On Microsoft’s Surface…

For those who didn’t see it, Microsoft’s mystery announcement yesterday was the introduction of the Microsoft Surface–their “answer to the iPad.” You can watch the video here.

Personally, I think last night’s presentation was a step in the right direction for Microsoft, but only a step, when what they really needed was a jump. RIM introduced their PlayBook too early, and look where it got them. Microsoft tried this once before with the HP Slate. And it crashed and burned. And while I don’t think Microsoft should be more “Apple-like” in its culture, it definitely needs to take more cues from Apple in its strategy. Apple’s $500+ billion value is evidence of this. They’re worth double what Microsoft is worth, and they have less than 10% of Microsoft’s market.

The presentation was decent. Good, even. They did several right things: Announce the product, as they did. Focus on the business usage, as they did. Acknowledge that they came late to the game, as they did. But they should have also acknowledged that Apple achieved something in this market that they couldn’t. When the economy was going down the tubes, Apple was still selling strong, because they had brand loyalty, and people who use Apple products are passionate about them. Microsoft should have accepted that reality, and taken a stand that they’re looking to compete, and that they are committed to competing in every way. And that means making a few changes to Microsoft’s old way.

Here’s what they should have done to nail that:

What Microsoft Missed

  1. Emphasize the Windows Marketplace ecosystem. Show how it integrates, seamlessly, with the OS. Perhaps it’s obvious to some people, but not to average consumers who are used to the iOS App Store’s simplicity.
  2. Set a release date. The fact that this is still months away was a bad call. Building up hype 5 months in advance may as well be a year. They’ll miss the Christmas rush, and with Surface Pro coming out 90 days later, Apple will have a fourth iPad model at the same time Microsoft will be releasing their first professional tablet.
  3. Set a price. Saying you’ll price competitively is nonsense. It’s competitive if it’s competitive. When it doesn’t exist yet, it’s not competitive. And if you can’t do a feature-by-feature comparison, it’s hard to be competitive, or to measure a competitive price. They could argue that $1,000 for the product is competitive, because it has “USB and HDMI.” But who wants to pay more than what they pay for the highest-priced iPad?
  4. Integrate 3G/4G. Apple did it, so Microsoft should too. Not having 24/7 connectivity on a business device is bad news.
  5. Show the feature comparison. Not to single out Apple, but with Apple’s retina display and 10-hour battery life, I would think that knowing the exact screen quality and battery life would matter to most people.
  6. Make it a portrait and landscape device. If you watched the video, did you notice that the screen never rotated into portrait mode? What if I want to work on a long document? The iPad’s portrait mode plus a keyboard makes it a perfect 8.5×11 ratio for editing a full document, and on retina, it’s crystal clear, like real paper. That shortcoming in the Surface might be a fundamental flaw.
  7. Get Ballmer’s vacuous stares out of the presentation. Leave up the people who can actually smile and not look like they’re searching for Apple employees in the crowd. All kidding aside though, Ballmer’s hard-nosed, out-of-touch, corporate mentality introduces an element of Windows that may attract business users, but as the traditional business model is moving into a more “freelance” or “entrepreneurial” mindset, that kind of corporate rigidity is losing favor with people. There’s a reason why the relaxed atmosphere of companies like Google and Facebook are highly sought after.

But… to credit Microsoft, they did some things very well.

What Microsoft Nailed

  1. Those covers, and the keyboard. Assuming it works (none of the testers were apparently allowed to use the keyboard), it looks like a game-changer. I would love a soft-touch cover like that for the iPad. Rethinking the input devices (something that I think Microsoft has been a leader in for many years; they made great mice and great keyboards) is a wise strategy, and really helps to bridge the PC and tablet market in a way Apple never did. Apple’s keyboard solution was more of an afterthought product, rather than an integrated solution. Microsoft nailed this on an all-in-one product.
  2. The magnesium casing. That’s slick, and tasteful. Their focus on the strength and lightness of design was critical, if this tablet is to compete with the iPad. Furthermore, it raises the standard from the cheap form factor of other devices (laptops and PCs) that are made from cheap plastic and sharp metal.
  3. The kickstand. No need to buy lots of extra accessories: the stock products from Microsoft cover all the bases. Well done. It locks the device into a single landscape orientation (meaning, you can’t flip it upside down), but that might be a result of the tablet being a landscape-only device anyway. On my iPad, I am forever rotating it from one landscape side to the other, depending on how I’m using my case. If I want to hold the iPad in landscape mode, my case is only comfortable in one orientation. But when I want to use it as a desktop tablet with slight elevation, I need to rotate it the other way for the case to be in its propped up mode. The kickstand eliminates that constant rotating.
  4. A better presentation. Finally, Microsoft has started to show some artistic culture, and it wasn’t a “PowerPoint presentation.” I don’t know… maybe it was using PowerPoint, but it didn’t feel like it, and that’s the point. It didn’t feel like a presentation from 1995. It felt like a metro-infused art gallery. Notice the minimal text during the talks. One and two word sentences. Unfortunately, the speakers’ enthusiasm still felt a little forced, like they were trying to communicate a culture they hadn’t fully adopted yet, but it’s better than they’ve done before.
  5. A consumer and a pro version. While Apple’s “one product fits all” approach is good for Apple’s culture, Microsoft’s statement that Windows has always been “all about choice” is a good statement to make (though in the past, that would be a lie, as was proven with Internet Explorer: Microsoft did not want anyone to choose another browser). The point is, they’re providing choice, but not too much. Just two. Great call.

All in all, a job well done. We need a price, and a launch date. Microsoft has been notorious in the past for failing to meet their targets (they even started their own presentation 40 minutes late), but it’s time for them to step up their game and meet some deliverables.

Well done, Microsoft. Keep it up.

Understanding Statistics

This isn’t specifically a Mac or Apple post, but rather a focus on the statistics and results of this particular survey. The survey identifies that about two-thirds of PC users (64%) would pay less than $600 for a Mac Tablet, and the remaining one-third would pay $600 or more. Interestingly, of the remaining 36%, 20% would pay more than $800, while only 16% would price it between $600 and $800.

In contrast, current Mac users have a different view: 27% would pay between 600 and 800, 41% would pay more than $800, and only 32% would pay less than $600.

Let’s look at these numbers a little deeper though. A Mac user is twice as willing as a PC user to pay $800 or more, and almost twice as willing to pay $600-800. They are half as willing to pay less than $600. In other words, Mac users consider the price worth it, and are twice as likely to buy a Mac Tablet as a PC user, regardless of the price. In other words, Mac users value something other than price when they make a purchase. PC users, on the other hand, value price above all else.

Basic economics says that a person will never pay more for a product than the value that product provides, except in the case of a pure monopoly on a necessity item. Thus, when a person is willing to pay a certain price for a product, they consider its value to be relative… they will pay more for a product they feel is worth more, but will not pay more than they think it’s worth. Make sense?

In this survey, 64% of PC users will not pay more than $600. Economically speaking, it’s because they don’t consider the value of what they are purchasing to be greater than $600. But their primary frame of reference is the cost of PCs, and in particular, $300 to $600 netbooks. In contrast, 68% of Mac users will pay more than $600 for a Mac Tablet. Again, economically, Mac users value a potential Mac Tablet as greater than $600. Now also consider that both parties are people who are willing to buy a Mac, and therefore already place some degree of value on it. These are not people who were asked what they think the product will be priced at, these are existing computer users who were asked to identify what price they would be willing to pay. PC users place a lower value on a Mac than Mac users do.

Thereby begging the rhetorical question of the day: Who is better to judge the actual value of a product–the person who already uses it, or the person who doesn’t use it?

In effect, PC users are saying, “I want a Mac Tablet, but Mac’s are pricey, so I want them for the same price as netbook PCs, because I value them as one and the same.” Mac users are saying “We already use a Mac, and we already know its value, which we consider to be greater than the value of a PC, so we’re willing to pay a higher price for that greater value.”

And this is where statistics get funny. The article from TUAW suggests that Apple needs to keep the price of a Mac Tablet at about $600 or less to attract PC users. Yet, Mac users are willing to pay more. But from Apple’s perspective, the statistics say something different:

Don’t take losses by selling the product cheap just to win some short term converts: current Mac customers don’t care. And current customers are more valuable than potential future customers.

Remember the old adage, slow and steady wins the race. Focus the time on educating the PC user to become a dedicated Mac convert. It’s not like Apple to win a convert by offering a cheap product. They win a convert by gradually appealing to something other than people’s pocketbooks.

Because Mac users get it.

Mac users understand the value and are willing to pay more for it. And once the product is out there and tested in a controlled capacity, then work on making it better, and dropping the price. You win more converts each time, and existing Mac users buy a new one anyway.

And lastly, don’t forget that we’re talking about a product that doesn’t even exist yet, and already people are willing to pay a premium for it. That’s precisely what Apple needs: Mac users and PC users alike acting like Pavlov’s dog over a potential product. It’s not a bad thing. But it is a learned, and conditioned response, and Apple knows how to lead that well. It will be interesting to see how this knowledge will drive the development of this product over the next two months.