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Microsoft's latest Surface tablets don't dazzle industry analysts

Matt Hamblen | Sept. 24, 2013
Sticking with larger displays keeps prices up, and Microsoft still has too few Windows RT apps.

Microsoft's message of productivity will likely work best with enterprise workers using the new Surface Pro 2 tablets, which can also run legacy Windows apps, analysts said.

But the Surface 2 running Windows RT 8.1, even with its bundling of the Office 2013 RT suite, will still be a hard sell. "I understand Microsoft thinks they are making Surface 2 more valuable with Office RT and other interesting services, but they are in a market competing with $200 Android tablets and even the $329 iPad mini," said Tom Mainelli, an analyst at IDC.

Larger Android tablets and the iPad with a 9.7-in. display are still used by a stable, installed user base "which isn't going away," Mainelli added. "Adding a lot of new apps for Windows RT is still an unproven entity to end users."

Mainelli predicted that smaller tablets running Windows 8.1 or Windows RT 8.1 will come from Microsoft's manufacturing partners.

"In many ways, Microsoft Surface would be better served by only having the Surface Pro 2, but it's obvious that Microsoft wants to make Windows on ARM a continuing priority," Mainelli added. The Surface 2 runs an ARM-based Nvidia Tegra 4 processor, while the Surface Pro 2 comes with an Intel Core i5 processor.

The $449 starting price for the Surface 2 is $50 less than what Microsoft charged for the original Surface RT last year. "Lowering that price by $50 certainly helps Microsoft, but I'm not sure it's enough to change buyer's minds," Mainelli said.

Microsoft lessened the pain of continued steep prices on both machines by offering free Skype calling to landlines in 60 countries for a year, unlimited Skype Wi-Fi on 2 million hotspots for a year and 200 GB of free SkyDrive storage for two years.

"I think the Skype and SkyDrive offering will help on the price," said Carolina Milanesi, an analyst at Gartner. Milanesi also said buyers will respond to Microsoft's message that the larger Surface tablets, which cost more to make, are more suited for productivity tasks than smaller devices on the market.

But she conceded that to do well, Microsoft has to market the new tablets aggressively and find lots of retailers to sell them.

Jack Gold, an analyst at J. Gold Associates, said the free SkyDrive offer "doesn't matter." Everybody gives away cloud storage now. It's the cost of entry into the marketplace."

Overall, Gold wasn't impressed. "Other than upgraded hardware with chips primarily and better cameras and a somewhat lower price, I don't see much incentive for people to buy these Surface devices," he said.

 

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