Gigaom

How Microsoft Can Save the Surface


An attendee uses the touchscreen on a Surface tablet at the Microsoft Build Developer Conference in San Francisco on June 26

Photograph by David Paul Morris/Bloomberg

An attendee uses the touchscreen on a Surface tablet at the Microsoft Build Developer Conference in San Francisco on June 26

It’s no longer surprising that Microsoft’s (MSFT) Surface RT isn’t the sales hit the company had hoped for. Last month, Microsoft dropped the its price by $100 and took a $900 million inventory writedown. Research firm IDC last week shared its tablet shipment data for the quarter, and Microsoft was nowhere to be seen in the top five.

Should the company throw in the towel on Surface RT, or can a refreshed model turn sales around?
I considered this question after installing the Windows 8.1 beta on a Surface RT a few weeks ago. And I’m reminded of it again while reading that IDC estimates only 200,000 Windows RT devices shipped last month.

Surface RT units make up only a portion of that number, as there are still a few vendors shipping Windows RT computers: Dell (DELL), Acer (2353:TT), and ASUSTek Computer (2357:TT) come to mind, although ASUSTek earlier this month said it will no longer do so, joining Samsung (005930:KS), Hewlett-Packard (HPQ), and others that have left or will be leaving Windows RT behind.

Microsoft announced on Wednesday that Windows 8.1 will begin rolling out worldwide on Oct. 18. That’s good news for existing Surface RT owners because, based on my experience so far, the software update improves the Surface RT user experience. There are some tweaks, fixes, and performance improvements, and it includes Outlook for Windows RT, which has worked very well in my limited testing.

An update to Windows 8.1 alone won’t turn Surface RT sales around.
Microsoft hasn’t officially announced a follow-up to its Surface RT hardware, but if it does, it could help boost sales. I actually like the form factor and build quality of the current Surface RT: It’s lightweight, offers great battery life, and has a good keyboard option. Overall it can feel sluggish, however, and let’s face it: There are faster chips available to Microsoft now than when it introduced the Surface RT last year.

The device doesn’t need an overhaul on the outside, in my opinion, but on the inside. If Microsoft can find a way to put a Qualcomm (QCOM) Snapdragon 800 chip inside the device and drop the price of its base 32-gigabyte model to $299, the product would be far more compelling to consumers. Upgrading the display to full HD from 1366 x 768 would be a nice stretch goal, but
if it means raising the price above that $299 mark, I’d skip it.

What else could Microsoft do? Kill. The. Desktop.
I get that the desktop is a staple of Windows, but I think it does more harm than good. From a user-experience standpoint, it’s completely jarring to me in the touch-friendly and fresh new Metro mode to jump back to 1995 with a desktop environment that’s really just a placeholder for Microsoft Office and Internet Explorer. Microsoft should find a way to build a Metro-style version of Office for what I’ll call Surface RT 2.0.

Getting rid of the desktop could also help with perception. Without a desktop ever appearing, some people might stop asking the question: “What old Windows apps can I install on Surface RT?” Microsoft might not consider breaking free of the Windows legacy a good thing from a branding perspective, but if it wants to create a “new” version of Windows, it would help to cut ties with the old ones.

Where’s the value?
Perhaps the biggest reason the Surface RT has failed is a simple one: Microsoft hasn’t convinced enough people the product has good value. A key reason for that is the similarly priced full Windows 8 tablets powered by Intel (INTC) Atom chips. I noted this in January after testing one of these devices: Why buy “half” of Windows 8 when you can get the whole thing?

With these competing devices offering all of the same functionality as the Surface RT plus Windows legacy support and comparable battery life, why buy the Surface RT? The inclusion of Office in Microsoft’s product is nice and often touted as a value-add, but there’s something wrong with that line of thought.

If people just have to have tablets with Microsoft Office, why is it that many other tablets that cost more are greatly outselling the Surface RT? It’s because fewer people need Office on their tablets than those who do, meaning it’s only a value-add for a small part of the potential tablet audience.

Also not helping the value proposition is that some well-known apps offered on other platforms aren’t yet available on Surface RT. That’s changing a little for the better as Foursquare, Rhapsody, Flipboard, and Facebook (FB) will all support the platform. Windows RT still isn’t the first platform choice for tablet developers, but I think the Surface RT has bigger problems to address than apps.

After using Windows 8.1 on the Surface RT, I think Microsoft has a compelling product for a specific audience—but only if it’s priced right and the performance level is raised to compete with other devices on the market.

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