Microsoft’s Surface tablet is, for now, aptly named. We know what the product looks like, but don’t know how it will perform, or sell, until it gets into consumers’ hands. Reviewers can only debate the features (USB port; kickstand; thin keyboard; whoop-de-doo) and analysts will resort to new forms of bet-hedging (“execution will be key”).
And the tablet has to perform beautifully because of an ugly catch 22: mobile devices become popular with consumers largely because of the available applications, but app developers only work on devices that are popular with consumers. The fact that it will run Microsoft Office’s software suite, with which cubicle dwellers worldwide are sentenced to spend their days, does not mean Surface can crack this problem.
Pricing will also be crucial. Microsoft’s Lumia smartphone, released with Nokia, proved that a solid product with differentiating features can still struggle with consumers, especially if it is too dear. Microsoft, because it is making the Surface under its own brand, will have complete control of price. So far, it has said only that prices will be “competitive” with existing products. Why not discount aggressively, to break open the market? Assuming a $400 cost for the lower-end Windows RT version, the company could sell 10m of them at $300 (a big discount over the cheapest iPad) while sacrificing all of 4 per cent of pre-tax income.