Defending the Surface Pro 3

on May 28, 2014

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.