Microsoft Corporation (NASDAQ:MSFT)‘s Surface hasn’t made much of a dent in the tablet market in its freshman year, but it’s ready to give it another shot.
The software giant has set up a media event for September 23 to update its Surface line.
The chatter has been pretty consistent. The new tablets will have slightly improved specs. Microsoft Corporation (NASDAQ:MSFT) will drop the RT name from the entry-level model, though it will still run the scaled-back Windows RT 8.1 mobile operating system that has failed to catch on since it doesn’t run traditional Windows programs.
There won’t be a lot of buzz for Surface 2 and Surface 2 Pro, and that’s on Microsoft Corporation (NASDAQ:MSFT). Despite spending a lot of money on advertising to show off the stylish tablet and the inventive flat touch keyboard that snaps on magnetically, the original Surface RT and Surface Pro were failures.
A lot can change if Microsoft Corporation (NASDAQ:MSFT) gets it right on pricing. The original Surface RT hit the market at $500 late last year. It was a colossal mistake to introduce a new tablet at the same starting price point as Apple Inc. (NASDAQ:AAPL)‘s iPad. It may have had some superior specs, but it clearly wasn’t enough to take on Apple at the high end.
Google Inc (NASDAQ:GOOG)‘s Android — which over the past year has surpassed Apple Inc. (NASDAQ:AAPL) in global market share — is open source, and that makes it freely available for hardware makers to flood the market with devices across all price points.
It was Android’s presence — and not Apple Inc. (NASDAQ:AAPL)’s — that doomed the Surface. Apple actually sold fewer iPads in its most recent quarter than it did a year earlier. It moved 14% fewer tablets, even though industry tracker IDC shows that global shipments have soared 60% over the past year. The cruel math for the iPad here is that its share of the market has gone from 60% a year ago to 32% now.
Earlier this summer, in a desperate move, Microsoft Corporation (NASDAQ:MSFT) slashed the price of its RT by $150 to $350. It’s also offering refurbished Surface RTs for just $300, but who are we kidding? Don’t you have to sell tablets first before getting enough returns to polish them up and resell them as refurbished? It wouldn’t be a surprise if those refurbished tablets are new.
Some argue that the Surface RT price cut is merely to clear out inventory, but Microsoft Corporation (NASDAQ:MSFT) will be repeating last year’s mistake if it hits the market again at $500 for the Surface 2.
Microsoft Corporation (NASDAQ:MSFT) can’t blow this. Tablets aren’t just a passing craze.
