Quick Thoughts: Mister Softy Takes the Gloves off

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–          Microsoft’s Surface line of tablets is the first real challenger to the iPad – Windows/Office compatibility, ingenious keyboard cover, and serious specs will find an audience.

–          Surface is a warning shot to OEMs –Android tablets have been uninspired, Microsoft obviously didn’t want a repeat performance with the critical Windows 8 launch.

–          Surface with Touch Cover could seriously undermine market for Ultrabooks – ability to effectively edit native Office documents eliminates the need for the added hardware.

–          Initial device is skewed to work applications, but we expect future iterations to leverage Xbox leadership in web-TV to deliver an integrated consumer experience.

 

The first Android tablets were pretty uninspired.  Rushing to market for Christmas 2010, manufacturers couldn’t wait for the Honeycomb software release that scaled to larger screens of various dimensions and launched products based on the previous Fro-yo release that were anything but a treat.  Since then, Android tablets have made progress, but, with the exception of Amazon’s barely Android Kindle Fire, the products have failed to establish more than a me too presence vs. the market defining iPad.

Microsoft is aiming much higher with Windows 8 and they are not about to let futzing around by their OEM partners ruin the coming out party.  Hence tonight’s announcement of Microsoft’s homegrown Surface tablets.  Bringing out its own line of tablets means that Microsoft could begin working on their design well before the specifications of Windows 8 were released to other manufacturers and take painstaking control over every aspect of the design.  It shows.

Based on the specs and the presentation, Surface is a serious contender.  Thinner and slightly heavier than an iPad, the ARM-based Windows RT version will have a 10.6 inch 1080p display that will not look as good as the vaunted Apple Retina display.  However, the ARM Surface will be fully compatible with Windows Office, has a USB port, has dual WiFi antennas (promising best in class WiFi reception), includes a nifty kickstand and comes with a touch keyboard integrated into a magnetically attached case.  The keyboard includes an accelerometer which can distinguish casual touches and a pressure sensitive touch pad to offer a superior typing experience.  When the cover is folded away, the Surface automatically senses it and turns off the keyboard.  Microsoft promises the RT version on the same timetable as its September/October Windows 8 launch, at a price point similar to comparable ARM-based tablets.  The big brother Intel-based Surface supports the full Windows 8 OS, offers more memory, and a mechanical keypad in the cover.  It will be roughly 3 months behind the RT version at a price “comparable to Ultrabooks”.

The keyboard cover got the biggest oohs from the assembled journalists, as they instantly recognized the shortcomings of virtual keyboards on touch screen tablets.  If it works as smoothly and as well as the demo suggested, it will be a substantial selling point for the Surface for road-warriors that currently lug around laptops in order to work on Office Documents.  I expect this to be the target market for Surface, even though the kickstand, 16×9 HD screen and Netflix integration will make for excellent video watching as well.  Future versions could well deliver close integration with Xbox, more media content, cloud services, and perhaps, a Facebook tie-in, expanding the market focus more resolutely into the consumer space, and thus, a more direct confrontation with Apple.  Stepping back, I believe the Surface improves the odds that Microsoft will be able to grab a meaningful share of the tablet market, and makes me more enthusiastic about the company’s future.

Undoubtedly, many reports today will lead with the challenge to Microsoft’s OEMs.  Ultimately, I don’t think any of them have much choice but to play along – the demise of HP’s WebOS and RIMM’s Playbook are fresh object lessons, and none of the leading device makers have any real history of successful software development.  If Asus, Lenovo, Dell or the like want to be successful with tablets, they are just going to have to make better tablets than Microsoft – or Google for that matter.  Even Samsung, which has plied Android all the way to leadership in the dog-eat-dog smartphone market, should have pause before charging ahead on homegrown software, after repeated failures over the years.

I see Microsoft’s decision to go solo on Surface as a realistic assessment of the friction and inevitable delay added through the OEM channel in a market where time is of the essence.  Microsoft’s call may also shed more light on Google’s acquisition of Motorola.  An acceleration of the path between innovation and introduction may be worth the grumblings of the ecosystem.

For our full research notes, please visit our published research site.

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