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Microsoft Needs to Stop Aping Apple

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The launch of Apple's (NASDAQ: AAPL  ) new iPad Mini and iPad Air products now seriously calls into question Microsoft's (NASDAQ: MSFT  ) tablet strategy. Indeed, while Microsoft just a few days ago launched its Surface 2 and Surface Pro 2 products -- starting at $449 and $899, respectively -- it seems that Apple just took an axe to whatever value proposition the Surface 2 had to offer, and even does some pretty serious damage to even the more expensive Surface Pro 2.

Surface 2 versus iPad Air -- is this even a contest?
Microsoft's Surface 2 is a big improvement over the original Surface RT. It sports a 1920x1080 display, a fast NVIDIA Tegra 4 processor, 2GB of RAM, and a pretty nice physical design all around. The reviewers, such as AnandTech, seemed to really like the hardware. The problem with Surface 2 is that it comes running Windows RT. This is a version of full Windows 8.1 that only runs touch-enabled applications in the Modern UI. This, right off the bat, puts it at a serious disadvantage to the other Windows 8.1 devices from Microsoft's own partners that come with full x86 software compatibility.

But beyond that, the newly announced iPad Air is simply better than the Surface 2 in almost every quantifiable way -- it is thinner, lighter, sports a richer software ecosystem, and a better display. Of course, for the privilege, consumers will have to cough up an additional $50 which, quite frankly, seems like a bargain.

Of course, some will argue that the Surface 2 offers productivity features that the iPad's more "limited" iOS doesn't offer. But this argument doesn't hold up too well. Indeed, while the Surface 2 comes with Office 2013 for Windows RT, no traditional PC applications work, so that's a big part of the Microsoft advantage wiped away. It also doesn't help Microsoft's case that Apple is including its own productivity suite, iWork, as well as its iLife software suite. Microsoft's Windows 8/RT has similar applications built in, though.

But the bottom line is that in order for Microsoft to come in with a brand new ecosystem that, again, strips away the advantages of supporting the legacy OS, it needs to deliver a much superior product for the dollar. After the iPad Air launch, it's clear that this isn't happening with a Surface 2 starting at $449.

Are the rest of the Windows 8.1 tablets done?
The big question, then, is whether the Windows 8.1 tablet venture itself is largely doomed? It's not certain yet, by any means. For example, both Lenovo and Dell announced fairly compelling 8-inch designs at the $299 price point. These run full Windows 8.1, sport Office Home & Student, and come with a good Intel Bay Trail system-on-chip. But the snag, of course, is that these tablets are slightly thicker (394 grams for the Dell against 331 grams for the iPad Mini), and come with much lower screen resolution (1280x800 for the Windows 8.1 tablets and 2048x1536 for the new iPad Mini).

To be perfectly fair, at the $299 price point, the smaller Windows 8.1 solutions offer a compelling value proposition against a $299 previous generation iPad Mini, which has a 1024x768 screen, 512MB of RAM, and a two-generation old A5 system-on-chip. But the real problem for these aren't quite the iPad Mini as much as the cheap Android tablets such as the Nexus 7.

The larger Windows 8.1 tablets such as the Dell Venue Pro 11 -- with full Windows 8.1 compatibility -- stand a chance for those looking for a notebook replacement; at $499 with a 1920x1080 screen, 2GB of RAM, and the option to buy decent keyboard accessories, it could be an attractive offering. For those looking for pure tablets without any need to use Windows' rich desktop ecosystem, Windows 8.1 tablets could still end up being a tough sell.

Foolish bottom line
Apple yet again knocks it out of the park with its latest iPad launches, and it once again proves that there's a reason that Apple, time and again, gets away with selling premium products at premium margins. Microsoft keeps eyeing these margins hoping that it can fetch a similar cut, but Apple is the exception, not the rule. Most tablets -- Android and Windows -- will be sold at low margins in a highly competitive environment. But that's the thing -- Microsoft doesn't need to play this game.

It is, first and foremost, a software company. Instead of trying to compete with its hardware partners, what it needs to do is to be the steward of its software ecosystem. It needs to make the Microsoft software ecosystem so desirable that hardware vendors are happy to sell Microsoft-based devices profitably. And, in the end, Microsoft will get a nice check for each license sold and -- if the ecosystem takes off -- recurring royalties from the sales of Windows Store applications.

Microsoft doesn't need to be Apple to be successful in mobile, but it seems management hasn't figured this one out yet. Next up, a writedown on unsold Surface 2 inventory? 

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Read/Post Comments (19) | Recommend This Article (0)

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 October 23, 2013, at 3:02 PM, Drew9944 wrote:

    Good article. Why has Microsoft even gotten into making hardware, when its main business is software sold to OEMs who make the hardware? Competiting with one's customers is never a good business. And on top of that, there is no compelling reason to buy Microsoft Tablets, vs. either Apple's which overall work better and have better software, or vs. Microsoft's OEM customer such as Dell and HP which make cheaper Tablets running MSFT software. They MSFT should stick to trying to make good software.

  • Report this Comment On October 23, 2013, at 3:26 PM, Jerria4400 wrote:

    Motley Fool needs to stop APING Microsoft. WTF? is Motley Fool owned by Apple? Paid by Apple? Sorry, even though I have an iPad, it doesn't fit all of people's needs. Surprisingly, one reason the US is great is because we have free markets and choice. If MS can live with 2% of the market, then 2% of the market is being satisfied in a way that the other choices can't. The part I hate about Apple is its position is to kill innovation and competition with patents, lawsuits and proprietary software/hardware. Why is Motley Fool not concerned about this?

  • Report this Comment On October 23, 2013, at 3:29 PM, donax666 wrote:

    All I know is I have a Surface RT and a Surface 2 pro and compared to my friends and wife's iPad and Galaxy note. I can simply run circles around them both on either tablet. Yes the apps for windows isn't as large as apples or google but do we really need 200+ types of alarms or clocks??

    Also lighter yeah it's a lbs lighter than the surface but that's honestly hardly noticeable, I carried my surface through 3 countries in my backpack for a month, can't say i ever went "Gee I wish the surface was 1lbs lighter"

    Having a MicroSD slot and USB port on the surface also allowed me to push the 512GB (READ 512GIGS) and additional 64GB on the SD card and I can use my good ole 1TB ext HDD I have on my PC, pair all that with the free for 2 year 200GB Skydrive and I have a full 1.8TB of storage with me most of the time, 776GB when I don't take my ext HDD.

    Sure the iPad is great if you just wanna play around, kind of like a Fiat 500, but if actually need to do work, get a truck

  • Report this Comment On October 23, 2013, at 3:33 PM, nivadia274 wrote:

    I agree with jerria and donax, Microsoft doesn't need to stop aping apple, MOTLEY FOOL needs to stop aping Microsoft. This is ridiculous! I'm not saying Microsoft is 100% better and you're completely wrong, but give them a chance! They had a rough start but they seem to be listening to customers on where to improve. Making me wish I can block motley fool from my stocks news feed seriously

  • Report this Comment On October 23, 2013, at 3:58 PM, musicianm2002 wrote:

    While Donax666 can enjoy her 512GB SD card, people who need all that extra space can use a simple application called splashtop to access files files across the globe back home from their computer system, that may not be on their iPad.

    In light of the storage capability, everything will be cloud based anyway - any documents that you need to access can be implemented into iCloud and yes, this includes MS Office files.

  • Report this Comment On October 23, 2013, at 4:09 PM, auggybendoggy wrote:

    Please, ipads are toys or controllers. If you want to do real work you get a SP2 or hybrid. And because of Apple's arrogant talk, if I was MS, I would totally cancel all of the office applications from Apples systems.

    I actually like apple products, I just think Cook is suffering, like Jobs, from severe myopia.

  • Report this Comment On October 23, 2013, at 4:10 PM, rsg003 wrote:

    I agree Surface 2(RT) is a lost cause and doesn't even come close to the specs of any of the top 7-10in Tablets out there. Now the Surface Pro 2 is a different ballgame. Microsoft really has something there but they need to bring the price down to match the Ipad...without lowering the cost it will never be anything more than an Enterprise Tablet if it even goes that far...Microsoft still hasn't learned anything from Google and Amazon....

  • Report this Comment On October 23, 2013, at 4:16 PM, rcmotohead wrote:

    I signed up specifically to laugh of the amateur writers at the Fool, which is appropriately named by the way. Every article is anti-Microsoft and pro-Apple. The only people buying into their biasness are the isheep. I say get some baaaaaaaaaahhhhhllsss, take of the apple blinders and actually try a few other pieces of hardware out. Hey iPhone uses, 2007 called. It wants its OS back.

  • Report this Comment On October 23, 2013, at 4:27 PM, DoctorBiobrain wrote:

    The big problem with the Surface is: What the heck is it for? There are already Netbooks and small laptops for people who need a full computer but don't want to lug around something heavy. The MacBook Air, for example, is terrific. But if you want a cheaper one, you can get cheaper ones. And just about any of these will bury the Surface or Surface Pro in functionality. In fact, I'm currently looking at getting a 15" Lenovo laptop that's cheaper than the Surface and far more functional.

    And the whole point of the tablet is when you don't need a full computer. Like when you want to lounge on your couch browsing the web, checking Facebook, chatting with friends, or watching cat videos. And well...that's what people use computers for much of the time. People mock iPads for not being for work (which isn't true, as I've definitely gotten work done on mine), but that's not what the form is for anyway. It's for light usage while hanging out, not for getting serious work done. And unless I need my full computer for something, I prefer being on my iPad.

    And that's the problem with the Surface, in that it's the worst of both worlds: It's a poor excuse for a laptop, but it's not really that great as a tablet either because it's too bogged down with garbage and has a bad battery life. Microsoft was solving a problem that few people have. They were clearly trying to give people the best of both worlds, but ended up doing the opposite.

  • Report this Comment On October 23, 2013, at 4:29 PM, dillweed12345 wrote:

    The iPad is just not set up productively for business travel. You cannot always access internet and the need for having files on a hard drive or flash drive are critical. I still travel with a laptop as I have not yet seen a tablet that suits my needs.

  • Report this Comment On October 23, 2013, at 4:30 PM, dillweed12345 wrote:

    The problem with Apple is that they are now starting to insult their customer base. They keep adding a sliver of a feature to each product release to get the sheep to keep buying them up. Eventually the sheep stop following the master.

  • Report this Comment On October 23, 2013, at 4:36 PM, AcuraT wrote:

    This article is highly concerned about the size and weight, which is in Apple's favor. Any analysis in the capabiliities of the operating system? No? How about I help out a litlte bit (and to disclaim, I own both a Apple ipad and a Windows tablet).

    With Apple, you get an OS that is not "kid friendly." For those without kids, that is not important. For those with kids, this may be of interest. With Apple, what do you do when you want to control your kid's ability to use the web? Well, first, you have to go into the control panel and REMOVE Safari from the desktop. This is because Apple does not give you any ability to contol Safari. Then, you have to go on the web and use another browser. Some use K9, which gives you some (not complete) contol. Others use Mobicip which gives much better control, but you pay for that as this costs 9.99 I believe. It has the ability to liimt the websites, but does not have the ability to track attempts kids make to go to other websites.

    With Windows, you have full control on the Surface RT. You set up the browser by going into the controls, and personalizing the browser to where it can go. In addition, you can set it up to track attempts to go where you don't want your child to go. In other words, full control.

    Need other examples? Here is another: productivity software. Since this is Microsoft, they offer a full suite of Office on the RT tablet. On Apple's ipad, you get Apple's equivalent work package... which falls short. It can do some things, but definately not everything.

    There are other things as well. So while Apple has the software packages, you will have to dig through them to close the gaps in the basic architecture of the Apple iPad. With Windows, the gaps are not as many, but you have to deal with fewer software packages (but you can control the internet for your kids far more effectively. The choice is for the public to make. For my kids, I am leaning towards Windows this holiday season - and so is my wife. No decision yet, but the controls are pushing us in that direction (and no, Android lacks the same web browsing control Apple does).

  • Report this Comment On October 23, 2013, at 4:36 PM, Itassi wrote:

    I bought an Ipad and my kid now uses it for a toy...what the heck does these tablets do anyway???

  • Report this Comment On October 23, 2013, at 4:39 PM, donax666 wrote:

    @musicianm2002 Yeah that's true... But reread what I wrote. Microsoft also gave 200GB of skydrive for 2 years. That would cost $800from apples iCloud service if you could get more than 50GB which I don't see as an option....

  • Report this Comment On October 23, 2013, at 4:43 PM, dannystrong wrote:

    The Fool seems to have missed the past 35 years or so. Microsoft has *always* aped Apple. Its their entire business strategy.

  • Report this Comment On October 23, 2013, at 4:48 PM, wiggin88 wrote:

    I have both an iPad and a Dell Windows 8.1 tablet. I use the Windows tablet 99% of the time since I can do everything that I want to do on it while travelling, from simple emails and surfing, to serious productivity with full Office and Acrobat. It can even run full Photoshop, albeit a little slow. I've also added a 64GB SD card, so memory is not an issue, and I carry my entire document directory with me with built-in Bitlocker encryption. Try doing that with iTunes! As a disclaimer, I have a desktop at work so it is just my travel device.

    I don't like most tablet-based games - if I am going to play video games, that is what an XBox or PS3/4 are for!

    The iPad does have some advantages. It has a higher resolution display, and is a little lighter. However, it is truly useless for any real work beyond light email. iWorks just doesn't cut it unless you don't need any of the key functions of Office, like revision tracking, formulas in Excel, etc. So most people travelling with an iPad end up carrying a laptop as well, which I don't need to do.

    So what ever happened to my iPad? The kids use it to watch Netflix. For that purpose, I could have gotten a Nexus for $300 less :(

  • Report this Comment On October 23, 2013, at 4:52 PM, Jeffkory wrote:

    It's about time someone knocks MICROSUCK down a bit- After they shoved windows 8 down everyone's throats- I switched and am glad I did- NO more microsuck products for me- The come out with a new product every 2 to 3 years to suck money out of us.

  • Report this Comment On October 23, 2013, at 5:01 PM, donax666 wrote:

    @Jeffkory... yep WIndows 8 was hard for people to use. well idiots really... Also I like how you attack MS for releasing products every 2-3 years to suck money...

  • Report this Comment On October 23, 2013, at 6:38 PM, cap69 wrote:

    The author is dead wrong. Microsoft is doing exactly what it needs to do.

    I mean, any person with half a wit would ask himself, what good is the world's best software when it is constantly delivered on trashy hardware.

    Any person with a pinch of wit would ask himself does it make sense for a company to persist with its earlier playbook and therefore with partners that have made the company's name synonymous with trashy hardware, and damaged its brand.

    But not the author. He has his own ax to grind (perhaps he would be more objective if he were not invested in one of MS's partners?). Nothing illustrates his lack of logic better than this:

    "Surface 2 versus iPad Air -- is this even a contest?"

    Look at what's going on over here, friends. No, Surface 2 and iPad Air are not yet a contest. You know why?? Because MS did exactly what the author wants MS to revert to! Which is, MS waited to see if one of its partners (Intel + bumbling HP/Dell etc) could put out something competitive to iPad. Because OEMs are pretty divorced from innovation, because Intel had nothing that could compete with ARMs performance/watt value proposition, iPad got to establish itself with a huge ecosystem. At that point MS said, okay, enough of this crap. And they took on the burden of hardware innovation too. They dumped Intel (which gets the author's goat), switched to ARM, and just in their second iteration have something that is aestheticaly competitive with iPad, and better than it if you are less a hardcore App Store user, and more a productivity oriented person. Surface 2 with MS Office is a high performing, awesome piece of hardware that is better than any of the fully-featured $299 Intel or $299 Nexus trash being peddeled by the OEMs. Surface 2 has a lot of catching up to do because it is up against an entrenched competitor. By this token Intel should junk its mobile effort because after all these years Qualcomm continues to kick its butt in that area. No? Note to author: such are the inconsistencies you end up with when you have a tangled mess of an agenda in your head.

    It's pretty simple:

    Someone who is drawn to the iPad Air offering is not going to suddenly pause because Dell/Lenovo churned out some fully-featured $299 Intel trash. Surface 2 is a work in progress for consumers who want to work on great quality hardware and are only hesitating in their switch to iPad because of lack of productivity tools (no, Apple's iWork offering doesn't count -- it only merits uncontrollable laughter).

    As Tim Cook said, there is a market for junk/value. So MS is not stopping the OEMs from making what they always make. In Surface, MS is now simply offering alternative, high quality stuff which is essential to rebuilding its brand/scrubbing off the many decades of OEM tarnish. Its the best of both worlds. To value lovers: go buy $299 stuff from Lenovo/Dell. To premium quality lovers: buy Surface. Anyone who has used Surface knows this: Microsoft's software shine on it like never before.

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