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3 Reasons Microsoft's Surface Will Come Up Short

The following video is part of our "Motley Fool Conversations" series, in which analyst John Reeves and advisor David Meier discuss topics across the investing world.

Everyone has been talking a lot about Microsoft's new Surface tablet. The device looks great, but David is skeptical about its ultimate success. First, Microsoft wants to sell it through its own sales channels, which limits the potential audience, especially in its stores. Second, David is not sure what audience Microsoft is targeting. The iPad and Amazon.com's Kindle Fire are clearly consumption devices. The Surface wants to be a productive device, too, which few customers may want. Finally, there’s also a chicken and egg problem with content. Tablets from Research In Motion and Hewlett-Packard crashed and burned because of the lack of apps. The same could happen to the Surface. David thinks the Surface will launch with some fanfare. But ultimately, this is not going to make a dent in Apple's dominance of mobile computing. He prefers to invest in Apple, not Microsoft.

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David Meier owns shares of Apple. John Reeves owns shares of Apple. The Motley Fool owns shares of Apple, Amazon.com, and Microsoft. Motley Fool newsletter services recommend Amazon.com, Apple, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (6) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 25, 2012, at 4:15 PM, bugnuts wrote:

    No one does vaporware better than Microsoft.

  • Report this Comment On June 25, 2012, at 4:23 PM, TheLI0N wrote:

    Didn't watch the video as I never watch the videos on this site but I will say that Microsoft was doubted about the XBox too. We all know how that ended up, XBox is king. Sony was talked about the same way Apple is now. I'm hot a huge fan of Microsoft, but once they throw their might behind something it's naive to count them out. I'll be buying quite a bit of M$ stock after the coming market crash.

  • Report this Comment On June 25, 2012, at 5:49 PM, gtbohrer wrote:

    OK....watched all three of these. Could you guys try a little harder to buoy up your slowly falling Apple and Amazon stocks by attacking their competitors?

    It's really starting to feel less like analysis and more like damage control.

  • Report this Comment On June 25, 2012, at 7:11 PM, RandomMeaning wrote:

    Many refer to the XBox as an example of success but few understand it. The XBox gained acceptance in spite of the hardware, not because of it. The key was exclusive games and, to a lesser extent, XBox live. Easy example. Imagine if Halo were exclusive to the PS3 instead. How would that have changed things?

    But how did the XBox change things for the PC makers though? Succinctly, the PC makers lost the high end market. Used to be the high end games were PC only with high specs. Expensive, high margin rigs. No more. Microsoft helped bring them to the XBox instead. Very few mass market PC games now. Mainly MMORPGs with the biggest names being platform agnostic.

    By the way, what is the exclusive software which is what Microsoft really hopes will drive sales of their tablet/laptop? I'll give you a hint, starts with a big "O". But figure this, which device will be better for working in "O": a Surface which works like a laptop with a small screen, smaller storage, even smaller keys, and a much smaller touch pad with the added bonus of touch screen capability or an ordinary laptop?

    In conclusion, doesn't matter how anyone tries to spin it. Microsoft went into hardware for one reason: they believe they can make more profit from combining the software and hardware. After all, Microsoft could easily have shared the hardware design with their partners instead of going off on their own. Just look at all the success their partners had from Plays for Sure, XBox, and Windows Phone! Now we can add Nokia to the list. Wonder how things will work out for Dell, HP, and the rest . . .

  • Report this Comment On June 25, 2012, at 9:04 PM, Secs27 wrote:

    Your comments about amazon kindle fire re ridiculous. The fire is a subpar piece of junk. It Appeals to a very low end consumer buying overpriced crap on amazon. The items that amazon sells can be found everywhere on the Internet for less. If you bought it on amazon, you have overpaid.

    The iPad is a wonderful device however it cannot replace the power and productivity of my computer Unlike the people you are talking about, I use a computer for productivity, not just sitting on the couch reading emails and mindlessly searching the web wasting time. Thus, I need both my computer and my new iPad.

    The Microsoft surface appears to be a beautiful and extremely well built machine that has the aesthetics and portability of the iPad yet it is a full blown computer able to run actual programs like MS Office and it has full size USB ports. It can download 1gig files in 5 seconds. That would take my iPad all day to do that.

    The Surface is a tremendous invention that has the ability to replace BOTH my computer and my iPad.

    Why not have a gorgeous tablet that can double ad a powerful computer. I can finally be a one device person. I can't wait to purchase a Surface.

  • Report this Comment On June 26, 2012, at 5:01 PM, chilero wrote:

    I have never wanted a tablet until I saw the Surface. You have to remember that they showed 2 models. The RT version is the one that might be compared to the iPad while the x86 version is likely targeting power users. The x86 will run every program that you currently use on your Win7 computer (except high end games of course).

    The issue is certainly with the number/quality of Metro apps that will be available. You would be a little foolish to believe that companies aren't making apps for Windows 8 right now. Over the next few years they'll likely sell 500 million Windows 8 licenses so the market will be there.

    The number one selling accessory for the iPad is keyboard (I read that and make no claim to whether it is true) so having the keyboard built into the cover is is ingenious and truly innovative.

    They are also trying to give their OEM's a kick in the arse to get them to put some thought and design into the hardware insteading of producing crappy designs.

    I doubt the Surface will match iPad sales but it'll surely destroy android tablets.

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