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November 30, 2012

Surface with Windows 8 Pro pricing contemplations -- an opportunity for traditional vendors of rugged tablets?

On November 29, 2012, Microsoft revealed, on its Official Microsoft Blog (see here), pricing for its Surface with Windows 8 Pro tablets. The 64GB version will cost US$899 and the 128GB version runs US$999. That includes a pen but neither the touch or the type cover. They cost extra.

So what do we make of that?

Based on my experience with the Surface with Windows RT tablet, I have no doubt that the hardware will be excellent. With a weight of two pounds and a thickness of just over half an inch, the Pro tablet is a bit heavier and thicker than the RT tablet, but still light and slim by Windows tablet standards. The display measures the same 10.6 inches diagonally, but has full 1920 x 1080 pixel resolution compared to the 1366 x 768 pixel of the RT tablet. That's the difference between 1080p and 720p in HDTV speak. There's a USB 3.0 port and a mini DisplayPort jack. Under the hood sits a 3rd Gen Intel Core i5 processor as opposed to the nVidia Tegra 3 ARM chip in the RT model. And both RAM and storage are twice of what the RT tablet has. All that certainly makes for an attractive tablet.

What customers of a Surface with Windows 8 Pro get is a modern and rather high performance tablet that can be used with a pen or a mouse in desktop/legacy mode, and with touch in the new Metro mode with all the live tiles and all. You can use the pen in Metro mode, of course, but Metro wasn't designed for that. And you can use touch in legacy mode, but as 20 years of experience with Windows tablets has shown, legacy Windows does not work well with finger touch. Still, this will most likely be good hardware that makes full Windows available in a tablet, and also allows evaluating Metro in its native mode.

But let's move on to the ever important price. And here Microsoft faced an unenviable task. Microsoft tablets had to be price-competitive with the iPad, and the Surface RT tablets are. Except that so far they have not been accepted as "real" Microsoft tablets because they cannot run legacy Windows software. The Windows 8 Pro tablets are real Windows tablets, but they now cost more than iPads. Sure, they have more memory and ports and a memory card slot and an Intel Core processor, but the perception will still be that they cost more than iPads and are thus expensive. That's somewhat unfair because the i5 processor in the Microsoft tablet alone costs costs more than most consumer Android tablets. But this is an era where you can get an impressive, powerful and full-featured notebook for 500 bucks or so, and a sleek Ultrabook for well under a grand. That makes the tablet look expensive.

Price, in fact, has always been a weak spot with Windows-based tablets. Witness a bit of tablet history: the first pen tablets in the early 1990s cost almost $4,000. Even in an era where notebooks cost much more than what they cost today, that was too much, and it was one of the several reasons why early pen tablets failed in the consumer market. Tablets did remain available in vertical markets throughout the 90s, albeit usually at around $4,000.

In 2001/2002 Microsoft tried again with their Tablet PC initiative. The goal there was to bring the tablet form factor, beloved by Bill Gates himself, to the business and consumer markets. The price was to be lower and to make that possible Microsoft initially mandated the use of inexpensive Transmeta processors. When they turned out to be too slow to drive the WIndows XP Tablet PC Edition at an acceptable clip, everyone turned to Intel and the average 2002-style Tablet PC ran around US$2,000. Which was still too expensive for the consumer market where customers could pick up a regular notebook for less.

Unfortunately, while two grand was too steep for consumers, the side effect was that companies like Fujitsu, Toshiba, and everyone else who had been selling tablets in the 90s now had to offer theirs for half as much as well, losing whatever little profit came from tablet sales in the process. What's happening now is that the Surface for Windows 8 Pro again halves the price people expect to pay for a tablet. And again there may be a situation where the public considers Microsoft's own Windows 8 tablets as too expensive while the verticals have to lower their prices to stay competitive with Microsoft itself.

And that won't be easy. Vertical market vendors have done a remarkable job in making business-class Windows 7 tablets available for starting at around US$1,000 over the past year or so. But those tablets were almost all based on Intel Atom processors which are far less powerful than what Microsoft now offers in their own Windows 8 Pro tablets. So we have a situation where Intel pushed inexpensive Atom processors to make inexpensive tablets possible, but Microsoft itself has now upped the ante for its licensees by offering much more hardware for less.

Ouch.

It's hard to see how this could possibly leave much room for the traditional makers of business-class Windows tablets. Unless, that is, they find a way to compellingly answer the one question we've been hearing ever more loudly over the past couple of years: "we need a tablet like the iPad, but it must run Windows and be a lot more rugged than an iPad." Well, there's the niche. Tablets that match the iPad's style and Microsoft's newly established hardware standard, but a whole lot tougher than either and equipped with whatever special needs business and industrial customers have.

That ought to be possible. The traditional vertical market tablet makers and sellers already know their markets. And unlike the designers of consumer market tablets, they know how to seal and protect their hardware and make it survive in the field and on the job. What that means is that Microsoft's pricing for their Surface tablets may well be a glass half full for the rugged computing industry, and not one half empty.

Anyone for a sleek yet armored ULV Core i5 or i7-powered, IP67-sealed tablet with a 1080p dual-mode and sunlight viewable procap/active pen input display, a 6-foot drop spec, dual cameras with a 4k documentation mode, 4G LTE, and integrated or modular scanner/RFID/MSR options?


Posted by conradb212 at November 30, 2012 08:31 PM

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