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Microsoft Doubles Down On Surface Tablet Strategy

By Norman Chan

The skinny on new Surface hardware coming out next month.

They're really sticking with this thing, huh. That's the prevailing thought that ran through my mind during Microsoft's Surface 2 announcement event yesterday morning in New York. Even though many of the hardware details had already been leaked well ahead of the briefing on Redmond trackers like Paul Thurrott's WinSuperSite, I had hoped for a surprise or two. Maybe a different form-factor. Maybe a more sturdy keyboard cover design. But nope, what we got was Microsoft staying the course with its Surface hardware lineup. Two tablets, one running Windows RT and one running Windows 8.1 Pro. Both still sporting 10.6-inch displays. And both still almost exactly the same size and form-factor as the existing models.

There are notable hardware improvements, to be sure, but the paradigm of large productivity tablets that can be used as pseudo laptops remains the same. These were products in development before the launch of the first Surface last October, Surface lead Panos Panay tells us. This is part of a multi-year roadmap in which his team is already designing the next three generations of Surface, we're reassured. So even though the tablet business cost Microsoft $900 million last year in unsold hardware, Surface is to stay. Devices and services, the Microsoft way.

So let's go over what was announced yesterday--including all the hardware details that weren't explicitly mentioned on stage. Let's talk Surface as a strategy, what challenges it still faces, and why the biggest hurdle to Surface adoption isn't hardware--it's Windows RT.

Let's start with Surface 2, which I think is the less interesting of the two Surface tablets. Surface 2 is almost exactly the same size as the Surface RT (technically a millimeter thinner), which Microsoft is still selling for $350. It still runs Windows RT, but now on Nvidia's Tegra 4 SoC instead of the Tegra 3. Tegra 4, as we've seen in the Nvidia Shield, is plenty fast for ARM-applications in Android, and should help app load times and performance in Windows 8.1. Additionally, the Surface 2 now has a 1080p screen--the same one in the new Surface Pro, which is a tweaked variation of the 1080p display in last year's Surface Pro, better calibrated for color accuracy.

Among the other improvements that Windows 8.1 bring is improved battery life. Microsoft claims 25% longer usage in the Surface 2 than Surface RT, while keeping the battery the same capacity. There's also a USB 3.0 port now, and the chassis is lighter due to the two-piece white magnesium construction (as opposed to the three pieces of the original). Here's a quick photo comparison of last year's Surface RT on top of the Surface 2. Aside from color, they look very similar, and feel almost exactly the same when held with two hands. Hovering just under 1.5 pounds, this is still not a tablet to hold with just one hand.

The higher-resolution screen is noticeable more in Office RT programs than on the Start Screen, especially with high-DPI text. And yes, the full suite of Office RT apps is once again included, but Microsoft is getting even more aggressive with its bundling and pricing. Surface 2 buyers will get 200GB of Skydrive storage for two years, as well as free international Skype calling and Wi-Fi Skype hotspot access for a year. That, combined with Surface 2's $450 price (with 32GB of internal storage, 18GB available) makes the Surface 2 sound much more attractive than Surface RT did last year at launch. This is the other thought that I kept going back to during the event: Microsoft's aggressive pricing and bundling (relative to last year) feels more like an act of desperation than of confidence. I'm sure they're still making money--or at least breaking even--on hardware at retail, but this is their attempt to get users to give Windows RT another try. In a market where some OEMs have openly dismissed or abandoned RT tablets, and where Microsoft is sitting on millions of unsold Surface RTs, that's a stubbornly bold stance to take.

It makes me wonder who Microsoft's target customer is for the Surface RT and Surface 2. Judging by the messaging of commercials still running on TV, in which Surface takes direct jabs at the full-size iPad, Microsoft is touting hardware features and price as the reason to buy a Surface, which notably omits attributes Apple has conditioned iPad fans to pay attention to: software experience and app support. Panay only spent a a few minutes in the presentation talking about Window 8.1 and app availability, and only to say that RT app growth had reached 100,000 apps in the Windows Store--no notable call-outs or app demos to demonstrate performance. One app that did get a demo was the Microsoft-owned Skype, to show off the Surface 2's improved 3.5MP front-facing camera, which did capture very clear video in low light. Skype is typical of the type of application that Microsoft knows its Windows RT users care about--casual apps that serve a specific purpose, whether it's video calls or e-book reading.

Surface 2 is laptop replacement not in the sense that it can do everything a laptop can do, but that it can do what Microsoft thinks its target users want, without all the things that those users don't need from a full laptop or Windows Pro. The problem is that $450 (plus the cost of accessories) is a lot to ask for that functionality.

Surface Pro 2, however, is being billed as a full-on laptop alternative, just as the Surface Pro was last year. To that end, Microsoft made just one physical hardware change to accommodate laptop users, and that was adding an extra tilt angle to the Surface's kickstand hinge (this is in the Surface 2 as well). The extra degree of tilting, Panay said, addresses the biggest request for Surface Pro users--that it wasn't great to type with when using it on the lap. By being able to tilt further back, Surface and Surface Pro 2 address an ergonomics issue, theoretically being less taxing on the neck when users look down at their lap to type.

This misses the point of why we thought the Surface Pro just didn't work as a laptop. Its fundamental kickstand and touch/type cover design is not conducive to comfortable typing on an uneven surface like the lap. The kickstand supports the Surface well enough, but the weight distribution is off--two pounds weighted on the screen while the lightweight touch/type cover wobbles around from your fingers typing on it. Instead of focusing on typing, you're spending your time keeping your legs still so the Surface won't fall onto the floor. Compare this to the hinged-keyboard design of Lenovo's Thinkpad Helix, which locks the screen/tablet into place so the "laptop" is one sturdy and cohesive unit. Again, Surface is a design that works fine on a solid surface like a desk or maybe even an airplane tray, but not on the lap.

But as a portable desktop computer replacement, the Surface Pro 2 has a real future. The most important design decision in the Surface Pro 2 is keeping its size and weight the same as the last Surface Pro--meaning heavier and thicker than ARM tablets--but packing it with better hardware to satisfy performance. This, like I said last year, is an UItrabook competitor, with the same U-class Intel processor as this year's MacBook Airs and Lenovo Yoga 2s of the marketplace.

Specifically, Surface Pro 2 is equipped with Intel's 4200U processor, a 1.6GHz Core i5 Haswell chip that Turbos up to 2.6GHz on load. Compared to the Intel 3317U Ivy Bridge processor used in the last Surface Pro, the 4200U is more power efficient with a 15W TDP at load compared to the 3317U's 17W. A Microsoft engineer told me that Surface is designed to use even less power than that--productivity apps will push the chip to 12W at most. The use of Haswell, in addition to some low-level hardware optimizations and the benefits of Windows 8.1, pushes Surface Pro's battery life up by 75%, according to Microsoft. In most tests of the first-gen Surface Pro, web browsing and video playback lasted between 9-10 hours. To get 15 hours with the same Whr battery in the Pro 2 would be very nice indeed.

Another few notes on the processor and performance. Microsoft opted for the 4200U chip instead of the more expensive 4250U chip used in this year's MacBook Airs for likely a few reasons: CPU performance at cost. The 4200U runs at 300MHz faster than the 4250U (both Turbo to 2.6GHz), and costs $55 less per unit, which lets Microsoft charge $900 for the Surface Pro 2. However, the 4200U runs on Intels HD 4400 graphics, which are slower than the HD 5000 graphics in the 4250U--Surface Pro 2 won't game as well as a MacBook Air. I was curious why Microsoft didn't opt for the ULV 4200Y processor, which has a max TDP of 11.5W, and would've granted the Surface Pro 2 even longer battery life. But as the engineer told me, the design decision here was for application performance, and the 4200Y maxes out at 1.9GHz in Turbo.

Other bits of hardware insight: storage capacity on the Surface Pro starts at 64GB (mSATA, not PCIe), of which 37GB is available to users. On the 128GB model, 97GB is available. Just like with last year's models, additional storage can be freed up by creating a USB recovery key, which is not included. Surface Pro 2's other configuration options include RAM, which starts at 4GB and goes up to 8GB. All configurations use the fast LPDDR3 memory spec. Cameras on the Surface Pro 2 also have not been improved, and remain the crappy 1.2MP sensors in last year's model. An LTE model is in the works for early next year. The digitzer is still there, and remains the same.

Microsoft also had a gaggle of Surface accessories on hand to demo, including a new backlit Touch Cover with over 1000 sensor points, new backlit Type Cover with reduced travel keyswitches (not sure this is good), a battery cover with a 30 Whr capacity that will charge the Surfaces' internal battery when not plugged in, and a $200 docking station that adds additional USB ports, Ethernet, and video out. I'm fine propping this up on my desk on top of some books and plugging in my own USB hubs.

Panay and team also made a big deal out of the potential of future Touch Cover variants, utilizing the touch sensors in these covers to design new types of Surface covers that serve specific purposes. The one demoed yesterday was called the Surface Remix Project, a pressure sensitive cover used in conjunction with a music program to remix songs. It's a neat idea and may be practical for a small group of artists and musicians, but I don't think people want to buy DJ Hero-style accessories for their tablets, especially when Microsoft is having enough trouble getting people to choose Surface in the first place. We'll file this one under "to be determined..."

The design of any new hardware generational is going to be a series of prioritizations and compromises. Nobody can avoid this, not even Apple. The shift from iPad 1 to 2 emphasized weight, while iPad 3 took a step back in that regard to accommodate a high-res screen. iPad Mini prioritizes size and weight, but at the cost of performance and screen resolution. The design decisions made for Surface 2 and Surface Pro 2 reflect the ideals of performance and long battery life. A full PC in the tablet form factor is the company line, but read between those lines and you'll see the compromises: Windows RT and devices on the heavy end of the tablet spectrum. Surface 2 and Surface Pro 2 are improvements over last year's Surface RT and Surface Pro, but Microsoft can't ignore where the market is going and what else is out there. Ultrabooks like the Yoga 11S, tablets like the Nexus 7, and even hybrids like Asus' Transformer T100 are capable and cost-effective. I would have preferred Microsoft relegate Surface RT to a new smaller form-factor (which may come later anyway), and made the Surface 2 an Intel Bay Trail device that could run Windows 8.1 Pro. And if that's just part of the multi-year Surface roadmap, I hope it comes sooner rather than later.

Surface 2 and Surface Pro 2 will be released on October 22nd, and pre-orders are available now. Microsoft is sending out review units in about two weeks, and we'll be testing them as soon as they come in.