Why Surface RT is just the tip of Microsoft’s tablet problems

March 25, 2013

We're almost six months on from the introduction of Microsoft’s first Surface tablet – the Surface RT – and Steve Ballmer and friends could be forgiven for thinking that they hoped to be in a better position than they are today.

As it stands, the Redmond giant has supposedly sold around 1.5 million Surface tablets, with just over a million of these said to be the Surface RT. The newer and more powerful Surface Pro, which offers backwards compatibility with existing Windows apps and which runs the full version of Windows 8, is estimated to have sold about 400,000 units in a month.

Improvements needed for Surface RT v2.0

Such figures would place Microsoft in about sixth place in the tablet market, behind the struggling Barnes & Noble, but what surely is of deeper concern is IDC’s forecast of Windows 8 occupying just 7.4% of the tablet market by 2017.

I am not here to talk about the failings of Windows 8 – a number of journalists, Windows 8 OEM partners (I am looking at you Acer & Samsung) will do that for me — but instead Microsoft's troublesome tablet strategy.

The truth is that the Surface RT, the less successful model, is easily remedied. Sure, it’s too expensive, it doesn’t offer enough storage, the mag connector is poor and there is no Outlook app. And there is a dearth of high-quality Metro apps and retailers actually selling the device.

Almost all of these problems can be fixed. For instance, estimates reveal Microsoft makes around $300 from each Surface RT sale so, R&D and marketing costs aside, there is room for some discounting. Or perhaps the firm could bundle the Touch or Type Cover with the device, which cost an extra $119 and $129 respectively.

Other problems can also be tackled. Expanding distributor agreements would be simple and courting developers could be easy as dropping the app store entrance fee, something the Yankee Group has predicted could happen later in the year.

Perhaps the bulkiness of the binary system, which currently restricts available storage to 16GB on a 32GB model, and the troublesome mag connector would be more of a problem, but my point is out there – improving the next Surface RT is possible.

Microsoft’s tablet strategy is bad news for Surface RT

What puzzles me more is Microsoft’s tablet strategy, and frankly the direction it is trying to take the Surface.

Is it, as Steve Ballmer has repeatedly voiced, seeking just to compete with Apple, looking to specifically tap the enterprise space or use Surface as a vehicle to drive Windows 8 adoption and, with that, draw rising revenues from Office — Microsoft’s big cash cow? I am not so sure.

As a result, I think that the Surface products are neither one thing nor the other. The Surface Pro is promoted as a tablet and a laptop, something which could be seen as a compromise. That said, the excellent Touch and Type Covers, and the backwards compatibility with existing Windows apps, means it can ably perform as both.

[As an aside, it's worth noting just how long Microsoft has been pushing tablets as PC-like devices. On trawling YouTube last week, I found some clips from the launch of Microsoft’s Tablet PC Initiative in 2001 and the dual-screen Courier tablet at CES 2010.

[Comments from each launch included "it's a fully-fledged PC" and "it's almost as powerful as a PC running Windows 7."]

The Surface RT appears to be in the no-man's land of the tablet market, however.  It's not powerful enough and doesn't have enough apps (Windows RT after all only supports Metro apps) to challenge iPad or Surface Pro, and yet too expensive to battle with Android.

Under normal circumstances perhaps you could say that Microsoft could drop the price on version 2.0, improve some of the specs and maybe pay a few more developers to build some apps. Maybe then the Surface RT becomes an affordable business model for budget-constrained professionals.

But then along comes Windows Blue – an update which could well herald cheaper and smaller Windows-powered tablets, including from Microsoft. Maybe that could see the Surface RT being squeezed out. Indeed, some reports claim that Windows Blue will replace Windows RT.

This isn't to say that Microsoft is a lost cause when it comes to tablets. It is a massive company teeming with innovation, talent and great products in other areas. The Surface Pro has a promising future, and will probably improve again on its second iteration.

But I worry that the Surface RT will go the way of the Zune – a reasonable product which failed because of poor marketing and, as one astute blog commentator put recently, “a lack of consistent placement within Microsoft’s business – i.e. there was none”.

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