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Would you buy a car without a steering wheel? Well, that’s what Microsoft(s msft) wants you to do with its new Surface Pro 3 tablet, which it claims can serve as a “laptop replacement.”
The Surface Pro 3 is an impressive gadget. It’s light and beautiful, and its screen is perhaps the best I’ve seen on a tablet. My colleague Kevin Tofel has more thoughts here, but suffice to say the product itself is good and the culmination of three successively better iterations.
Microsoft is actively positioning the Surface Pro 3 as a laptop replacement, rather than a tablet. It’s got a big 12-inch screen, it’s packed with laptop guts, and according to Surface VP Panos Panay, Microsoft focused on “lapability” as a core part of the experience. But here’s the problem: In addition to the $800 starting cost for the tablet, you’ll have to pay an extra $130 for a Type Cover, an add-on to Surface that snaps on through magnets, covers the screen, and includes a keyboard and trackpad. In other words, the interface you think of when you hear “laptop replacement” is sold separately.
While selling an accessory separately might not seem like a huge problem, it fits into a problematic pattern with Microsoft hardware: The company hasn’t decided exactly what should be included in the box and what should be a separate purchase. (The confusion even extends to Microsoft stores, which have regularly given the Type Cover away for free with a Surface purchase.) To give the Surface Pro 3 — or the next Surface — the best chance for success, Microsoft should include a Type Cover with every $800 Surface sold.
Microsoft’s deceptive marketing
The Type Cover is more than an accessory: it’s one of Microsoft’s key marketing points for the Surface. The Type Cover appears in nearly every Surface ad, usually as a focal point, as seen in the television spot above.
Microsoft’s announcement blog post calls the Surface 3 “the tablet that can replace your laptop.” The Surface Pro 3’s product page features a comparison chart between the Surface Pro 3 and the Macbook that lists its “detachable keyboard” as a benefit (over the Macbook’s “non-detachable keyboard,” which is, according to Microsoft, “available”).
If you buy a Surface Pro 3 and don’t pair a keyboard with it, it’s not a laptop. Sure, it can run legacy Windows apps, but without the $130 touch cover, you’ll be pecking on a glass screen. That’s not the email-and-Excel sort of productivity that Microsoft consistently promises. The distinction between mobile computing and desktop computing, in the consumer’s mind, is not in the type of apps the Surface Pro 3 can or can’t run, but rather the kind of computing interface it offers. Without the keyboard and trackpad provided by Type Cover, it’s a tablet.
Microsoft can afford it
Microsoft didn’t include Type Covers in the first or second Surface Pro, either. Those devices were absolute flops in the marketplace. Microsoft actually took a $900 million writedown on the first Surface RT, and though it hasn’t broken out sales numbers for the Surface Pro, I’d guess that it isn’t selling well either.
Microsoft might worry that including the Type Cover with the Surface Pro 3 will increase the overall price enough to prevent the most price-sensitive consumers from considering the device in the first place. But the price wouldn’t — and shouldn’t — increase by a full $130.
Sure, at an estimated $17 materials cost for the Type Cover sold at $130, Microsoft gets a sweet $113 margin before other expenses. But you know what would be even sweeter for Microsoft? Actually selling out of Surfaces. When you’re losing $900 million on a piece of hardware, profits made on accessories are essentially a rounding error. The goal for Microsoft shouldn’t be Apple-style margins, but rather getting the product into the hands of enthusiasts and establishing market share.
A design flaw
When Microsoft first introduced the Surface RT and the Surface Pro in 2012, some believed the company was moving away from licensing operating systems and toward a more integrated, Apple-like model where it produced both software and hardware, leading to fat margins. Some also thought Microsoft was doubling down on industrial design, pointing to the Surface’s chamfered edges, creative heat management, and, yes, that impressive cover.
Yet the Surface isn’t that unique — there are lots of tablets packing laptop guts running full Windows 8. Sure, Microsoft’s tablet has more impressive components — starting with a Intel Core processor — but it’s a difference of degree, not kind.
The Type Cover has significantly improved over its three iterations. The trackpad, in particular, benefitted from major refinements. The kickstand is also upgraded, with a new hinge that lets the user pick an angle from zero to 150 degrees. Without a keyboard, though, the kickstand loses a lot of use cases and there’s nowhere to put the improved pen that Microsoft spent a lot of time perfecting.
Design isn’t just about tolerances or chamfers: it’s about considering the intent of every decision made, and that starts at the store. When customers face a second choice and extra cost just to get the feature they saw on the advertisement, that’s not a great introduction to the product.
Lessons from Xbox
This isn’t the first time Microsoft has made this type of hardware blunder. The Xbox One, which isn’t selling well, was initially advertised as less of a game machine and more of a living room media center. That’s a savvy idea — that market is still up for grabs, and who better to fill it than Microsoft? But non-gaming consumers would rather use a remote control than an Xbox Controller — it’s a small difference that has a big impact on user experience. The Xbox One remote costs $25 at retail. The marginal cost to produce another is most likely less than $5. Why couldn’t have Microsoft simply bundled it?
It’s smart that Microsoft is positioning the Surface Pro 3 as a competitor to the Macbook Air instead of the iPad, especially as it seems to be edging away from Windows RT. It can score lots of little victories comparing itself against the Macbook that it might not be able to against the iPad, like cost and weight. But the way it is currently presented to the market shows lapses between Microsoft’s engineering, marketing, and sales departments.
While showing off the Surface Pro 3’s improved Type Cover, Panay remarked, “Sometimes the most subtle innovation can have the largest impact.” I agree. The vast majority of consumers will consider the improved Type Cover trackpad a bigger deal than the Surface’s spec bumps. But in order to have a large impact, first you’ve got to get it into the hands of your customers, and if it’s a feature Microsoft is hanging its hat on, that should be everyone who buys a Surface.