Microsoft's Surface Pro highlights flawed two-for-one strategy

Symbol of one-Windows-two-devices plan to break out of diminishing PC business

Microsoft's upcoming Surface Pro tablet sums up the company's seeming strategy with Windows 8: That business users can do with one device what they currently accomplish with two.

"The Surface Pro is designed for people who want a premium, thin and light notebook experience but secondarily want a tablet experience," said Patrick Moorhead, principal analyst with Moor Insights & Strategy, in an email.

"The Surface Pro [is] a symbol of Microsoft's vision with Windows 8, a reference device if you will," echoed analyst Sameer Singh, of Tech-Thoughts.

The two-in-one strategy runs through Microsoft Windows 8, the operating system whose most distinguishing feature is its split user interface (UI) personality: a traditional Windows-style mode and a touch-first, tablet-centric UI.

It's no accident that the Surface Pro, unlike its less-expensive sibling, the Surface RT, runs Windows 8 rather than the Windows RT spin-off, and relies on an Intel processor, not one based on the ARM architecture that powers virtually all tablets. Where the Surface RT is limited to tablet-style apps, the Surface Pro runs not only those, but also the enormous library of Windows applications -- the same that run, for example, in Windows 7.

Essentially, Microsoft is arguing that customers can have their cake and eat it, too, with a tablet and a PC, in one device, powered by a single operating system. The strategy is at odds with Microsoft's biggest OS rival, Apple, which maintains two different operating systems for its tablets and personal computers.

But while Microsoft has called its approach "no compromise," the strategy is, in fact, rife with compromise. The Surface Pro -- officially, the name of the tablet is "Surface with Windows 8 Pro" -- is neither a tablet nor an ultrabook, but bits of both.

"The Pro is an ultrabook, only with more severe design constraints," said Ezra Gottheil of Technology Business Research, who covers both Apple-made and Windows-powered mobile devices, referring to the Pro's thin form factor and light weight.

Customers who simply want a notebook/ultrabook replacement are not the Surface Pro's target. Those users will keep what they have or, when they upgrade, buy another lightweight laptop like Apple's MacBook Air or any of a growing number of Windows-based options. Instead, Microsoft is betting there's a large number of business computer users who need -- or at least want -- a two-in-one device that serves adequately as both notebook and tablet.

The dual roles mean that the Surface Pro is, by nature, expensive. "It's a premium product at a premium price," noted Gottheil.

Those prices, which Microsoft revealed last week, speak to the all-in-one strategy as well, because they give the Surface Pro little chance of competing with pure tablets.

Microsoft has pegged prices of the Surface Pro at $899 for a model with 64GB of flash RAM-based storage space, and $999 for a unit with 128GB. The prices do not include a cover-cum-keyboard, which Microsoft sells at $120 and $130, with the lower-priced version assigned to the membrane-style Touch Cover and the higher to the more traditional moving-keystroke Type Cover.

With a keyboard -- and few buyers will eschew one -- the Surface Pro prices out at between $1,019 and $1,129. That's not tablet territory.

"Microsoft won't drive a lot of volume with Surface Pro compared to the iPad and 7-in Android tablets, but will profitably sell units more in line with ultrabook levels," said Moorhead.

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