The ideas behind the new Microsoft Surface campaign are, on the whole, pretty good. The Surface RT has an integrated keyboard and kickstand, is souped up with Microsoft Office software, boasts twice the storage and has a full-sized USB port… all for a lower cost of $349 after price cuts recently vs. $499 for the entry-level iPad.
The only problem is that Microsoft is misinterpreting what the Apple iPad does. The ad focuses on multitasking and productivity via Office, rather business-like tasks that many consumers aren’t interested in. Most of us (myself included) just surf the web, play some games, maybe watch Netflix (NFLX) or check Twitter… but aren’t tappity-tapping away at an important work project.
Some do, of course, but not most. About 2,200 people voted in a rather unscientific CNET poll earlier this year and a mere 8% mentioned business use. That was across all tablets, of course, including the iPad and Surface as well as Amazon (AMZN) Kindle Fire and Google (GOOG) Nexus tablets.
Furthermore, it’s worth noting that the Type keyboard cover, which provides a more tactile feel and (for me) fast typing speed akin to a laptop, adds another $120 to the price tag — bumping Surface up to the same range as an iPad when you bake that in.
MSFT recorded a $900 million writedown because it overestimated demand for Surface — essentially confirming that the company didn’t understand what consumers want, or underestimated Apple and its iPad dominance … or both.
It will be interesting to see how (or if) Microsoft can recover from this Surface letdown later this year. The recent ad campaign is below if you want to take a gander.
- Microsoft stock is dead until 2014. (The Slant)
- Microsoft PC dominance is being dismantled. (Business Insider)
- Therese Poletti says that thus far, Surface is a bust. (MarketWatch)
Jeff Reeves is the editor of InvestorPlace.com and the author of “The Frugal Investor’s Guide to Finding Great Stocks.” Write him at firstname.lastname@example.org or follow him on Twitter via @JeffReevesIP. As of this writing, he did not own a position in any of the stocks named here.