An overview of all the depressing ways Microsoft screwed up the Surface launch

Laptop Magazine has created a small slide show listing seven ways that Microsoft (MSFT) can save its Surface tablet from the same circle of technology hell now inhabited by past Microsoft duds such as the Zune and the company’s KIN phones. But reading through Laptop’s list of suggestions, we can see that Microsoft has made several unforced errors during the launch of the Surface that the company should have seen coming from miles away. In no particular order, here are some of the key mistakes Microsoft has made with the Surface so far.

  • First: Microsoft initially decided to only sell the Surface in its own stores. Look, I know that Microsoft is trying to be more like Apple (AAPL) by putting more emphasis on its own retail outlets. But Microsoft isn’t anywhere close to Apple’s level right now — it’s hard to imagine glassy-eyed fans camping outside a Microsoft store overnight to be the first to use the newest Windows Phone 8 device. Not only that, but Microsoft only has 32 retail outlets in North America, meaning people who are interested in the Surface can’t just go to their local Best Buy (BBY) or Staples (SPLS) to try it out for themselves. Thankfully, Microsoft has realized this was a silly strategy and will reportedly be offering the Surface to more retail outlets just in time for the holidays.
  • Second: Microsoft really overpriced the Surface. According to a bill of materials estimate released earlier this year, Microsoft makes a 43% profit margin for every entry-level Surface sold, just below the 49% profit margin that Apple makes for the iPad. This is all well and good if you’ve already established your brand in the tablet market and can get away with charging people more money than competitors. But Microsoft hasn’t established itself in the tablet market. In fact, Microsoft has released its first tablet roughly two-and-a-half years after Apple released the iPad and one year after Amazon (AMZN) started the trend toward cheap $200 tablets with the Kindle Fire.  This isn’t to say that Microsoft should engage in a race to the bottom with Amazon and Google (GOOG) over tablet prices, but it should at the very least understand that to establish itself in an already crowded market, it needs to accept lower margins on its first device.
  • Third: Microsoft didn’t give people the Touch Cover as part of the entry-level package. As Laptop Magazine notes, the Surface’s click-in keyboard is one of its most appealing features and yet it’s not included with the $500 entry-level Surface. I ranted about this decision back when I first learned about it and my opinion hasn’t changed since: If the Touch Cover really is integral to the Surface experience then it should be included with all versions of the tablet. Yes, this means that Microsoft will have to tolerate margins for the Surface of less than 40%, but if your tablet isn’t selling it doesn’t matter how high your margins are per device.
  • Fourth: The Surface really does have “meh” specs compared to other tablets. As Laptop Magazine chronicles, the Surface has a lower screen resolution, lower battery life and a worse camera than other big-name tablets on the market right now. No, specs aren’t the most important part of user experience with tablets, but they do matter. The fact that the Retina-equipped iPad and the Google Nexus 10 both deliver superior screen resolutions while also beating the Surface in terms of battery life is a sign that something is amiss here.

I really did have hope for the Surface when it was first unveiled because it showed Microsoft was really thinking creatively about mobile computing for the first time. But all these hopes were predicated on the idea that Microsoft would price the Surface competitively and deliver a strong user experience with Windows 8. Needless to say, neither of those things has happened so far. I still think Microsoft has the opportunity to establish itself as a significant player in the mobile space, but the company really has to rein in its penchant for shooting itself in the foot.


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