Microsoft's Final Mistake?

The first wave of hands-on reviews for Microsoft's (NASDAQ: MSFT  ) new Surface with Windows 8 Pro is coming in.

It hasn't been very flattering.

Tech reviewers seem to have mixed feelings about Microsoft's second shot at standing out in the crowded tablet space. Yes, Intel's Core i5 processor gives the device great processing power as it takes on traditional Windows applications. It also boots up surprisingly fast.

However, the negatives appear to be outweighing the positives given the tablet's stiff price tag that starts at $899 and quickly dives into four digits if buyers want the keyboard cover or enough storage capacity to make the device useful.

Tracking down a charging station
Surface Pro has a problem. It's a tweener. It's bulkier than most stand-alone laptops. Its battery life is clocking in at less than four hours for a couple of reviewers. For those scoring at home, that's less than half as long as Apple's (NASDAQ: AAPL  ) market-defining iPad can hold up between charges.

It's also priced nearly twice as high as the entry-level iPad.

The bullish counter here would be that folks will be buying the Surface Pro when it hits the market on Saturday because it can be both a tablet and a slick ultrabook.

Yes, there's a market for that. However, reviews claim that Windows 8 Pro software and recovery tools take up between 30 gigabytes to more than 40 gigabytes of the tablet's capacity. Folks paying $899 for the 64 GB model will be in for a rude awakening when they see that they only have half of that storage capacity available to them. Unlike the iPad's rigid platform, the Surface Pro can be expanded through a memory card slot, but all that does is bump the already high costs of ownership even higher.

Friendly fire
Microsoft is already treading on dangerous turf here. Surface is competing with hardware partners. Companies are shelling out for costly Windows operating system licenses for their tablets -- knowing that open-source Android would cost them far less -- and now Microsoft is a threat to that market share sliver.

The relationship status is getting more than merely complicated now.

Microsoft's move to offer up $2 billion in Dell's (UNKNOWN: DELL.DL  ) privatization efforts this week open up a new can of worms. How will other PC manufacturers feel about supporting Windows at a time when computer sales are already tanking and the software giant is playing favorites?

Mr. Softy has become a greedy jockey. It's buying and breeding racehorses.

Microsoft has every right to do exactly that, but then it can only blame itself when consumers and its own partners turn on the company.

Too many second chances
Surface Pro was already facing an uphill battle after analysts slashed their sales projections for the original Surface, which was more economically priced but ran on the feeble Windows RT platform. Now that reviewers aren't exactly singing the device's praises, it may be time for Microsoft to bow out of the tablet space before it's too late.

It's been a frustrating path for Microsoft investors, who've watched the company fail to capitalize on the incredible growth in mobile over the past decade. However, with the release of its own tablet, along with the widely anticipated Windows 8 operating system, the company is looking to make a splash in this booming market. In this brand-new premium report on Microsoft, our analyst explains that while the opportunity is huge, the challenges are many. He's also providing regular updates as key events occur, so make sure to claim a copy of this report now by clicking here.


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  • Report this Comment On February 06, 2013, at 9:52 PM, pynew wrote:

    "It's bulkier than most stand-alone laptops"

    Really? To say it might be bulkier than some tablets is one thing but bulker than a laptop? You can't be serious. It's smaller and lighter!

  • Report this Comment On February 06, 2013, at 10:08 PM, techy46 wrote:

    Well, Surface Pro is $200 more than the iPad across all storage sizes and the keyboard costs $130 while an iPad keyboard $70 but the Surface runs all PC software and the iPad doesn't run squat except applets for consumer adults and kids. You can't have your cake and eat it too unless you buy a Lenovo Yoga 11. 13 or Helix. There's going to be a whole lot of enterprise IT workers that will ove to have a W8 notebook with a free tablet too.

  • Report this Comment On February 06, 2013, at 10:35 PM, AlexanderAkhavan wrote:

    I am seriously looking at the Surface Pro for mobile use at work.

  • Report this Comment On February 07, 2013, at 6:47 AM, RandomMeaning wrote:

    There are two major problems with the whole Surface venture, one is the product itself and the other is strategic.

    The product is compromised and flawed. After reading many reviews, it's quite clear that when used as a laptop, it does not work as well as almost any laptop you could buy in the last 3 years at just about any price point (cramped screen, poor battery life, unadjustable kickstand which prevents any use as an actual laptop, inadequate track pad, etcetera) while its utility as a tablet is well below that of several Android devices, let alone an iPad (horrible battery life, slow software response, subpar touch response, overweight, poor user experience in portrait mode, etcetera). Yet somehow, there are Surface devotees trying to convince the world that putting to together an inadequate laptop and a Soviet era tablet together makes it better?

    More simple, for getting "real work" done, a real laptop works better while for casual work/entertainment an iPad and some varieties of Android tablets works far better. Why put up with a frustrating experience when there are far better solutions available?

    The strategic mistake is getting into the hardware side of PCs, tablets, and phones. It's a greedy vanity project. Right when Microsoft is having to prop up Nokia and Dell, their most loyal and exclusive supporters, Microsoft is in the process of competing directly with them. Great plan Mr. Ballmer. Right when the entire PC industry is breaking down under the weight of ever narrowing margins, you're going to try and steal the high end from your own "partners". It's a foolish distraction which is doing real harm.

    Instead, Microsoft should be focusing on highly profitable software. Where is a fully touch enabled version of Office that can run on multiple platforms? I have little doubt that Microsoft would make more profits selling Office on an iPad then they will ever make on the Surface. That should have already happened within a year of the iPad's launch. Instead, they've tried to use it like a moat to keep Office fans on Microsoft's platforms. Which results in giving Apple and Google even more time to refine their own alternatives. I know, someone will say something along the lines of "only Office for real work" but the reality is that there are many businesses, large and small, that have found alternatives that work quite well for them for a much lower cost. Pretending otherwise is foolish and pointless. That is happening in the real world regardless of what people post.

    Another long ramble but the gist is this: Microsoft is a good company with some good ideas but is suffering from poor leadership making worse decisions.

  • Report this Comment On February 07, 2013, at 12:21 PM, TMFBreakerRick wrote:

    pynew, correct. That was my mistake. I meant bulkier than laptops. Obviously it's not bulkier than most laptops.

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