After announcing a pair of phones as well as the HP TouchPad, HP abruptly discontinued the TouchPad, discounting it to $99 to rid itself of the extra inventory. And before you could say "Sharknado," the TouchPad was the Internet's darling, selling so quickly that HP decided to make another batch.
In general, Microsoft predicated the Surface's value proposition on several things: the quality of its construction, including the VaporMg material and the kickstand; Microsoft's own software and services; an apps market that would leverage the historical Windows developer base; and to a lesser extent, the novelty of a Windows tablet.
Soon after, the Surface's advantages were methodically knocked down: the Google Nexus 7, then the Apple iPad mini, made the Surface seem large and ungainly; the novelty wore off; and, of course, customers, developers and partners turned their collective nose up at Windows RT. It didn't help that the Surface RT competed with Microsoft's traditional OEM partners; Samsung, Lenovo, and others refused to offer their own Windows RT products. Time has been a bit kinder to Microsoft's Metro apps, but the delays in convincing third-party developers like Facebook to sign on have undeniably hurt Microsoft.
Right now, the average consumer most likely considers the Surface RT to be good for little more than surfing the Web and running Microsoft Office. At $349 for a 32 GB model—$150 more than the Nexus 7, which will be refreshed soon—the Surface RT just looks like a rotten deal. However, a 32 GB Surface RT is now $250 less than an iPad, a fact that Microsoft points out in its latest commercial. Will the recent price cut make up for a much weaker app environment? I'm not sure. The Windows RT brand appears heavily bruised.
Microsoft must demonstrate the value proposition of the Surface RT tablet, pronto. To its credit, it's done so with its latest commercials, emphasizing Office. But even with the value that Office brings, a further price cut looks inevitable to bring it in line with competing solutions. But if it does so, it looks even weaker than before. It's an ugly situation.
And there's no backing down now. "Windows RT is like Intel's Itanium processor in a way," Moorhead said in an interview. "They have a huge commitment to it."
Moorhead, who worked at rival AMD for most of his career, knows the analogy well: a massive, power-hungry chip for the 1 percent of the high-performance computing world, the Itanium was notoriously dubbed the "Itanic" following Intel's grandiose pronouncements of its success and its quick trip out of sight, languishing within HP's highest-end systems, when Intel's own Xeon chip had largely replaced it elsewhere.
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