3 Problems Facing the Surface 3 Pro

If Microsoft wants to be a devices and services company, this device isn't a good fit.

May 31, 2014 at 4:00PM

Every time it seems like Microsoft (NASDAQ:MSFT) finally got the point that the PC business isn't the future of the company, they go and make a product like the Surface 3 Pro. The main page of the Surface page says this product is "the tablet that can replace your laptop." In particular Microsoft calls out the MacBook Air as a comparable device. Unfortunately, Microsoft is missing the point. In fact, the Surface 3 Pro has three specific problems right out of the gate.

You can't be serious
A quick trip to the Microsoft Store shows that the company thinks the Surface 3 Pro can go head-to-head with Apple's (NASDAQ:AAPL) MacBook Air. Let's get straight to the point, this is a terrible comparison and on the surface (pun intended) Microsoft's device is at a serious disadvantage.

This is the first problem the Surface 3 Pro is facing, unrealistic expectations of the tablet-hybrid's value. The Surface 3 Pro compared to the MacBook Air is almost laughable if you look at the three devices (the 2 Air models vs the Surface) side-by-side.

Specs

MacBook Air 11 "

Surface 3 Pro 

MacBook Air 13"

Hard drive

128 GB

64 GB

128 GB

Weight

2.38 lbs.

2.4 lbs. (with cover)

2.96 lbs.

USB 3.0 ports

2

1

2

Price

$899

$929 (with cover)

$999

Microsoft can't have its cake and eat it too. The Surface 3 Pro isn't comparable to the MacBook Air without the Type Cover. If we include the type cover, the Surface 3 Pro is actually $29 more expensive than the MacBook Air 11". This is the more accurate comparison as the 11" Air has an 11.6" screen compared to the 12" screen of the Surface 3 Pro.

Given that both products have similar battery life, the big question is, do consumers want a heavier than average tablet that has relatively worse specs than the MacBook Air for more money? I really don't think that is a question Microsoft wants an honest answer to.

You can't be serious: Part II
If we expand the search for comparable products to the Surface 3 Pro, the problem appears to get even worse. This is the second problem facing the Surface 3 Pro, there is serious competition already offering similar capabilities at lower prices.

Looking at other products from Hewlett-Packard (NYSE:HPQ), and accessories from Logitech that can be paired with the iPad lineup, makes the Surface 3 Pro look like an even worse value proposition.

Hewlett-Packard's Split lineup offers similar capabilities to the Surface 3 Pro, yet at lower prices. In fact, the cheapest Split version costs just $599.99, which is a 35% discount to the new Surface. If customers are looking for another alternative, a $100 Logitech iPad Air keyboard plus a 32 GB iPad Air for $599 gives the user a lighter tablet with similar specs to the Surface 3 Pro for about 25% less.

The bottom line is, there are many options that offer a similar experience to the Surface 3 Pro at lower prices.

The worst part of it all
The worst issue facing the Surface 3 Pro is, Microsoft is going after the wrong market with the device. According to IDC Research, worldwide PC sales are expected to decline by 6% in 2014 and continue to decline through 2018. In addition, if the Pro is aimed at business sales, Microsoft should be aware that IDC thinks business tablet sales will still only be 18% of the total market by 2018.

It's different when Hewlett-Packard goes after PC sales with the Split lineup and multiple hybrid devices. The company still gets about 30% of its revenue from the PC business. With another 20% of HP's revenue coming from printing, the company has a vested interest in keeping the PC business alive.

Between Samsung taking market share in the tablet business, and Apple trying to take the remaining market, Microsoft is already facing an uphill climb. However, the Surface 3 Pro is priced too high to compete with traditional tablets, and yet Microsoft isn't in a position to take market share with a premium priced tablet.

Just when it seems like Microsoft is finally getting the point that the PC business can't be the company's future, it releases a product like the Surface 3 Pro. It's a good thing that Microsoft is doing well with other products like the Xbox One and Office 365, because this one looks like a dud.

Leaked: Apple's next smart device (warning, it may shock you)
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

Chad Henage owns shares of Apple and Microsoft. The Motley Fool recommends Apple. The Motley Fool owns shares of 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.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers