Analysts: Microsoft's Surface Tablet Poses No Threat to Apple's iPad

Gregg Keizer June 20, 2012
Analysts: Microsoft's Surface Tablet Poses No Threat to Apple's iPad
Price may be major stumbling block to real competition, but Windows tablet could be enterprise winner, say experts.

Apple has little to worry about from Microsoft's tradition-breaking move to sell its own tablets, analysts said today.

Microsoft's new Surface, a line of 10.6-in. tablets that will run the company's impending operating systems -- the tablet-centric Windows RT and the more traditional Windows 8 -- pose little threat to Apple's iPad market dominance, those experts said.

The Microsoft Surface tablet, unveiled late on Monday, comes with a built-in "kickstand."

According to IDC, the iPad will account for 63% of all tablets shipped in 2012.

"I don't think Surface is a big hurt on the iPad," said Ezra Gottheil of Technology Business Research. "[The Surface] will have some legs in the enterprise -- it will be a lot easier of a sell there with compatibility through Office, it's probably more manageable, and it comes from a vendor that IT is more comfortable with. But it won't be a major impact on the iPad."

Others agreed.

"Microsoft's tablet-related products may have a place in certain parts of the enterprise world that require Windows-based solutions [but] we found little in yesterday's presentation that would convince us that a consumer would prefer Surface over an iPad," said Brian White of Topeka Capital Markets, in a note to clients today.

Yesterday, Microsoft stepped over a line it had never crossed in its 37-year history: It said it had designed, and would sell, what is essentially a computer, in the process eliminating the middleman -- OEM partners like Dell, Hewlett-Packard, Lenovo and others -- from the Windows food chain.

Radical though that was -- one analyst yesterday said it was the boldest move he'd ever seen by a technology company -- it won't be enough to unseat Apple from the top tablet spot.

"While we believe Surface will appeal to users looking for a Windows tablet capable of running Windows-based productivity software, we do not see it altering competitive dynamics in the tablet market," said Brian Marshall, an analyst with ISI Group, in an email Monday.

The Surface will probably be too pricy; starts out behind the iPad in critical component specs, especially the display; and most importantly, is a copy-cat that may lack sufficiently-compelling reasons for bypassing the original.

"This absolutely begs the question," said Gottheil. "If the Surface is going head-to-head with the iPad, why not just buy an iPad?"

Much depends on what prices Microsoft puts on the Surface, something the company declined to disclose yesterday. Instead, it made vague references to competitive pricing, which many suspect hinted at numbers too high to entice customers, consumers especially, from opting for an iPad, a true notebook or a cheaper Android tablet.

Monday, Microsoft said the consumer-oriented Windows RT Surface would be "competitive with a comparable ARM tablet," while the heavier Windows 8 Pro model would be priced similarly to "an Intel ultrabook-class PC."