Microsoft tries again to woo tablet buyers

  • Bloomberg News
  • Monday, September 23, 2013 1:22pm
  • Business

NEW YORK — Microsoft Corp. Monday introduced two new versions of its Surface tablet, the software maker’s latest bid to challenge Apple and Samsung Electronics in the hardware market after its first devices fell flat.

The new Surface Pro, powered by an Intel Corp. chip, is 20 percent faster and features an all-day battery with 75 percent more life, Panos Panay, the company’s Surface vice president, said at an event in New York. The Surface 2 has a high- definition screen and 25 percent better battery life, and runs on an Nvidia Corp. chip based on ARM Holdings Plc technology.

Microsoft jumped into the touch-screen tablet market, dominated by Apple’s iPad and models running Google’s Android software, in June 2012 with the announcement of its first Surface. Designed to keep its Windows software relevant as consumers shift to tablets from personal computers and laptops, the Surface instead generated such little demand that Microsoft took a $900 million inventory writedown last quarter.

Microsoft “bet the farm on touch and tablet,” said Wes Miller, an analyst at Directions on Microsoft, a Kirkland, Wash.-based research firm. They’ve “got to move some serious tablets,” he said.

Microsoft said the devices will go on sale on Oct. 22. The Pro, which runs on Intel’s Haswell chip, starts at $899, and the Surface 2, the successor to the Surface RT, starts at $449. The company also introduced new, thinner versions of the device’s covers that come with built-in keyboards – and one model boosts the tablets’ battery life even further. There’s also a docking station that lets the Surface Pro connect to a computer monitor and speakers.

“This is the most powerful tablet in the world,” Panay said of the new Surface Pro. “This thing’s a beast.”

The Surface 2 is priced at $50 less than its predecessor when it was introduced. The new Pro starts at the same price as the earlier model when it debuted. That may still be too high to attract more buyers, though Microsoft has packed more powerful chips and hardware into the Pro to try to make it a better value, Miller said.

“It’s going to be interesting to see how the market receives it – they’re both still premium-priced devices,” he said. “They were inspired by Apple’s model, which is you create premium devices and premium accessories and you hope that people are willing to pay premium prices.”

Surface 2 comes with a copy of Microsoft’s Office applications, and both devices include free Skype Internet-based calls to landlines internationally, Skype Wi-Fi and free storage on Microsoft’s cloud service.

The Redmond-based company has thus far failed to get traction in the market. Surface accounted for 0.7 percent of the 44.3 million tablets sold in the second quarter, according to researcher IDC. The device was too expensive, riddled with software bugs and featured too few applications, Miller said.

Android controlled 62.6 percent of the tablet market and Apple had 32.5 percent, according to IDC. Android software is used in tablets manufactured by companies including Samsung and Sony Corp.

Tablet shipments will top those of PCs for the first time in the fourth quarter, IDC said earlier this month. Some 84.1 million tablets will be shipped, compared with 83.1 million PCs, the researcher said.

Microsoft entered the tablet hardware market in part because traditional manufacturers of Windows computers weren’t stepping up with compelling devices. Still, among Windows tablets with Intel chips, Surface is being outsold by vendors like Acer Inc. and Hewlett-Packard Co., IDC said.

While giving a boost to the Windows business, the competition hurts the prospects of Microsoft’s hardware unit, fueling opposition from investors, who have balked at the Surface writedown and Microsoft’s agreement to spend $7.2 billion on Nokia Oyj’s handset unit.

“For Windows, Surface is less important as long as other people’s tablets do OK,” Miller said. The hardware challenge “poses an interesting conundrum given that Microsoft just bought a phone company.”

Microsoft said it sold $853 million worth of Surface tablets in the fiscal year that ended June 30. To sell more devices, the company has cut prices, and earlier this month it started offering at least $200 in coupons to its retail stores if customers traded in a used iPad.

Talk to us

> Give us your news tips.

> Send us a letter to the editor.

> More Herald contact information.

More in Business

Black Press Media operates Sound Publishing, the largest community news organization in Washington State with dailies and community news outlets in Alaska.
Black Press Media concludes transition of ownership

Black Press Media, which operates Sound Publishing, completed its sale Monday (March 25), following the formerly announced corporate restructuring.

Maygen Hetherington, executive director of the Historic Downtown Snohomish Association, laughs during an interview in her office on Thursday, Feb. 15, 2024, in Snohomish, Washington. (Ryan Berry / The Herald)
Maygen Hetherington: tireless advocate for the city of Snohomish

Historic Downtown Snohomish Association receives the Opportunity Lives Here award from Economic Alliance.

FILE - Washington Secretary of State Steve Hobbs poses in front of photos of the 15 people who previously held the office on Nov. 22, 2021, after he was sworn in at the Capitol in Olympia, Wash. Hobbs faces several challengers as he runs for election to the office he was appointed to last fall. (AP Photo/Ted S. Warren, File)
Secretary of State Steve Hobbs: ‘I wanted to serve my country’

Hobbs, a former Lake Stevens senator, is the recipient of the Henry M. Jackson Award from Economic Alliance Snohomish County.

Mark Duffy poses for a photo in his office at the Mountain Pacific Bank headquarters on Wednesday, Feb. 14, 2024 in Everett, Washington. (Annie Barker / The Herald)
Mark Duffy: Building a hometown bank; giving kids an opportunity

Mountain Pacific Bank’s founder is the recipient of the Fluke Award from Economic Alliance Snohomish County.

Barb Tolbert poses for a photo at Silver Scoop Ice Cream on Thursday, Feb. 29, 2024 in Arlington, Washington. (Annie Barker / The Herald)
Barb Tolbert: Former mayor piloted Arlington out of economic brink

Tolbert won the Elson S. Floyd Award, honoring a leader who has “created lasting opportunities” for the underserved.

Photo provided by 
Economic Alliance
Economic Alliance presented one of the Washington Rising Stem Awards to Katie Larios, a senior at Mountlake Terrace High School.
Mountlake Terrace High School senior wins state STEM award

Katie Larios was honored at an Economic Alliance gathering: “A champion for other young women of color in STEM.”

The Westwood Rainier is one of the seven ships in the Westwood line. The ships serve ports in the Pacific Northwest and Northeast Asia. (Photo provided by Swire Shipping)
Westwood Shipping Lines, an Everett mainstay, has new name

The four green-hulled Westwood vessels will keep their names, but the ships will display the Swire Shipping flag.

A Keyport ship docked at Lake Union in Seattle in June 2018. The ship spends most of the year in Alaska harvesting Golden King crab in the Bering Sea. During the summer it ties up for maintenance and repairs at Lake Union. (Keyport LLC)
In crabbers’ turbulent moment, Edmonds seafood processor ‘saved our season’

When a processing plant in Alaska closed, Edmonds-based business Keyport stepped up to solve a “no-win situation.”

Angela Harris, Executive Director of the Port of Edmonds, stands at the port’s marina on Wednesday, Jan. 24, 2024, in Edmonds, Washington. (Ryan Berry / The Herald)
Leadership, love for the Port of Edmonds got exec the job

Shoring up an aging seawall is the first order of business for Angela Harris, the first woman to lead the Edmonds port.

The Cascade Warbirds fly over Naval Station Everett. (Sue Misao / The Herald file)
Bothell High School senior awarded $2,500 to keep on flying

Cascade Warbirds scholarship helps students 16-21 continue flight training and earn a private pilot’s certificate.

Rachel Gardner, the owner of Musicology Co., a new music boutique record store on Thursday, Jan. 18, 2024 in Edmonds, Washington. Musicology Co. will open in February, selling used and new vinyl, CDs and other music-related merchandise. (Olivia Vanni / The Herald)
New Edmonds record shop intends to be a ‘destination for every musician’

Rachel Gardner opened Musicology Co. this month, filling a record store gap in Edmonds.

MyMyToyStore.com owner Tom Harrison at his brick and mortar storefront on Tuesday, Sept. 6, 2022 in Everett, Washington. (Olivia Vanni / The Herald)
Burst pipe permanently closes downtown Everett toy store

After a pipe flooded the store, MyMyToystore in downtown Everett closed. Owner Tom Harrison is already on to his next venture.

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.