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Microsoft Corporation Begins Sales of Surface Book and Surface Pro 4

By Daniel Sparks - Oct 27, 2015 at 12:00PM

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Are Microsoft's new Surface products aimed to take share from Apple's mobile dominance in enterprise?

On Monday, Microsoft's (MSFT 3.20%) recently announced Surface Book and Surface Pro 4 officially became available for purchase. Both products represent important moves for the company. The Surface Book is Microsoft's first Surface laptop. And the timing of the Surface Pro 4 aligns with Apple's (AAPL 4.01%) upcoming launch of its iPad Pro -- a product with a similar value proposition.

Microsoft Surface Book. Image source: Microsoft.

Here's what investors need to know.

The launch
"[I]t's one of the best computers you can buy right now," said The Next Web after reviewing the Surface Book. But as The Next Web accurately notes, what's impressive about the product is that even though the device is clearly an excellent laptop, it also happens to be a tablet. Most reviews share similarly optimistic takeaways after getting hands-on time with the device. The product starts at $1,499.

The Surface Book is available on the company's Web storefront and at other retailers including Amazon and Best Buy. Initially, the device is only available in Canada and the United States, but the company will roll the product out to more markets in the future.

Supply for the Surface Book is likely constrained, as the website currently says the product will take four to five weeks to ship.

Microsoft's Surface Pro 4 -- a formidable upgrade from its predecessor -- is also now available on Microsoft's website and other retailers. It starts at $899.

Notable success
Microsoft's Surface product has been a surprising catalyst for the company's hardware business. While year-over-year revenue for the segment was down during the company's just-reported fiscal first quarter of 2016, this was only because of the timing of Microsoft's planned launch of its new tablet, which prompted many interested buyers to delay purchases during the quarter.

Surface sales more than doubled during Microsoft's fiscal fourth quarter of 2015 and the company expects the growth to continue during the holiday quarter.

A key step to compete with Apple in enterprise
The Surface Pro and Microsoft's new Surface Book are clearly aimed to compete with Apple's iPad Pro. Even more, the products seem positioned to compete with Apple's mobile products in enterprise -- an arena Microsoft obviously would enjoy having a more prominent presence.

Apple has made its intentions very clear in the enterprise segment: the company wants to dominate mobile sales. Ahead of Apple's iPad Pro launch, the Cupertino-based company solidified a partnership with Cisco in an aim to optimize iOS products for Cisco clients. This partnership followed a similar strategic arrangement with IBM, announced in 2014.

Highlighting Apple's success in mobile enterprise sales and services, nearly all the Fortune 500 companies are currently deploying iOS in their businesses.

Microsoft's desire to take a chunk of Apple's share in this market is already evident.

"Surface continues to gain ground with businesses and schools, creating opportunities for our rapidly growing partner channel, which includes Accenture, Dell and HP," the company said during its most recent earnings call. "Both the number and size of deals in our commercial segment for Surface have increased double digits year on year."

Microsoft Surface Pro 4. Image source: Microsoft.

Sure, Microsoft's new Surface Book may be a laptop, but that doesn't mean the product isn't aimed at competing with Apple's mobile dominance in enterprise just as much as the Surface Pro 4 is. With a detachable touch display, the Surface Book could prove to be a powerful mobile enterprise product.

Given Apple's huge customer base and the company's recently announced iPad Pro, Apple shareholders certainly shouldn't fear Microsoft's new Surface products or the company's small but important early success in the mobile enterprise segment. For Microsoft, however, this could provide upside for the software giant's comparatively small hardware business over the long haul.

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