Microsoft has become mildly famous -- in hindsight -- for being early, far too early, to important technology products and trend swings. Is history repeating itself with the Surface Pro 3?
Microsoft beat Samsung to smartwatches by nearly a decade. It trumpeted tablets nine years before Apple's then-CEO Steve Jobs showed off the iPad by sitting in a comfortable chair. Its Windows Mobile was crushing it in the embryonic smartphone market with a 42% share by the time Apple pulled the iPhone from its R&D pocket and changed the rules.
Microsoft has become mildly famous -- in hindsight -- for being early, far too early, to important technology products and trend swings. There were reasons why Microsoft failed in those early attempts -- technology and connectivity and usage reasons -- but what everyone remembers is that the people in Redmond, Wash. jumped the gun.
And then when rivals -- standing, many would argue -- on the shoulders of Microsoft, launched products that redefined a market or created a new one, the company was caught flat-footed.
The Surface Pro is the next candidate for Microsoft's premature introduction problem.
The latest iteration of the Surface Pro was introduced last week, and Microsoft was crystal clear about how it wanted customers to see the device. "This is the tablet that can replace your laptop," said Panos Panay, Microsoft's top Surface executive, during the May 20 introduction of the Surface Pro 3. "I am sure that this is the tablet that can replace the laptop. I am sure."
Panay didn't just talk that theme, he showed it, too. He put the Surface Pro 3, minus its keyboard, on one pan of a scale, a 13-in. MacBook Air from Apple on the other. The pan with the Air banged down, the one with the Surface rose. Panos beamed.
In Redmond, the personality of Surface Pro 3 is explicit, as is the company's strategy.
This isn't just a tablet, as are the iPad and a gazillion Android devices. The Surface Pro 3 is a tablet meant to replace a laptop. Microsoft does not have a tablet strategy for its own hardware -- it's not going head-to-head with the iPad, in any of the sizes Apple produces -- although it does have a strategy for its OEMs, who are welcome to battle for the scraps left by iOS and Android. Instead, Microsoft has a tablet-replaces-notebook strategy, and the goal is to hijack sales that would otherwise have been tallied by someone else in the "notebook" column, more specifically, the "premium notebook" column.
Tactically, Microsoft, by comparing the Surface Pro 3 to the MacBook Air, implied that that "someone else" was Apple, which more or less owns the premium notebook market. Or at least it wanted its OEMs to believe that.
"We're not interested in competing with our OEMs when it comes to hardware," said CEO Satya Nadella at the Surface Pro 3 event.
Whether the Surface Pro 3 can cannibalize sales of Apple's top-tier, top-priced laptops -- the Air in particular, but also the MacBook Pro -- is an unknown, although at first glance it seems unlikely that Mac owners can be convinced to desert. More likely, OEMs selling premium-priced Windows notebooks watched the webcast last week and, for all of Nadella's words, were anxious or angry or both as their operating system provider intruded into their territory even more brazenly than before.
"Our goal is to create new categories and spark new demand for our entire ecosystem," Nadella continued. "That's what inspires us and motivates us with what we are doing in our devices and hardware."
Earlier in the century came new categories, like the smartwatches and slates and smartphones. Now, for Microsoft, it's tablets that replace laptops.
But there's no evidence that more than a small fraction of computer and tablet users want anything to do with the tablet-as-laptop category at the moment. The constant drumbeat by analysts who count and research firms that survey has been that tablets are perceived, and then used, as companions to traditional personal computers -- not as replacements.
Panos himself, citing some proprietary research, claimed that 96% of those who own an iPad also own a notebook, a telling statistic that doesn't, as he meant to suggest, mean that those 96% want to ditch either one, much less both, for a 2-in-1. Instead, it plays to the idea that most people want separate devices.
Tablets have sold in the quantities they have, not because they can replace a PC, but because they simplify some of the tasks once possible only on a PC.
Most people did not shove their PCs or Macs into the attic as soon as they bought a tablet. Rather, they decided a tablet was better, simpler to use or more convenient for some chores -- like reading an e-book, watching a movie or TV show, browsing the Web -- than they had once done on a PC. Their tablets were usable in places a laptop was at best inconvenient, like bedrooms or couches or even bathrooms.
So the PC -- the smarter tool for a whole long list of tasks like writing or crunching numbers or finessing photos -- stayed in place for longer, stationary sessions. For every fringe example of someone who said they spent 100% of their computing time on a tablet, there were thousands who split the difference between a tablet and laptop.
Even those who have resisted tablets understand that the devices do not replace a personal computer. According to a poll by Kantar, of those who have not yet bought a tablet, only 20% said that a lack of a keyboard -- the defining component of Microsoft's tablet-is-notebook concept -- was among their reasons. More important, they said, was the added expense, and for 72%, it was their belief that a tablet was unnecessary because they were happy with their current PC.
Yet some long-serving analysts see the inroads of tablets onto laptop turf as inevitable, and feel Microsoft's idea has merit.
"Maybe it's best to think about [the Surface Pro 3] as where the next replacement cycle for PCs will go, and how something like it gives companies an upgrade path for their [current] laptops and PCs," said Carolina Milanesi, chief of research at Kantar WorldPanel Comtech, in an interview last week.
Not that the Surface Pro 3 is necessarily the Grail. Sameer Singh of Tech-Thoughts put it in stark terms. "The challenge for tablets is to move upmarket into productivity use cases without compromising on their advantages over PCs -- 1) ease of use, and 2) lower price points," Singh wrote last week. "With the Windows 8 operating system and a price tag starting at $930 (including the keyboard cover), the Surface Pro 3 misses on both points."
And the movement, if there is to be one, will be slow, an accretion, not a fast flip from tablet and notebook to tablet is notebook. In March, IDC forecast a long slog. For 2014, IDC said, the 2-in-1 category would account for just over 10 million units, or about 3% of all tablet shipments, equivalent to around 4% of all PCs. Even by 2018, 2-in-1s will comprise just 8% of all tablets, less than 11% of all personal computers.
And in January, Gartner said only one in eight consumers -- or about 12.5% -- claimed that they'd replace their laptop with a tablet.
Apple, the putative aim of Microsoft's Surface Pro 3, hasn't warmed to the idea either. While rumors continue to swirl of a larger iPad with a split-screen, and analysts have prognosticated that as tablet sales flag, Cupertino will see the advantage in going upmarket into tablet productivity, much of the latter may be just wishful thinking. Apple has a habit of not doing what experts and pundits believe it should.
It's true that Apple CEO Tim Cook has silenced his criticisms of the flaws of 2-in-1s -- the last time he disparaged them was October 2012, when he likened them to a "car that flies and floats." But there's no proof that the company will soon impinge on its MacBook Air, a true notebook, with a hybrid -- its professed acceptance of cannibalization notwithstanding.
The easy explanation is that Apple, which has a better track record than Microsoft in creating new categories, sees no need at the moment to replace notebooks. A corollary is that, as it has before, Apple will wait until it judges the time is right.
When will that be? Unknown. But the bet is that Microsoft has again come to the party with a flawed product at an unacceptable price. And in its attempt to be early, to quell the chatter that it's usually late, it will pay for being too early. Just as it has in the past.
Microsoft did not directly address timing or cite statistics claiming that huge swaths of customers are clamoring for a tablet that replaces a notebook. But it was telling that Nadella felt it necessary, two years after the Surface's debut, to defend the mere existence of a hardware effort, the devices half of his predecessor's "devices and services" plan.
"The question that needs to be asked and answered is: Why hardware?" Nadella asked last week. "We are not building hardware for hardware's sake."
No? Then what is it doing?
Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at @gkeizer, on Google+ or subscribe to Gregg's RSS feed. His email address is email@example.com.
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This story, "Perspective: The Surface Pro is Microsoft's latest premature introduction problem" was originally published by Computerworld.