3 Problems Facing the Surface 3 Pro

Every time it seems like Microsoft (MSFT -2.45%) 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 (AAPL 0.52%) 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.

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 (HPQ 0.11%), 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.