- Microsoft unveiled the Surface Book 2, a $1,499 laptop aimed at stealing away Apple customers.
- Microsoft Corporate VP of Devices Panos Panay says that the goal is to make a powerful laptop, without compromises, that people are proud to use.
- While revenue from the Surface division is down, Panay says that the company remains committed to the unit.
Microsoft gave us our first look at the Surface Book 2 on Tuesday, a premium laptop that it says is twice as powerful as the MacBook Pro — a comparison that Microsoft is more than willing to invite with this new device.
"We do see our competition," Microsoft Corporate VP of Devices Panos Panay told me at a Surface Book 2 preview event last week. "It's an important filter."
But while power is important, Panay says, Apple enjoys one major advantage that Microsoft has hustled to capture for itself across the whole Surface line: Mac owners see their computers as "precious objects," and feel "a sense of pride" just for owning one, he says.
"They want [Macs] to be precious objects as much as they want a computer," says Panay. And it's what he wants for Surface, too.
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Panay says he's gotten into a certain habit, to make sure that Surface is getting the reaction he wants. Whenever Panay sees somebody using a Surface — in a coffee shop, at his son's little league tournament, wherever — he walks up, and without introducing himself, just asks them to "tell me about what that is."
And Panay says that he knows he's on the right track, because they "literally start pitching me on what they do with it." At his son's tournament, for instance, the organizer was using his Surface Pro tablet/laptop hybrid to keep score, print out rosters, scan injury waivers, and generally run the entire event, all while sitting on the grass.
Importantly, Panay says, these unwitting users never just tell him that it's a PC, or that it's a laptop. They're very specific: It's a Microsoft Surface, and they're proud to tell him so, he says. Sometimes, those hapless Surface fans even suggest he run out to Best Buy and buy one.
The Surface Book 2
Panay has a reputation for sweating the details. And he says that a lot of thought has gone into the little things that make a laptop like the Surface Book 2 into the "object of desire" that his team is aiming for.
The laptop's signature hinge, which allows the screen to detach into a standalone tablet, has been redesigned so it's both stronger and faster to release. All models of Surface Book 2 are fanless, meaning they're quiet even when operating at peak capacity, and offer 17 hours of battery life. The keyboard has been redesigned, too, for smoother typing.
And, even with all of that, Microsoft still says that the Surface Book 2 is 5 times more powerful, graphically, than the original model, and available at the same price point. He paints the Surface Book 2 as a laptop without compromises, for the gamer or creative professional who needs both power and flexibility on the go.
"That is the essence of it," says Panay.
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To Panay, the Surface Book 2 itself is the representation of a "tidal wave of innovation" across all of Microsoft. The better battery life is only possible because the Windows and Surface teams worked together to integrate the software and hardware. Similarly, Microsoft faced cooling problems on both the Surface Book 2 and the forthcoming Xbox One X console — so the two teams worked together to come up with a new kind of heat sink for both.
"[Surface Book 2] is truly integrated up and down the stack," says Panay.
Elsewhere in the world, both Google and Facebook have started to manufacture their own hardware: Google just unveiled the Pixel 2 smartphone and Pixelbook laptop; Facebook is in the virtual reality headset market with its Oculus division.
Panay balks at the suggestion that he finds it "validating" when other companies follow Microsoft's footsteps into the hardware market ("I'm not looking for validation"). He does say, however, that it's "fun" to watch as other software companies figure out that, at a certain point, your strategy could well lead you into building hardware.
Surface Book 2 is hitting the market during a turbulent time for Microsoft's hardware strategy.
Microsoft launched several new Surface devices in the last year or so — the $2999 Surface Studio all-in-one PC, the $999 Surface Laptop for students, and a revamped $799 Surface Pro. Now, the revamped Surface Book 2 rounds out the lineup, says Panay.
"There is a product in the Surface lineup for everybody," says Panay.
And yet, if Microsoft wants to unseat Apple, it has a long way to go. Surface has barely made a dent in the still-shrinking PC industry, with revenue in the division down 2 percent in Microsoft's most recent fiscal year. Meanwhile, Apple holds the spot as the fifth-largest PC manufacturer in the world.
That revenue dip led Microsoft's biggest partners in the PC industry, including Lenovo and Dell, to openly speculate that Surface will be discontinued by 2019 — a belief that Panay says is "so far from the truth."
If Microsoft has an advantage in this battle, it could come from Apple's product strategy, says Patrick Moorhead, chief analyst with Moor Insights. Even as the PC industry shrinks, demand for high-end laptops is growing — but Apple's focus on the iPhone and iPad could leave an opening for Surface to unseat the Mac, suggests Moorhead.
"Microsoft would like to see Surface eclipse MacBook sales and given Surface is strategically more important to Microsoft than MacBook is to Apple, I could see it happen in a few years," says Moorhead.
As for the bumps in the road so far, Panay brings it back to Microsoft CEO Satya Nadella's signature "growth mindset" philosophy, which urges executives to learn from their mistakes and come back again stronger.
"Your belief strengthens as long as you're learning," says Panay.