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Microsoft Surface and its impact on the tablet market

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Microsoft Surface and its impact on the tablet market
With the introduction of the iPad, Apple redefined what the words “tablet computer” mean. Before the iPad, they mostly meant a big, clunky laptop-like device with an unresponsive swivel-screen that could eventually take the form of about three or four iPads stacked on top of each other. It's true that Bill Gates has always been a believer in the tablet form-factor, but due to the way Microsoft made business  (through partnerships with hardware manufacturers) and overall lack of focus as far as this product category goes, a true consumer-friendly tablet never saw the light of day. It became clear that it would take much more than just putting a touchscreen and desktop Windows on a laptop to get things going. In the end, those were highly-unsuccessful devices that few people bought. The mass-market tablets that were going to rule the computing world were mostly seen as something that belonged to the future.


THE RISE OF TABLETS

Obviously, the future came with the launch of the iPad - all of a sudden, tablets (iPads) became one of the hottest tech commodities. Just like that, the “giant iPod touch” sold in millions, and, as you might expect, other tech companies saw great opportunity in this newly-formed market. However, as it often happens with companies that would find themselves in the category of “others”, their first tablets felt like rushed products, with sub-par design and user experience. That was partly due to the fact that there wasn't any suitable open-source or licensable operating system to put in such a device, so they had to make do with whatever was available. Well, Android was available, so they made a big touchscreen device, put scaled-up Android on it, and called it a tablet. Of course, no one bought it. It wasn't until Google made significant improvements to its platform with Honeycomb and Ice Cream Sandwich, when Android tablets actually began to pick up pace. According to research firm IDC, Apple's iPad held a market share of 68% as of Q1 2012, so that means those Android tabs do get off the shelves. Can you guess why people are buying them? It's certainly not because those buyers hate Apple. Well, actually there might be some of those cases, but the majority of users deciding to go with an Android-powered tablet do it because they want to be able to use it more like a PC. Of course, there's nothing wrong with this. Some things are just easier if you do them the “old-fashioned” way, and the open nature of Android helps a lot.

Still, a lot of those Android tablets which find their way to the hands of consumers end up being used as iPads – for general consumer stuff like reading ebooks, watching movies, YouTube, email, social-networking, casual games... Once you're done tinkering with the OS, and once you try out about a hundred apps, you kind of get to the conclusion that you can't get serious work done on this thing, because there's no serious software written for it. Sure, there are hundreds of thousands of apps available for Android tablets, but almost all of those are very basic tools. And even if they have the features, in most cases those apps are so ugly and look so amateurish (as if their UIs were designed by the programmers who wrote them), that it makes you question whether it's actually a good idea to trust this device for anything more than uploading a YouTube video or writing a short email/blog post. It's strange, really, but you might be able to do more with the iPad's higher-quality apps, regardless of its closed, consumer-centric OS.


MICROSOFT SURFACE

After this lengthy first part, two things should have become clear.

1. The world is now ready for tablet computers;

2. The world is in need of more capable tablets.

Sure, feeding Om Nom with candy is fun for a while, but once they hit the Home button, many people want to be able to do something meaningful with their tablets, and by the looks of it, this may soon be possible.

Microsoft Surface and its impact on the tablet market
As you're surely aware, Microsoft introduced its new Surface family of tablets this Monday. Everyone knew that Windows 8 tablets are on their way, but the announcement of Microsoft's Surface dramatically increased the interest.

We won't hide it – we liked what we saw. To us, it's almost as if the Surface is the second real tablet after the iPad. It's like an iPad, but for professionals, and that's because it delivers on both the hardware and software fronts, in a big way. Windows 8 represents a big change for Microsoft, and the company wasn't willing to launch it on a pack of black slates, all looking like a poor man's iPad. It needed something better – a tablet that is both beautiful, and ready for business. It has recognized that in this day and age, people need powerful tools, but they also appreciate quality products. Because of this, a lot of people nowadays would love to own a tablet, but end up buying a notebook, as they don't want to sacrifice on functionality. Meanwhile, Apple is making huge profits from its products, because people are ready to pay when it's worth it, when a device is no longer just a piece of tech, but a piece of art as well.

Microsoft has obviously learned a lesson here, and felt the need to show its partners how it's done, how it envisions the Windows 8 device. Judging by the Surface, the Windows 8 tablet has to scream premium quality, has to be cool, and strike the right chords that would establish an emotional connection with the user. Of course, this doesn't mean there won't be lower-end Windows 8 devices, but it's the high-margin, top-shelf products that rake in the most profits. Until now, Microsoft was OK with what its partners produced, but now the company wants to see a change, and is offering the Surface as an example of where it wants to go. Whether the others will follow is yet to be seen.

Many argue that Microsoft has upset its hardware partners by producing its own device, but we doubt this is too serious. Have the Nexus phones made Android manufacturers reconsider their product ranges? Not really. And remember that Google is expected to announce a Nexus tablet in about a week. Even with the Surface around, there will still be a lot of money to be made with Windows 8.

Microsoft Surface and its impact on the tablet market
So, in conclusion of this part, we do see the Surface as a winner for Microsoft. Actually, the Intel-powered Windows 8 Pro version seems more likely to find faster user adoption at first, as it will be filling an obvious gap in tablet town. The lower-priced Windows RT version should also be doing well, though, as it will be packing more appeal than most of the competition. However, its success will also depend on the program/app catalog that it will launch with. As you probably know, you won't be able to run any current Windows programs on Windows RT – developers will have to rework their apps first to make them usable on this new ARM-based system.

The great product seems to be at hand, but Redmond still has some work to do as far as third-party software developer support goes, in order to ensure a smooth start for its consumer-oriented tablet.


COLLISION COURSE

There seems to be a lot of concern regarding the pricing of these devices. Microsoft has announced that the Windows RT Surface will cost as much as comparable tablets, and the Windows 8 Pro version will cost as much as comparable ultrabooks. While it would have been much better if they simply spilled the beans on the exact prices, it's not so difficult to get the message.

The ARM-based Microsoft Surface should cost somewhere around $599, maybe a bit more. That's about equal to an iPad 32GB and high-end Android tablets. Sure, you'll be able to find a good Android tab at a lower cost, but it doesn't really matter that much, because those users who will be torn between Windows and Android are so few, and Microsoft has so much more marketing and distribution power compared to a single Android manufacturer, that there could hardly be a real fight here. That is in case Microsoft decides to push hard, and not leave it all to its partners. But with all the talk about touch-covers and type-covers, it looks like Microsoft has decided to make some cash.

It's unlikely that the Surface (ARM edition) will hit iPad sales too hard, because the iPad is the consumer tablet. It has a very strong position there, which is backed up with tons of quality software, so there's little reason for the casual user to move away. However, it wouldn't surprise us if Android tablet sales suffer significantly. Android tablets are just starting the gain prominence, and this is mostly because of Android's open nature, giving users freedom to do some stuff that cannot be done on an iPad. It's simple - if you want a tablet now, but don't like the Apple way of doing things, you get an Android tablet. But with the Surface and other Windows tablets, it'll be hard for most users to continue siding with Android.

Microsoft Surface and its impact on the tablet market
The Intel-based Microsoft Surface will likely touch the $899 price point, or maybe even higher. That's a lot more than most Android tablets, but then again, a lot of people will be tempted by the superior design and full-featured Windows 8 Pro experience. And, as we said, people are ready to pay when it's worth it. With this Surface, you'll not only get a portable tablet, you'll get a full PC which packs all the punch you need for executing some real software – like the one that's only available on Windows and Mac.

Are we finally witnessing the advent of the true all-in-one computer? No, but we do think that there will soon be major tectonic shifts in the tablet industry. Sure, others may have a head start in the tablet space, but Microsoft has a significant head start in software, and that's going to help the Surface tremendously.

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