Microsoft Surface: 5 Reasons to Pay Attention to This iPad Challenger

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Microsoft surfaceMicrosoft's (MSFT) plan to take on Apple's (AAPL) iconic iPad finally surfaced on Monday.

The arrival of Surface -- the name of Microsoft's upcoming Windows-based tablet -- will naturally be met with a lot of skepticism. Despite the company's success in software and video game consoles, it has done poorly when trying to play catch up with Apple in the past.

The Zune was no iPod. Last year's commitment giving Nokia (NOK) billions in support in return for the handset maker's championing of Microsoft's fledgling mobile operating system has yet to result in any serious inroads against Apple's iPhone.

Why should Microsoft fare any better with tablets?

Well, there are plenty of reasons to take the world's largest software company seriously in its push to make Surface a mainstream device, and not just because it's taking a big gamble by breaking from tradition and putting out the computing hardware on its own. Here are some reasons to get excited.

Microsoft surface

1. Microsoft's going bigger

Early tablet makers tried to match the iPad's screen size of 9.7 inches, but the push to beat Apple on price eventually found companies saving money by thinking smaller.

Amazon's (AMZN) Kindle, Barnes & Noble's (BKS) Nook, and Research In Motion's (RIMM) PlayBook have all settled on 7-inch touchscreens.

Surface is going with a larger 10.6-inch screen. The end result is a tablet that may be larger in terms of lugging around, but it should provide a better device to consume video. The fact that the Surface features a kickstand -- allowing it to stand up like a photo frame -- makes this a device that folks can simply place on a desk or table and enjoy.

2. Surface is coming in two flavors

Microsoft watchers weren't sure what they would be getting ahead of Monday afternoon's rollout. Would they be getting a simplified tablet or a high-end computing device? Well, buyers will have a choice.

The first Surface that will hit the market in a few months will be fueled by the stripped down Windows RT version of Microsoft's new operating system and will use the same ARM-based processor architecture as many of popular tablets already on the market. A few months later, the company will introduce a beefier model using Intel (INTC) chips and running Windows 8 Pro.

Aiming for both ends of the market matters.

3. Two words: Flash and Office

Apple's iOS doesn't support Flash, something that has helped Android gain a foothold with visitors of sites using the popular video platform. Surface will support Flash.

As a Windows-powered device, Surface will also play nice with the undisputed champ among productivity suites: Microsoft Office. There may be Android and iOS apps that indirectly work with Office files, but this is the real McCoy.

4. Microsoft has friends in high places

It's pretty convenient that Netflix (NFLX) CEO Reed Hastings sits on Microsoft's board of directors. That relationship may have been instrumental in granting the Xbox 360 a year of streaming exclusivity before Netflix became available on the rival PS3 and Wii consoles.

It wasn't a surprise to hear on Monday that Netflix will stream on Surface.

5. Microsoft isn't afraid to spend money to make money

Microsoft reportedly sells the Xbox at a loss, knowing that it can make it back in software and digital goodies. Its move to spend billions in support of Nokia's Lumia initiative is another example of Microsoft willing to take a near-term hit for the potential of long-term reward.

Microsoft didn't reveal pricing information on either Surface model this week, but it would be a surprise if the company is aiming for Apple-sized profit margins. Microsoft knows that it has to sacrifice margins to hit a price point that's compelling to mainstream audiences. It will also need to shell out big bucks to top developers to make sure that they're porting over the hottest iOS and Android downloads for Surface.

Microsoft's not going to bow out quietly here. It knows that it has too much at stake as tablets and smartphones are eating into the traditional PC market.



Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article, except for Netflix. The Motley Fool owns shares of Apple, Microsoft, Intel, Amazon.com, and Netflix. Motley Fool newsletter services have recommended buying shares of Intel, Amazon.com, Apple, Microsoft, and Netflix; writing puts on Barnes & Noble; and creating bull call spread positions in Microsoft and Apple.



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5 Comments

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thomasjperez1

Microsoft Defender needs to scan your tablet. Ahh, hell no!

August 10 2012 at 5:03 AM Report abuse rate up rate down Reply
thomasjperez1

Microsoft defender needs to scan your tablet. Ahh, hell no!

August 10 2012 at 5:01 AM Report abuse rate up rate down Reply
BABIN

Just set price for this around from $49.99 to $99.99 no more of that because this stuff will be manufactured in China anyway and Microsoft will not make big profit from each one but in the end in that range of price will sell 200 times more from Apple and will make more profit from Apple in the end and top of that anyone can afford that price without using credit or go deep in the debt to buy stuff likes from Apple which is anyway only Entertainemnt from both companies which in my opinion person no need to throw away big amount of the money only for Entertainment...In the end any company can go trough very easy and beat just like that competitors if selling similar quality for 5 time less from competitors and like I say already any company can do that because similar stuff still is manufactured in China and even after 5 times less price from competitors any company still can make profit but not that much like big one but like I say too in the end any company can sell 200 times more from competors similar stuff because that small price many peoples can afford...AMEN...

June 21 2012 at 3:04 AM Report abuse rate up rate down Reply
Ron

Most tablets don't print wirelessly. Can this one print via a wifi network printer? Also, can the word documents file be saved to thumbdrive to contiue work on the file at the office? Thanks. drof2th@aol.com

June 20 2012 at 1:28 PM Report abuse rate up rate down Reply
drgregdc1

I'll check it out on version 10.2. Microsoft took off as a leader in the beginning because they monopolized the market. But the tortise (APPL) kept at it and eventually built a better product that won the race. I for one got sick and tired of paying for Microsoft experiments with their software while we suffered with the poor quality, i.e. Vista. Switched to a MAC at home 4 years ago and I won't be back to the Microsoft store.

June 20 2012 at 12:44 PM Report abuse rate up rate down Reply
1 reply to drgregdc1's comment
DJ

Yet again, we see a myopic reply from a presumably young Apple consumer. I used my first Apple product in 1982. They haven't been a tortoise at all. Remember NEXT? The Lisa? Over the years they frequently marketed aging technology with edgy design (think design patent as opposed to utility patent) and OVERsimplified interfaces sold to consumers as cool. In providing technical support, I found the reality is that as many elderly folks buy them for the oversimplicity as duped youths, but rarely people with real technical needs until they put Unix legacy under the hood. They have been ahead (though this may be changing) with professional media production applications, but have never answered the productivity needs that will be a hallmark of true convergence. You can rightfully complain about the evil MS empire as to Apple's challenges here, but Apple has sucked the juices out of every evil opportunity they've encountered. Their current success is all about a business model. They do have a few significant utility patents they deserve credit for. But they are so off standard with progressive technologies that they - once again - seem poised to be marketing older technology on the premise of coolness (SIRI got some buzz, but it may be suffering Newton's fate as far as being immature on the market). The Surface will be an underpowered hybrid that will get certain things wrong and may not have much market share. But the best description thus far has been "reference design" for hybrid/converging productivity hardware manufacturers. Something IS going on here that could easily leapfrog all of Apple's significant patents if they don't catch up on productivity (they are much more like a slug that isn't even in the race). Enjoy your iOS fart apps in your house parents' ecosystem. I'm looking forward to an understated but ACTUALLY cool series of converged mobile devices.

August 23 2012 at 1:57 PM Report abuse rate up rate down Reply
newstrade

Rick sure sounds like a big Microsoft fan boy. Here are my thought on the write up

1) Larger screen, no one will care about this. now you need a bigger bag, a bigger purse. Will not make a difference in the market
2) 2 flavors. How about getting one flavor for people to like instead of 2 flavors for people to dislike.
3) Flash and office - Lets be real most sites are doing away with flash to html 5 and these days you can do everything with office files on an Ipad or an Android tablet.
4)Well, Netflix is losing a tons of market share competitors and cable companies. you can't even make a case here. What about Google and Apple "having friends in high places"
5) totally agree on this one. Microsoft knows how to spend money and will spend a ton of money trying to make the surface a competitor, one small problem - there are no apps for the Windows phone, Surface.

Microsoft is at least 2 to 3 years away from even being a competitor in the tablet market..

June 20 2012 at 8:01 AM Report abuse -2 rate up rate down Reply
1 reply to newstrade's comment
DJ

Apple fan bois keep saying everything is going HTML5, but I don't see it. Why are MOST (not just a few) sites that I want to visit still using Flash for essential functions (not just media)? Oh! That's right! Apple's users are just consumers and not broadly trained developers who would volunteer in droves to help all of these small companies update their sites. Funny how Jobs' prophecy hasn't materialized given that it didn't make sense to begin with. It is just an Apple/Adobe hatchet that won't be buried any sooner than MOST sites will be implementing HTML5. It WILL definitely happen and it will be a good thing. But, until then, face the fact that Jobs hustled kids into buying candy at a steep price one last time instead of the spinach that would help them produce (rather than consume).

August 23 2012 at 2:15 PM Report abuse +1 rate up rate down Reply