The new Microsoft Surface is trying to compete within this space at a price-point of almost 500 USD. It seems Microsoft decided to go under the price-level of an iPad, but still way over similar consumer tablets such as the Nexus 7 or the Amazon Kindle Fire HD 8.9”. At first sight, it looks quite reasonable: cheaper than the exclusive luxury offerings but still not in the range of the main-segment.
We think Microsoft is plainly wrong with this strategy and it will miss a huge opportunity if it doesn’t adjust its strategy quickly. Different to smartphones, tablets still do leave some room for a game-change, because the B2C sector is not the opportunity. While you could argue that the B2C market is big enough, the much more appealing opportunity lies in B2B sales. Even until today the iPad and also Android tablets are quite inconvenient if you want to connect your workplace to it and do productive activities. Neither of these devices allows for a key enabler for any office-worker or executive; Microsoft Office. Even though Google documents and all its components are gaining popularity, both users and also IT-departments are not fully happy with it yet. Sure MS Office works on a Mac computer, but it still doesn’t on iOS. Similarly, many corporate ERP’s and intranets don’t work at all or are very uncomfortable to use in a Safari-browser. The iPad is still essentially a media-consumption tool, whereas a Windows-based device is a productivity-tool. So most big corporates today complain about the difficulties they have with the iOS based iPad and don’t have a tablet offering for their workforce, because the heavily rely on Office, Windows Server and Internet Explorer.
Microsoft could and still can do a smart move by targeting all these unhappy B2B customers. Many IT-managers will happily allow a Windows-based tablet in their company, and similarly many employees and executives will be happy to use MS-Office while they are on business trips or work from home.
So Microsoft’s positioning of the Surface device at 500 USD is a doubtful move. It seems that the price was rather chosen out of a fear to quickly recover its development cost, rather than a strategic insight of how to enter a specific segment.
And another really interesting question arises: what about Nokia? If Stephen Elop was formerly head of Microsoft Office, then why does Nokia not come up with a Windows 8 tablet for the B2B customers? Wouldn’t it be an easy move? Microsoft and both Nokia are missing out on a big opportunity here.