Defending the Surface Pro 3

In the days since Microsoft launched the Surface Pro 3, there has, unsurprisingly, been a variety of mixed opinions. While many thoughtful and important points are brought up in articles from Ben Thompson and Tim Bajarin, I’d like to offer an alternative viewpoint defending the Surface’s existence and strategy.

Let me make a few points. Knowing what I know, having studied both the horizontal (modular) and vertical (integrated) business models, if I worked at Microsoft, I would be doing exactly what they are doing with the Surface line of products. I favor integrated models because it allows you to control your own destiny. However, it is also very hard and extremely risky. This is why there is only one modern day company succeeding at it — Apple.

I also recognize the tension the Surface products create with Microsoft’s partners. I have regular discussions with all of Microsoft’s PC partners and I empathize with their position and concerns regarding the competitive threat. Unlike Apple, Microsoft is tiptoeing towards an integrated model but still depends heavily on the support of their hardware OEMs. Microsoft and Google are in the same boat to a degree.

However, since I don’t work at Microsoft and I understand the tension Surface creates with partners, how then should we think about the Surface and the strategy of Microsoft behind it? I propose we think of the role and goals of the Surface products similar to why Google choses a partner to make their Nexus line of products.

The Nexus line of products exists, not to sell in volume, but to advance Android. Google makes specific and strategic hardware decisions they feel best showcase the latest software enhancements of Android. The target for Nexus phones and tablets is not consumers but developers. Google hopes its most enthusiastic developers get their hands on the Nexus and start creating new software experiences and utilizing new hardware features to advance Android.

I view Microsoft’s efforts with Surface in this vein. Whether Microsoft does or not is the question. However, this is how they should develop this hardware strategy. Several moves on their part make me think they do view Surface in this light to some degree.

They have priced themselves out of the mainstream, on purpose it seems. Like Google’s Nexus line of products, Microsoft does not sell many Surfaces in volume. Surface appears to have “showcase” hardware technology. The first had an optically bonded screen, the Surface Pro 3 has showcase Intel Core silicon that allowed the thinnest Intel Core product built. I view these features as staples to be used as a reference for other hardware companies to show what can be done with Windows 8. The Surface, in my mind, is a reference design to showcase Windows 8. The fact Microsoft commercialized it is what rubs partners the wrong way. But I’d argue it makes sense if you want your most loyal enthusiasts to help you advance the platform. You have to get your showcase reference design not just in front of your partners but in front of your developers. This is what I feel Microsoft is getting at with Surface. ((While this is plan A, it also sets them up for a plan B, in case their partners face unsurmountable challenges (i.e Acer). By gaining valuable learnings by building hardware themselves, plan B puts them in a position to take more matters into their own hands should it ever become necessary.))

Yes, they can limit distribution even more (like online only) so to be certain they aren’t competing for customers. Yes, they should probably stop trying to market it to mainstream consumers because that is a pipe dream and a waste of money. But they should focus on getting the Surface into the hands of those who can help them advance the Windows platform. For better or worse, the Surface is Microsoft’s vision for Windows 8. It should serve as the showcase to advance the platform. Therefore, the benchmark by which we should judge the success or failure of Surface is whether or not Windows is advanced as a platform. This we will not know for many years to come.

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Ben Bajarin

Ben Bajarin is a Principal Analyst and the head of primary research at Creative Strategies, Inc - An industry analysis, market intelligence and research firm located in Silicon Valley. His primary focus is consumer technology and market trend research and he is responsible for studying over 30 countries. Full Bio

19 thoughts on “Defending the Surface Pro 3”

  1. “…advance the Windows platform”? C’mon Ben, you can do better than that. Microsoft promoting Windows only tells me that MS is frozen in the long gone past, and pushing Windows 8 means they’re driving an OS with a very bad rep, and I suspect many of their customers see it the same way. If I were standing in front of Microsoft top management I would want to shake them by the shoulders and yell “Hey you, LET IT GO!”

    If they seek to move into the future then that’s exactly what they need to do – move into the future. They should stop babbling about products which belong to the Stone Age and are failures as well. They’ve screwed themselves enough already. It’s time to stop.

  2. I think Nexus was an attempt by Google to nudge their hardware partners to come closer to the “pure” Android experience. The problem, of course, is that each OEM wants to differentiate by adding layers of “functionality” (very debatable) on top. Pure Android would also be easier & faster to update; something OEMs care little about.

    SP3 is expensive, but so are competing Ultrabooks. Surface 1 & 2 did not sell well because they did not provide a good experience even relative to Ultrabooks. Weak sales was likely the reason Microsoft’s OEMs chose not to make Surface-like devices. Maybe this 3rd version will sell better and spur OEMs to jump. Or maybe this will anger them to the point where they try harder to find a way to jump ship. Google Chrome?

    I think Microsoft should stop making Surface hardware and stop developing this tablet-PC hybrid system they’ve been pushing for over a decade. They were too late to mobile and traditional Windows is slowly fading to irrelevance. Forget the OS wars and focus on apps and services. Be the software & services partner Google was supposed to be for Apple hardware. Focus on developing for iOS.

    Office for iPad is a good start. Make OneDrive better than Google Drive. Halo on the next Apple TV? Keep Skype cross-platform and make it better than FaceTime. Poach more Googlers and get Bing “good enough” so that Apple won’t be embarrassed to switch away from Google Search.

  3. “I favor integrated models because it allows you to control your own destiny.”
    Please explain. IMO It’s modular that lets you control you own destiny.

    1. No modular is when you license or sell your software to others who take it to market. Vertical / integrated is what Apple does. Windows is modular, Android is, etc.

      1. Okay, I was really thinking hardware, where on modular systems you can add anything you want.

        Still, how do you ever control your own destiny on vertical? You can only run what the OS strictly allows. An OSX example is Blu-Ray and the iOS examples are too numerous to mention.

        1. The company can control its own destiny. Not the consumer. 🙂 But again that is the point. Apple controls all their variables strategically. Where Microsoft is stuck with partners who could come and go, do what they don’t want, etc., they dont’ control them as much they try. Same with Google and Android.

          Vertical has no middle man. Its hard because you have to be really wise and adapt / plan for markets, disruptions, etc. You have to have a clear vision of the future and your role in it or it doesn’t work. Although this is true in modular as well. 🙂

  4. Ben and I disagree on this one. I do not think that the Surface – which competes with Microsoft’s potential Cloud customers and with Microsofts hardware partners – advances their platform. I think it’s a drag on their platform. I think the sole purpose of the Surface is to prop up Window 8 which was a mistaken attempt to create a hybrid operating system that just doesn’t work.

    Further, I think that the Google’s Nexus was a failure too. It accomplished nothing either for Google or the Android Ecosystem.

    Apple has an integrated platform. They sell their hardware and they bundle their software for free. Microsoft had a licensing model. They sold licensed their software and left the hardware manufacturing to their partners. What Microsoft is trying to now is sell their software to hardware manufacturers and sell their hardware to compete with those same manufacturers. It’s a strategic misalignment.

    1. But doesn’t iCloud compete with Drive and Onedrive and, to a lesser extent Dropbox? Aren’t these competitors at Apple’s mercy on “allowing” their apps?
      Doesn’t Google Maps compete with Apple Maps? iWork with Office?

      1. Apple doesn’t care a hoot for drive, one drive, dropbox or office. They help their platform only tangentially. What matters is iCloud.

        The only example you gave that matters is maps. Apple would have liked to have left maps with Google but their growing enmity made that impossible. They bit the bullet and created their own map app in order to keep control of their own platform and hurt customer satisfaction along the way. A clear example of strategy creating a tax on the system. But they did it as a last resort. Apple’s maps is like cutting off tail caught in a door. Surface is more like shooting yourself in the foot – a self-inflicted wound.

        1. To me Apple Maps is *way* better than Google Maps (either the old one or the new one) because it’s so much easier to navigate. Google Maps just took the print style of map and put it on computer. In print, a map must be broken up into pages but there’s no need for that on a computer. In Apple Maps you move the map instead of the cursor (unless you want to move the cursor) so you can follow a road for a very long distance and there are no pages to flip through. It’s all one continuous map and with a good trackpad it’s effortless.

          Also, I’ve used Apple Maps a lot and I’ve only seen one error, and that one was very minor.

          I live in the greater Washington DC area.

        2. As a user, all potential apps matter to me. From Maps to the Fart apps so long as it is I, the owner, that decides what to run. “Winning” is the company’s problem, not mine.

    2. “Further, I think that the Google’s Nexus was a failure too. It accomplished nothing either for Google or the Android Ecosystem. ”

      I agree with Ben Bajarin regarding the Google Nexus program.Total sales is not an important metric to determine success. Google showcased pure Android for devs and OEM`s. Seeing the lighter and overall better skins Motorola, LG,Sony, Samsung and HTC now layer on Android compared to 2 years ago is a real improvement and accomplishment. I believe labelling this a failure is disingenuous.

      1. “I agree with Ben Bajarin regarding the Google Nexus program” – Quicksingle

        I think that is the majority view but I also think it is very wrong. I am adamantly in the minority camp on this one.

        “Google showcased pure Android for devs and OEM” – Quicksingle

        Which accomplished absolutely zero. Reference designs are a crock. Google put an awful lot of effort into the Nexus program and they received less than nothing in return.

  5. I agree with FalKirk and disagree with both Ben and Quicksingle. Firstly the “looking for a surface, Surface3” is going to go down another XBox rathole of lost revenue. Its history preceeds it. The MSFT faint to vertical is just that. It is buying time till it can get out of 8 and into whatever the Bus Guys want, namely the statis quo of the distant past. OUCH. And anyone who says that revenue is not important, just doesn’t know how to spell business. If you think that all the android oems looked at plain vanella android to correct themselves, FUGETABOOUTIT, they finally listened to the steady jingle of lost sales to iphone and to the phone companies bowing to Samsungs Grease. Customers rule in moble not devs and coders. Customers rule.

  6. I don’t recall Google taking a $900 million write down on unsold Nexus devices. It’s pretty clear that Microsoft expected the surface to sell much better.

    The problem with the Surface is that it’s a portable computer competing against mobile computers. You can see this in its design and how MS talks about it and markets it. If you find the Surface keyboard acceptable, it’s an excellent portable computer. But if you want a mobile device, one you can use while standing up, walking around or where there isn’t a usable work surface, you will be much better off with something else.

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