Microsoft to reboot tablet effort with new Surface

September 22, 2013

A year after its flubbed tablet introduction, Microsoft is back with a new Surface.

The US tech giant, which has invited media to a launch in New York, is seeking to correct missteps from its first try and gain a foothold in the dominated by Apple's iPad and others using the Google Android operating system.

Details of the new device were not known, but many analysts expect a more powerful Surface to help Microsoft build momentum in mobile computing.

Microsoft, which is trying to shift its focus to "devices and services" to better compete with Apple and Google, barely made a dent in the sizzling tablet market since introducing the first-generation Surface in October.

The company has not released sales figures, but reported tablet revenues of just $853 million in the ended in June. Research firm IDC said Microsoft sold 900,000 in the of the year—a of just 1.8 percent—and even fewer in the . Apple by comparison sold some 34 million iPads in the first half of 2013.

Microsoft was forced to take an embarrassing $900 million writedown for "inventory adjustments" due to weak sales of the new tablet, which has a basic version and a more expensive "Pro" model.

Will things be different this time?

Rob Enderle, analyst and consultant with Enderle Group, said he expects the new tablets to be much improved.

"This new release should be massively better than the first one. The trick will be getting folks to look at the product fresh," he told AFP.

Enderle said the first version "was too heavy, too expensive and had poor battery life," and the upgraded Surface Pro lacked a key element, the Outlook email program.

Microsoft appears to have fixes these issues and now has a chance to gain some traction with a device that aims to serve as a tablet with some of the functionality of a laptop PC.

"Right now, people don't want to carry a large tablet and laptop," said Enderle.

"If you can consolidate into one product, it lightens your load and it's a lot cheaper."

Jack Gold, analyst at J. Gold Associates, said the first Surface "was not a complete device" and did not work with many Windows apps.

Gold said Microsoft can succeed with "a reasonably priced and performance-oriented Pro" to appeal to business users, but that the company "has to build momentum before Android makes it mostly irrelevant."

Others argue that Microsoft's strategy has become muddled as it tries to gain ground in the "high mobility" computing segment while still serving the hundreds of millions using conventional PCs on the Windows operating system.

Roger Kay at Endpoint Technologies Associates said Microsoft has been struggling to serve these sometimes conflicting goals.

"The ambiguity of Windows 8 is built into its architecture," Kay said.

"Microsoft has been doing nothing but looking over its shoulder. You need to have your own vision of what people need."

Kay said Microsoft still has a long road to become a meaningful player in .

"High mobility and that form factor are up for grabs between Apple and Google and perhaps Microsoft, but Microsoft will be a distant third," he added.

Kay said Microsoft's best chance in the segment was to build momentum with its acquisition of Nokia's phone business, and extend that into tablets.

Kash Rangan, analyst at Bank of America/Merrill Lynch, said Microsoft is hurt by a "diffused focus" as it tries to reorganize, search for a new chief executive and reboot its mobile strategy with its Nokia acquisition.

"We worry about the tsunami of changes the company is currently undergoing," Rangan said in a note to clients with a "neutral" investment rating.

"The reorganization, CEO change, acquisition of Nokia, and financial reporting structure change are all occurring simultaneously, and only serve to increase the complexity of the investment story."

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not rated yet Sep 22, 2013
Where the hell is the new surface as the headline suggests?
5 / 5 (2) Sep 22, 2013
Microsoft should learn that if they try to compete in the market of walled garden software ecosystems with Android and iOS, it's a losing battle because the users will flock to the platform with most users.

They should instead leverage the PC heritage and make a pad capable of running and multitasking common PC productivity software instead of limited "cloud" and java applications like Google, or dumbed down apps not much different from a website applet on Apple's devices. They should try to do what they're good at and make a flexible platform that doesn't depend on appstores or repositories or constant fast online access to run.

There's no reason why you can't run something akin to a traditional PC desktop on a tablet. A 7" tablet in your hand is as large as a 20" monitor on the table, so it's not a problem of screen real-estate. It's a matter of re-thinking the mouse as a touch interface to get the required precision, and you can ditch the dumbed down user interfaces.
1.5 / 5 (8) Sep 22, 2013
Weird rubber keyboards that can't be used on beds or couches don't sell? Next stop promised by dozens of articles a year on flexible displays that defeat robust touch screen usability. Not a single Surface have I seen in any coffee shop around the Columbia University area. The heavy battery laden tablet would smash to the floor every time their table is bumped. It's just bad design in the Age Of Hype. In other news the human brain itself will be surpassed in a decade, by glorified graphing calculators.
1.7 / 5 (6) Sep 22, 2013
Generally speaking, I think tablet and cellphone manufacturers are trying too much to be sci-fi and implement or at least imitate all the dysfunctional crud they saw in movies when they were 13 and though "wow that LCARS stuff is so cool!".

Meanwhile, consumers are more than happy to use Windows XP's ancient classic interface and don't mind that it's bug-ugly, because it's consistent and it works, and it gives you a paradigm that you can understand instead of everything just happening by "magic". People need to know at least a bit about what happens under the hood to understand what they're doing

Steve Jobs once said that he wants computers to be more like home appliances, but the problem with appliances is that people can't even set the clock on their microwave ovens because the internal workings of the device are abstracted away behind a "magic" and impenetrable user interface that just doesn't let the user to reach in and change the time because it's designed to do just one thing
2 / 5 (4) Sep 22, 2013
As long as Microsoft tries to sell it at a premium price it will fail.

Microsoft has never recognized that people expect Microsoft products to be the lowest price of all offerings in the market thanks to the paradigm the PC by Windows PC makers.

Apple has always been more expensive, even if Windows PCs offered far more for far less.

In the tablet market people expect the same.

It doesn't matter if Microsoft is making them, they expect it to be extremely inexpensive and loaded with all the hardware features you can think of.

Because MS didn't take the tablet market seriously, it allowed Google to take that tactic and that's why Google rapidly became #1.

Unfortunately for MS it still is the only tactic it can use.

To have any chance of success Surface has to be sold at cost or below, and MS has to be willing to take huge losses for a couple of years before it sees success.

Anything else and it will fail. MS can't overcome decades of expectations with 1 marketing campaign.
not rated yet Sep 22, 2013
Microsoft, no thank you. I'm perfectly happy with my old laptop running OpenOffice. Stop bothering me with nonsense that I don't need or want. Come up with something new and interesting if you want my money. Or don't, doesn't really matter to me.
1 / 5 (7) Sep 23, 2013
The $900 million write down?

Hell - I have been buying them by the pallet full, from the scrapyard for $25 (per pallet).

Install Linux on them and resell them for $120 a piece.

Not bad.

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