Redmond based tech giant Microsoft (NASDAQ:MSFT) recently unveiled its latest weapon in the global tablet war – Surface Pro 3, and claims that this is “the tablet that can replace your laptop”. This is certainly not the first time that a claim such as this has been made. Tech analysts earlier had thought, the premium Samsung (SSNLF) Galaxy Note tablets will also serve the purpose of a laptop. However, things haven’t been so. But, this time there’s a lot of hype over the latest Surface, and analysts are considering it to be a top notch device. Several also think the Surface Pro 3 might outshine Apple (NASDAQ:AAPL) iPad.
In this article I will discuss why I feel the device can replace your laptop, but can’t overthrow Apple as the ace tablet maker. Let’s dive to find out what the tablet has to offer and why overthrowing Apple isn’t a possibility
- Warning! GuruFocus has detected 9 Warning Signs with MSFT. Click here to check it out.
- MSFT 15-Year Financial Data
- The intrinsic value of MSFT
- Peter Lynch Chart of MSFT
What the device has to offer
The Windows maker has invested a lot of time and money in figuring out the right combination of features that are required to make a tablet self-sufficient, and finally has got it right. Similar to the previous Surface Pro versions, the latest Surface will come in a silver metal casing with Black bezels in the front, will have a rear support to help the device stand, and will support detachable keyboard-cum-flip covers that will come is a variety of colors. So, what’s new? Well, a lot actually.
Microsoft Surface Pro 3, Source: Microsoft
The Surface Pro 3 is not just an improvement over Pro 2. Rather, there are marked differences between the devices. Apart from being lighter, faster and stronger, the latest surface will come with a 12 inch display (as against Pro 2’s 10.6 inch display), and will sport a brilliant resolution of 2160 x 1440 pixels (as against Pro 2’s 1920 x 1080 pixels). Under the hood, the device will be powered by fourth generation Intel (NASDAQ:INTC) Core processor family (i3, i5, i7). This has been done to offer flexible pricing and performance. The Pro 3 weighs only 800 grams and is 9.1mm thick. The company has also made the optical layer a lot thinner and this has reduced the input lag between the screen and the Surface Pen.
Why Microsoft shouldn’t think of overthrowing Apple
From all the information that’s available, it surely seems Microsoft has a very powerful device to offer. But, how successful the Surface Pro 3 will turn out to be is a different question altogether. That depends a host of factors, such as pricing, marketing and promotions, customer’s willingness to be a part of the Microsoft ecosystem, and customers actually giving Microsoft a shot.
The primary problem that Microsoft might face is finding buyers. Consumers associate Surface with tablets. But that’s not the case actually. Surface Pro 3 is more of a laptop than a tablet. So, who will be interested to buy the device? Laptop buyers or tablet buyers? In the market there are not as many laptop buyers as there are tablet buyers. If the company aims it towards the laptop seekers, it will again have to go back to the dwindling demand of the PC market. However, as a tablet, there will be plenty of buyers.
But now the issue becomes the price. In comparison to Apple (NASDAQ:AAPL) iPad Air, Surface Pro 3 is a lot costlier with a price tag that starts from $799, as against iPad Air’s $499. So, this might push away a huge chunk of the market. According to a Bloomberg report, Surface Pro 3 is the best tablet that a lot of money can buy. However, consumers need to understand the differences. The Surface Pro 3 is way more powerful than the iPad Air and will actually make the user forget his laptop. Moreover, Microsoft is making a unique proposition to the laptop buyers, offering them the functionality of a laptop and the convenience of a tablet through a single device.
Consumers who have fully functional laptops won’t go for the Surface. The life of a laptop is way more than that of a tablet. So, the repurchase cycle will also be longer. Secondly, not everyone has tablets. To these buyers, iPads will make more sense. Thirdly, during the holiday season, many give tablets as gifts to their friends and families. They won’t be interested in spending $800 for the purpose.
Every Surface device that the company has made have been of top quality and great usability. Despite this, the series failed to see good traction. The top layer of the tablet buyers, who are ready to shed a good sum of money on the device, are all flocking to get iPads. The buyers range from college students to corporate executives. They all own a laptop and they fancy a tablet for convenience, and don’t want another powerful sleek laptop.
The Windows maker needs to make tempting offers to lure in the buyers. Once buyers get their hands on the device, they will surely like it. The Surface Pro 3 is an outstanding piece of technology, no doubt. However, Microsoft shouldn’t think of overthrowing Apple and Samsung. Surface Pro will have a market of its own.