Microsoft is building a cheaper Surface tablet to compete against Apple's iPad, according to Bloomberg. Microsoft has tried this before — and failed. Here's what it needs to do to succeed.
Microsoft's Surface tablets, which run a full version of Windows, are excellent computers. They're also very expensive. The Surface Pro starts at $799 and that doesn't include a keyboard. Conversely, Apple's new iPad starts at $329. Microsoft is targeting the $400 price point, according to Bloomberg, but it should try to come in closer to Apple's starting price or add value by including a keyboard and a stylus.
Microsoft's most recent attempt at an affordable tablet was in 2012, when it launched the Surface RT. That laptop-tablet hybrid failed largely because it ran a watered-down version of Windows called Windows RT. Consumers couldn't download the apps they were used to running on Windows. Microsoft needs to make sure its customers can run the Windows app they're used to running.
This is a tricky one for Microsoft. Apple sells several versions of its iPads, including those equipped with just Wi-Fi and those that also offer Wi-Fi and cellular connections that let you access the internet anywhere Verizon, AT&T, T-Mobile and Sprint have a signal.
Microsoft has a version of Windows for tablets that run on Qualcomm chips and are always connected like iPads, but those tablets don't have access to as many apps as those that run on Intel chips. It should use Intel chips so customers can get all of their apps, and include a full version of Windows, but also use Qualcomm modems to provide cellular connectivity — as it did with the Surface Pro LTE.
Apple's offering for its iPad with Wi-Fi and Cellular starts at $459, so Microsoft needs to hit that price point, too.
Microsoft shouldn't skimp on features, either. An affordable Surface won't just compete with the iPad at a $400 price point, but also Google's Chromebooks. If it wants these computers to be just as useful for work as they are for entertainment, it should make sure they support the Surface Pen for drawing on the screen and taking notes, as well as a full keyboard for allowing the tablet to work a full-fledged computer. As I said in the first point, Microsoft can help undercut the iPad by including a keyboard and pencil with the bundle.
Microsoft has a chance to succeed here. I'm a big fan of the Surface computers it sells, especially because they let me access all of the apps I need for work and multi-task better than an iPad. Microsoft needs to show people why they shouldn't buy an iPad, however, which is arguably the best all-around tablet for most people. That's going to come down to pricing, connectivity and apps.