One of the main challenges for Microsoft's new CEO won’t be appealing to the enterprise or growing Microsoft’s cloud business; it’ll be finding a way to make people actually care about the company's high profile Surface tablet.
Satya Nadella wasn’t the favorite for Microsoft’s chief executive spot when Steve Ballmer announced last year that he was planning to retire. But as more and more people fell off the possible list, it became clear that Microsoft wanted someone who understood its company and could lead it from a place of clarity on what it should and should not do in the coming years.
Satya Nadella’s resume is about as strong as any Microsoft investor could have hoped. He helped lead Microsoft’s cloud division from obscurity to growth, he helped shape the company’s enterprise values, and he has enough experience at the software giant to know what (and who) works.
Since it's been on store shelves, the Surface has failed to impress consumers and far too few enterprise customers have even taken notice. At this point, it’s more likely that the Surface will ultimately fail than find a way to match the iPad.
That is, of course, unless Nadella can find a way to solve the tablet’s many issues. And luckily for him, I have a brief outline to help him do just that.
Read on, Mr. Nadella, to find out what you should do to make Surface a winner:
1. Get it right with Windows 9
The time has come for Nadella to admit that Windows 8 and Windows RT just don’t work in the tablet market. The operating system might have seemed like an ideal choice for slates, but we know now that consumers and enterprise customers didn’t feel comfortable with it and the software fell short of actually providing an all-around pleasurable experience to users.
But all of that doesn’t mean that Surface is dead. When Nadella unveils Windows 9 – likely sometime in the next few months – he’ll need to prove that the operating system is designed with tablets in mind and has all of the nifty features that make a high-end operating system work as well as a mobile OS on the form factor.
Given Windows 8’s troubles, Microsoft will need Windows 9 to change the perception of the company’s software strategy. More than that, Windows 9 will need to be an operating system that proves Microsoft has it right in tablets.
For Nadella, all of that means spending an inordinate amount of time with the Windows team making sure that the operating system is optimized for tablets, comes with mobile-friendly features, like near-field communication support, and doesn’t cause any battery issues.
It’s impossible to undermine just how important Windows 9 will be to Microsoft’s Surface in the coming years.
2. Be willing to take a big loss
One of the big problems with Surface tablets at the onset was their high price tag. Microsoft was charging customers high-end iPad prices on the slate when they were expecting something much cheaper. For Microsoft, the high-end components and software justified the price tag. For customers, the company was viewed as out of sync with public opinion.
When Microsoft unveils the next high-end Surface, the company can’t play games and must be willing to take a big loss on the device. That’s right – the top-of-the-line Surface should cost somewhere around $500 or $600, even though its predecessor pushed $900.
One of the most important things game companies understand is that if they sell consoles for a loss, they can build a vast installed base and start winning the fight on software. Since Microsoft is competing in that space, it should also realize the importance of being willing to take a big loss to appeal to consumers and enterprise customers.
The tablet race is far from over. And what Microsoft needs right now is units in the hands of consumers around the world. If that means that a company with tens of billions of dollars in cash on hand must take a loss for a year to catch up to Android and iOS, then so be it.
If consumers start buying up the Surface in large numbers, seeing value in the price tag, Microsoft will be able to sell more copies of Office, get them onto its cloud services, and maybe even get more hardware to think twice about ignoring its platform. In other words, the hardware losses might quickly be made up for on software and services.
If Google and Amazon can achieve strong sales because of cheap prices, why can’t Microsoft do the same with a higher-end tablet? After all, isn’t the future about software and services, anyway?
3. Forget about Apple
The biggest mistake Microsoft and all other competitors make in the mobile space is to focus too heavily on Apple. Granted, the iPad maker is the gold standard in mobile, but that doesn’t mean that companies need to play catch up.
Nadella needs to stress to his company that it doesn’t need to be Apple; it needs to be a new Microsoft that doesn’t care what the iPad maker is doing.
Let’s be honest: Apple is a wildly successful company with billions in the bank, but it’s not going to ultimately win the mobile OS war, and there are signs that more and more people are looking to other platforms to dedicate their cash. Apple, in other words, might be the standard-bearer now, but it might not be that way forever.
So forget about Apple, Nadella, and focus on how the Surface can be the very best slate on the market. Following Apple’s lead or comparing the slate to the iPad makes no sense. Microsoft needs to put away all of that iPad envy and once and for all make other companies want to match its own market plays. Absent that, it’s hard to see how the Surface could ever make a splash in tablets.