Microsoft unveiled the second generation of its Surface tablets in New York on Monday, tweaking them with faster speeds and better battery life. The Surface 2 and Surface 2 Pro have "significant updates, including improvements to processing power and battery life," Microsoft said at launch event. The changes represent "the revamp we need," vice president Panos Panay said, as he presented the new tablets to reporters. The launch is Microsoft's second stab at gaining ground in the growing tablet market.
Microsoft markets the device, which comes with a kickstand and optional keyboard, as a substitute for a tablet with much of the functionality of a personal laptop computer. Panay said the new device includes Microsoft's revamped Windows 8.1 system, the popular Outlook program and access to ten times as many apps as the previous version. For US customers, the Surface 2 will start at $449 and the Surface Pro 2 at $899. It will be sold initially in 22 markets, with pre-orders starting Tuesday and sales to be launched October 22.
Surface 2 Pro, aimed at business users, is "the most productive, powerful tablet in the world," Panay said at the launch. "The point of this product is to work fast. The need of the product is to work all the time." Panay said Microsoft added about 50 percent more color accuracy, and improved sound with Dolby speakers for the Surface 2 Pro. It will have the full Microsoft Office suite and will be powered by a fourth-generation Intel "Haswell" processor which boosts both performance and battery life, the company said.
Panay said the basic version, Surface 2 is "a very, very powerful opportunity for people." It uses an Nvidia Tegra 4 processor, which Microsoft said runs more quickly and smoothly than its earlier tablet and increases battery life to up to 10 hours for video playback. Surface 2 is "slightly thinner and lighter than its predecessor," according to Microsoft, with an upgraded camera for high-definition video. "Surface 2 at $449 is better than $499, but not aggressive enough to get people to buy an unproven platform. Plus, (the) keyboard is still extra," said by IDC analyst Tom Mainelli. Mainelli added, "Surface Pro 2 is dramatically better than v1. And more storage is key. But pricing is still too high."
Mike Silver, a Gartner analyst, said the new product had some impressive-looking features, such as an improved keyboard. But Silver said there are still questions about whether the vast increase in applications represents quantity over quality. "They have to be the right apps," he said. Jack Gold at J Gold Associations said that the improvements were modest, with upgraded chips and cameras. "I don't see much incentive for people to buy these devices," Gold said. "Yes, the devices are cheaper than the iPads, but is that enough reason? They certainly aren't price competitive with all the new Android tabs set to come out later this year, including those with the same chips."
Sarah Rotman Epps at Forrester Research said Microsoft is making "needed hardware improvements" with the devices. "Surface 2 is better positioned to compete with iPad, and Surface Pro 2 attempts to take on MacBook Air as well as competition from Lenovo, Samsung, and HP," she said, while adding that the company "still has a long road ahead to win over consumers and businesses." Microsoft said the new tablets would be initially available in Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Italy, Luxembourg, the Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, Britain and the US on October 22, and in China in early November.
The launch comes with Microsoft seeking to reorganize around "devices and services" as the tech landscape becomes more mobile. Chief executive Steve Ballmer has said he will retire within a year. Microsoft has also announced it will acquire the handset division of Nokia to boost its presence in the mobile space.
While rival Apple Inc. has positioned its iPad tablets as alternatives to desktop and laptop computers, Microsoft is playing to its roots and promoting the Surfaces as personal computers in tablet form. A key feature in that regard is the tablet's new two-stage kickstand that makes the Surface easier to use as a laptop substitute. Panos Panay, who oversees development of the Surface tablets, said the new kickstand will improve the Surface's "lapability." "This will change the product in ways you cannot expect," he said.
The original Surface Pro, released last fall, started at $799. The Surface RT, which will continue to be sold along with the new models, will remain priced at $349 to start. Models with more memory cost more. That compares with $499 for the base version iPad and $329 for the slimmed down iPad Mini. In about an hour-long presentation, Mr. Panay stressed the ability to use the tablet as your only device, as it can be docked for use with a desktop monitor. The Surface 2 can now run the full suite of Microsoft Office software, including Outlook. "It's a full PC in tablet form," Mr. Panay said.
The Surface is the first device made by Microsoft, rather than one of its traditional device partners such as Dell Inc. or Hewlett-Packard Co. In the fiscal year that ended June 30, Microsoft said the Surface generated $853 million revenue, but the company took a charge of $900 million after dropping the price of the Surface RT by $150. Globally, Windows' tablet operating system is third with about 4% market share. That trails Google Inc.'s Android with 63% market share and Apple iOS's 33%, according to IDC.
To address challenges the Surface faced after its first release, Microsoft has expanded its retail partners to Best Buy Co Inc., Staples Inc. and many of Wal-Mart Stores Inc.'s largest outlets. When the tablet was launched last year, it could only be bought online and in about 30 Microsoft stores. The limited retail presence hurt sales, because customers weren't able to test the device before buying it, said Tami Reller, executive vice president of Microsoft's marketing group. The tablet's data can be erased remotely, an effort to appeal to security-conscious office technology managers, Ms. Reller said. Business might also develop their own removable keyboard pads that are customized to their needs, Ms. Reller said. "Lots of ideas are circulating," she said. "The potential is there."