in the last year alone. Focusing on business, where higher margins don't automatically preclude sales, was the right move.

"Microsoft can win, and it doesn't need to sell tens of millions of this device to be successful," argued Gold. "Rather, it can sell a modest number, perhaps two to three million, and still claim major success in validating the viability of the Windows tablet market."

Or at least the Windows two-in-one market.

Not everyone interpreted today's roll-out as a Microsoft pour-on-the-coals moment that simply sharpened its original strategy.

"I think this was a fundamental change in strategy," countered Patrick Moorhead, principal analyst at Moor Insights & Strategy. "Rather than being the ultimate productivity and creative consumption device, [the Surface Pro 3] is only a productivity device."

But even as he called Microsoft's original concept a failure, Moorhead joined the others in praising today's ploy. "Previously, [the Surfaces] weren't optimized for anybody, previously they tried to take on Apple with a frontal assault. That wasn't smart. Today they took a hard look in the mirror and asked 'What are we good at, what do people think we're good at. That was smart."

In general, the analysts were bullish on the restart.

"The enterprise is where they fit," Milanesi said of Microsoft. "And maybe it's best to think about [the Surface Pro 3] as where the next replacement cycle for PCs will go, and how something like it gives companies an upgrade path for their [current] laptops and PCs."

"I was surprised, actually," said Gold. "I was expecting to hear how they were trying to compete [in the tablet market], rather than how they were going to differentiate it within the notebook market. But notebooks are at the heart of the enterprise, so I'm reasonably bullish."

"What's clear is that Microsoft is in it for the long haul," Moorhead said, noting that the event began with CEO Satya Nadella on the small stage. "That was more than just getting the new CEO on the road," Moorhead added. "That showed that this was a very important launch to Microsoft, one that was important to get right."

Did Microsoft get it right?

"I expect this device to be successful for Microsoft, and to show that the new focus of Microsoft on markets where it can clearly differentiate and leverage its strengths can indeed pay dividends," said Gold. "Time will tell if enterprises and users see it the same way."

Microsoft introduced its latest tablet, the Surface Pro 3 at an event in New York on Tuesday.

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at  @gkeizer, on Google+ or subscribe to Gregg's RSS feed . His email address is gkeizer@computerworld.com.

See more by Gregg Keizer on Computerworld.com.

Copyright © 2014 IDG Communications, Inc.

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