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Has Microsoft Lost the Tablet Battle Already?

June 26, 2014 | About:

When Microsoft (NASDAQ:MSFT) announced its Surface Pro 3 based on Intel's (INTC) current-generation Haswell processor, the move seemed a bit perplexing to some. While Haswell is a great chip for Ultrabooks, it's still not quite there for tablets/detachable form factors that really sort of get to the vision of a true no-compromise convergence of tablets and PCs that Surface Pro has sought for years. After ASUS' keynote at Computex, it seems that the Surface Pro 3 could already be obsolete.

The ASUS T300 Chi with Intel's new Core M smokes Surface Pro
At Computex, ASUS demonstrated one of its next-generation product designs based on Intel's new 14-nanometer Core M processor known as the T300 Chi. This is a fanless 12.5-inch detachable laptop with a 2560x1440 display, LTE support, and a thickness of 7.3 millimeters (for reference, the iPad Air weighs in at 7.5 millimeters thick). For the first time, there finally seems to be a "no compromises" detachable design based on Intel's Core processors.

The ASUS T300 Chi. Source: ASUS via AnandTech.

Now, compare this to Microsoft's Surface Pro 3. It comes packed with a 15-watt thermal design power Haswell part (intended for Ultrabooks), has a fan, weighs in at 9.1 millimeters thick, and is still very much a "compromised" device. It's a lot better than the prior-generation Surface Pro 2, but Haswell -- as nice as it was -- still wasn't the right chip to realize this 2-in-1 vision.

Further illustrating the futility of Surface
It's clear that Microsoft's and Intel's hardware partners are really on the ball these days across a variety of price points. The low-cost ASUS T100 with an Intel Atom chip in it for only $350 has proven a success in the market thanks to solid performance and features coupled with good build quality for the price. These hardware OEMs are very good at what they do and have the benefit of scale and experience. Intel is good at chips and reference platforms, and Microsoft is good at developing efficient operating systems. This is why the whole horizontal model has worked so well to date.

Microsoft's Surface Pro 3. Source: Microsoft.

Why does Microsoft want to continue this hardware race when clearly the OEMs -- the ones paying Microsoft a nice, fat license fee for each device with a screen size above nine inches sold -- have a good handle on the situation? Does Microsoft really need to try to copy Apple when it can instead be a good steward of its Windows platform and ecosystem?

It's going to be tough for Microsoft to sell Surface Pro 3 when devices like the ASUS T300 Chi will be available in the market by the end of the year. Microsoft may be able to sell the Surface Pro 3 for the back to school selling season, but after that the sales are likely to trail off rather quickly. Will Microsoft release a Surface Pro 4 within the next six months or so based on Broadwell in order to compete? Only time will tell.

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