Microsoft should forget the Surface, stick to the Pro 2-in-1 line

Not all analysts agree: 'There is an interest in a lower-cost 2-in-1,' says Technalysis' O'Donnell


Microsoft will resuscitate its Surface tablet with a new model powered by Windows 8.1, ditching the flop that was Windows RT for a lower-priced device, according to an online report.

But the company would be better served by sticking with its Surface Pro line, some analysts said.

"A new Surface seems to be consistent with their Windows 10 story, that the OS will exist on all platforms," said Ezra Gottheil of Technology Business Research. "But that still leaves the question, 'Do they really need one of these?' I don't think so. I don't think it's a good idea."

Gottheil was referring to a Wednesday report by that Microsoft intends to launch a replacement for the discontinued Surface 2 tablet, a 2013 device powered by an ARM-architecture processor that ran Windows RT, a spinoff from Windows 8 that never gained traction.

According to WinBeta, Microsoft's third stab at the Surface would employ an Intel processor, rely on Windows 8.1 -- and be upgradeable to Windows 10 when that OS ships this summer -- and be aimed at consumers.

Presumably, such a device would be priced considerably lower than the entry-level Surface Pro 3, which sells for more than $900 when equipped with a keyboard.

Gottheil was puzzled why Microsoft would bother to resurrect the Surface. "The Surface Pro 3 is like a perfect concept car," he said. "It shows everything you can do with [the Windows] platform, the flexibility of the operating system, and that there's a place for a tablet that is your PC. For the most part that's not what their competitors are doing, so [the Surface Pro 3] doesn't do too much damage to their partners. But with a Surface, they might be going more head-to-head with those partners. That's a funny thing to do."

Stephen Baker, an analyst with the NPD Group, concurred. "No," Baker said simply when asked if Microsoft needed a lower-priced device to supplement the Surface Pro 3. "They don't want to be selling something for $299," Baker added, pointing out there was no profit at that price point. "And at $500, a 10-in. Surface would be way out of line with the [Windows tablet] market."

But Bob O'Donnell, chief analyst at Technalysis Research, disagreed with Gottheil and Baker.

"There is an interest in a lower-cost 2-in-1," maintained O'Donnell. "With average PC prices in the $500 range, a Surface would be much closer in price, so logically there's a hole below [the Surface Pro]."

O'Donnell also didn't buy the argument that a return of a lower-cost Surface would bother Microsoft's OEM partners. The Redmond, Wash., company's movement in hardware "has already been accepted ... it's part of the field now," O'Donnell countered.

The return of a Surface would mark a revamped strategy for Microsoft, which gave up on the Surface 2 earlier this year. Around the same time, the company confirmed that Windows RT-powered devices would not be able to upgrade to Windows 10.

Switching to Intel and Windows 8.1 -- and later Windows 10 -- would eliminate one of the loudest objections to the Surface RT (subsequently renamed Surface) and Surface 2 tablets, that they were incapable of running traditional Windows desktop software.

"Microsoft absolutely needs to stick with Intel," O'Donnell said. "The Windows RT experiment is officially a failed experiment."

If Microsoft does restore a Surface to its 2-in-1 line, O'Donnell doesn't expect the company to change its policy of selling the keyboard separately. He also criticized that decision. "It's a mistake not to bundle the keyboard [with the device]," he said.

WinBeta, without citing sources, said that Microsoft would introduce a revamped Surface at the company's Build developer conference, which is slated to run April 29-May 1 in San Francisco, and start selling the tablet soon after that.

Copyright © 2015 IDG Communications, Inc.

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