Microsoft (NASDAQ:MSFT) will introduce a so-called Surface "mini" this year, according to Windows expert Paul Thurrott. Could the smaller Surface revive the company's tablet segment? Probably not.
The 8-inch tablet segment is the place to be. Up from 27% of tablet sales in 2011, sub-8-inch tablets are expected to grab 55% of tablet sales this year, according to IDC.
But despite the optimistic outlook for 8-inch tablets, Microsoft's Surface mini doesn't have the odds in its favor. The company is going to need to prove the Street wrong before investors get excited about another Windows tablet. Following a $900 million writedown to Microsoft's tablet division, there's little reason to be bullish on the device.
First, here is what we know about the upcoming Surface mini. Thurrott extrapolates the device will...
- ship this year,
- utilize a Qualcomm processor and run the heavily criticized Windows RT operating system, and
- sport an 8-inch display.
Sure, with such limited information on the device, it's tough to project the tablet's fate. But, given recent moves and plans from competition in the 8-inch segment, it would be unwise to project robust sales for the device.
Google's recently refreshed Nexus 7, for instance, boasts a thin and light design, 323 pixels packed into every inch of its display, and an entry price point of $229. And of course the device runs on Android -- an operating system many consumers are already familiar with.
Apple (NASDAQ:AAPL) is rumored to launch a new iPad Mini along with a refreshed full-sized iPad this year. Both devices will run on Apple's new 64-bit architecture A7 chip, marking a huge upgrade for the iPad Mini processor, according to KGI Securities analyst Ming-Chi Kuo. The first iPad Mini used the A5, a processor that dates back to the iPad 2. Also, Kuo expects the iPad Mini to finally sport the Retina display. If Apple maintains its typical pricing strategy, the second-generation iPad Mini will take on the first iPad Mini's entry price of $329.
Of course there are plenty more options available in the 8-inch tablet segment. But Apple and Google alone pose serious threats to the Surface mini's future. Apple, in particular, would conceivably move mountains to stay competitive; currently the Cupertino colossus boasts a whopping 32.4% market share among the top five vendors in the tablet segment, according to recent data from IDC.
There is no hope for the Surface mini
Okay, maybe that's overstating it; there's always a sliver of a chance that the Surface mini may surprise, just like there's a chance someone who buys a lottery ticket could win millions. But the likelihood of Microsoft's Surface mini becoming a meaningful player in the competitive segment is slim to none. The combination of a terrible track record and proven, fierce competitors make betting on the Surface mini's success a wild gamble.