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On June 18th in Los Angeles, Microsoft introduced the Surface
tablet family of products. This is the first time Microsoft has ventured into
making its own tablet, which will run its upcoming Windows 8 and Windows RT
operating systems.
There will be two versions: an ARM-based tablet
(Surface for Windows RT) that will run Windows RT and an x86-based
tablet (Surface for Windows 8 Pro) that will run Windows 8. The ARM
version of
the Surface, which utilizes an unnamed Nvidia processor (likely Tegra 3)
will become available at the time of Windows 8/RT release around
October.
The x86 version (Surface Pro) will arrive about three months after the
initial Windows
8 release. There was no mention of an Asia/Pacific release date, but
given
Microsoft's record of releasing Windows 7 as a worldwide product, it
could be
likely that Surface for Windows RT (Surface RT) will be available in
English-based Asian markets with Windows RT's worldwide release,
assuming that it has worked out its channel plans.
Effectively two different products, Surface RT and Surface
Pro share very similar physical dimensions, as well as the selection of ports.
The design of the device is understatedly elegant, functional, and actually
quite thin (about 0.1mm thinner than the new iPad). It's obvious that Microsoft
wanted to create an integrated experience for the users, starting with the
operating system, then the device, and hopefully the ecosystem.
General Observations
Being the latecomer to the party has its advantages:
Microsoft had two years to observe Apple and Google battling it out for the
tablet space. Microsoft has learned a valuable, free lesson that Google has paid
for dearly: a seamless user experience could be more difficult to achieve if an OS vendor relied
on OEM partners to make the device. To that end, Microsoft is actually in the
lead compared to Google in that Microsoft has taken the first step to announce
Microsoft-branded Windows 8/RT tablets while Google has yet to publicly
announce its not-so-secretive Nexus
tablet.
Although initial impressions of the Surface tablets are
good, Microsoft purposefully withheld additional information for the Surface
tablets. Specifics on the pricing, battery life, and in-depth hardware
configuration were not disclosed. IDC believes that this is a calculated move on
Microsoft's part to incite excitement as well as provoke questions to keep interest
alive. There is no doubt that Microsoft is all-in on Windows 8/RT and Surface,
as shown by the amount of design and innovation that went in to the Surface
tablets.
IDC believes that the Surface tablets will stand a
good
chance of success in the mature Asia/Pacific markets. Despite the lack
of
transparency on the hardware specs and pricing, what the Surface tablets
offer
is a true do-it-all device. The Surface could potentially offer an
integrated
user experience with the function of a full operating system in a
compact
package for users to not only consume content, but also effectively
create
content from anywhere. This particular use case, combined with a
relatively
warm reception towards Windows 8, could persuade early adopters
and particularly business users (think: executives that brought iPads to
work but couldn't have full access to Office, etc.) to give Surface
tablets a try in markets, especially in English-speaking markets like
Singapore, Hong Kong, and Australia. Other developing markets may be
more price-sensitive. IDC believes that the Surface tablets may not
immediately find mass
market appeal, especially if it is priced at iPad-levels in these
markets.
Surface for Windows
RT
Microsoft's strategy of having two Surface tablets is clear;
Surface RT is for the consumer market, Surface Pro is for the commercial
market. In reality, this strategy won't matter as much. Given the fact that
Surface RT will be available first, early adopters will get on the Windows RT
bandwagon. Looking back at the iPad, where many early adopters were business
users, IDC believes a similar trend might happen here.
Since Windows RT will have the Office suite built-in, as
well as a myriad of business apps at launch, the Surface RT is essentially a
very powerful business tool from the start. Although the Surface RT isn't
compatible with traditional x86-based programs or system management, there are
ways around these limitations. Solutions like client virtualization can deliver
fully managed corporate Windows XP/7/8 desktop to the Surface RT, which ensures
compatibility and security. In a sense, the Surface RT could be the perfect
poster child for BYOD, where an employee's personal life resides local with the
devices, and his/her professional life exists virtually in the corporate
datacenter.
In Asia, addressing BYOD is one of the top priorities of
many organizations. In many cases, the extent of BYOD begins and ends with
smartphones, but personal tablet usage in the enterprise is on the rise in many
developed markets. Organizations are usually wary of supporting personal
devices, which could change with Surface RT and its business prowess. If
Microsoft does implement a Trusted Platform Module (TPM) in Surface RT, then
the device's position in the enterprise is much stronger.
The pure consumer market could be tougher to
crack for Surface
RT though. The Asia/Pacific tablet market is full of cheap Android
devices on the low
end and iPads on the high end. This market dynamic leaves Microsoft with
little
room to maneuver. Microsoft's Windows RT operating system will garner
some
attention from knowledgeable consumers, but the key to many Asian
consumer
hearts is through their wallets. Microsoft believes that consumers may
be willing
to pay a bit more to get a device that runs a full OS, but the truth is
that
Windows RT is not yet a proven product. If Microsoft wants to establish a
beachhead
of consumer users in Asia, it will need to focus on key developed
markets like
Australia, Korea, Hong Kong and Singapore (perhaps even leveraging local
music/media acts, etc.), as well as price the Surface RT
competitively with the market leader.
Surface for Windows 8
Pro
For Surface Pro, the path to success seems to be less treacherous.
It will be one of the best-looking, compact PC/Tablet hybrids. Microsoft will
have more time to position and price it accordingly and it will exist in a space
which Microsoft dominated for over 20 years.
As discussed in a previous IDC LINK, Windows 7 adoption
across Asia/Pacific has been relatively low compared to other regions. This
particular trend may pave the way for Windows 8 Pro, or at least Windows 8 Pro
on Surface Pro. While Surface Pro looks like a great fit for the
enterprise on paper, the reality of enterprises buying into Surface Pro is less
certain. For one, there isn't nearly enough accessories available for the
Surface Pro to be full featured enterprise workhorse (like a docking station).
Additionally, the pricing guideline Microsoft announced was that Surface Pro will
be priced "in-line" with existing ultrabooks. This means a price
range of USD 800 - 1,000 for the device, which may be out of the budget range
of many organizations.
Yet, the enterprise centric features of the Surface Pro
cannot be denied. The Surface Pro will be one of very few tablet form factor
devices that are fully compatible with existing enterprise desktop
infrastructure. The manageability, security, and compatibility aspects of the
device might be reasons enough for organizations to buy into the device, or at
least for the management level employees in efforts to displace the iPads,
which can be a nightmare to secure and support.
At the same time, Surface Pro might actually find fans
within the consumer market in Asia/Pacific. With much of the population utilizing
more public transport and walk more than other regions. This means even a typical
2kg laptop becomes a burden to carry. The Surface Pro, with its relatively
light weight and compact design, can serve as a multi-purpose device where consumers
may use it as a computer at work, tablet on the bus, and an entertainment device
at home.
Partners
Microsoft is taking a big risk with a self-branded tablet. It's clear
that Microsoft doesn't want to suffer the same fate as Google's Android, having
its operating system become so fragmented there is no way to guarantee the user
experience. At the same time, Microsoft is heavily dependent on its hardware
partners to ensure the success of Windows 8/RT, and this announcement has
surely touched more than a few nerves of its partners like Acer, Asus, Dell,
HP, etc. Microsoft insisted that all of its partners are aware of Microsoft's
intentions, but IDC believes there will be concerns from the partners, from both
the tablet and PC side about Microsoft's latest announcement.
The biggest concerns from the partners will be Microsoft's
(unfair?) competitive advantage by having full control of the OS, app store and
the hardware. Even if Microsoft prices the Surface in-line with other Windows
8/RT devices on the market, it will also collect licensing fees from its
partners. Additionally, it will be hard for Microsoft to remain neutral when it
comes to software and device updates. As Microsoft will have real time feedback
from the customers, it will be able to update/fix issues for the Surface much
quicker than partner's devices.
Nevertheless, having Microsoft in the tablet/PC space isn't
all bad news its partners. With Microsoft wholeheartedly devoted in the success
of Windows 8/RT and the Surface, it's guaranteed that Microsoft is going to
invest heavily in marketing Windows 8/RT. The result may be a much
bigger interest from the app developers, ecosystem vendors, and therefore
consumers. At the end of the day, it will be in Microsoft's best interest to
ensure its partners' Windows 8/RT endeavors flourish and the Windows 8/RT
platform becomes a major player in the tablet market. Microsoft's involvement in the tablet/PC
hardware space will be in effect the rising tide that lifts all boats,
including those of Microsoft's partners.
In Asia/Pacific, the Microsoft's channel strategy remains
unclear. Unlike the US, there are no Microsoft-owned retail stores in place in the region.
While Microsoft may rely on its enterprise sales force to push Surface tablets
in the commercial sector, there is no consumer market support at this time. IDC
expects Microsoft may start to build other distribution channels for the Surface in Asia as
the release date gets near, as well as partner with local and region retailers
to sell the Tablets.
With less than six months before Windows 8/RT
hits the
stores, IDC expects that Microsoft will become more engaging in sharing
more
information on the Surface tablets. This latest announcement is just
another
sign that Microsoft has once again becoming an innovative company. Of
course,
the there are risks associated with innovations, but Microsoft is facing
a do-or-die situation, where this may be the last chance it has to
claim a piece of
the tablet market. And Microsoft has already overcome its biggest
challenge: not
trying.
To learn more about IDC Asia/PAcific's analysis on Windows 8, please leave comment below, if there are enough interest, IDC will make it available.
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