Microsoft recently unveiled its prototype, Surface, their version of a tablet or alternative device to a personal computer. It is questionable how Microsoft, a known software company, will be able to manufacture and sell a tablet device that is a contender in the marketplace against devices such as the iPad. Thesis: It is critical that Microsoft produce a device that overcomes the limitations of its competitors and adds features that set it apart, in order to define itself in the tablet market. Background Information
Microsoft CEO Steve Ballmer unveiled the company’s new tablet Surface, at a press event in Hollywood last week. According to Ballmer, “Surface is a PC, the Surface is a tablet and the Surface is something new that we think people will really love” (Austin, 2012). Reviews of the device were generally favorable, describing Surface and beautiful and “very Apple-like” (Ray, 2012). Microsoft is introducing Surface to the market as two separate tablets aimed at two completely different types of users. The first tablet is Surface RT or Surface. The basic version, which weighs 1.5 pounds and is only 9 millimeters thick, is designed to run on a low-power version of Windows 8, called RT (Stern, 2012). It is the equivalent to Apple’s IOS that runs their mobile devices. The Surface RT will come preloaded with Microsoft’s Home and Student version of Microsoft Office (Word, Excel, PowerPoint, and OneNote). This software accessibility on a tablet makes it instantly more productive for Windows users that live in a Microsoft Office world (Colburn, 2012). The company took a completely different approach with Surface Pro. This tablet is Microsoft’s way to hedge against the creation of apps being their only platform to gain traction against Apple and Android (Colburn, 2012). The two-pound Surface Pro will use more powerful Ivy Bridge processors from Intel. The Pro, 13.5 mm thick, allows users to type on its keyboard, move things with their fingers on the touch-pad screen, or write on it with a stylus (Stern, 2012). Surface Pro is powered by Windows 8 Pro, so it will essentially be competing with lower end laptops and ultra-book computers. Unlike typical tablets, the Surface Pro will be able to run virtually any program that you can run on your home or office computer, which will likely make it more appealing to corporate users (Colburn, 2012). Both devices have a couple features that are unique in regard to other tablets in the market. Surface RT and Surface Pro have a built-in stand on the back, and a wider screen which more closely mimics a true wide screen television display so movies don’t have the upper and lower black bars when viewing (Colburn, 2012). Microsoft didn’t release any dates, but the Windows RT version of the Surface is expected to come out with the launch of Windows 8 due out in the fall. The more powerful Surface Pro version is scheduled to come out a few months later in early 2013 (Austin, 2012). Microsoft made its name -- becoming a dominant force in personal computing -- with such software as Windows and its Microsoft Office programs. Windows 8 is the first version to be designed, not just for computers, but for tablets and other mobile devices with touch screens (Stern, 2012).With the introduction of Surface, Microsoft is stepping out into new territory boasting in a press release that the Surface was “conceived, designed and engineered entirely by Microsoft employees.” (Austin, 2012) Ballmer said Microsoft remains committed to its hardware partners. But he also took a page from the late Apple (ticker: AAPL) founder, Steve Jobs, declaring that people's interactions with machines are better when "all aspects of the experience—hardware and software—are considered in working together." Rick Sherlund, who follows Microsoft for Nomura Equity Research, believes competition between Microsoft, HP and...
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