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Microsoft's Impressive Product Still Needs Perfect Execution


Microsoft may find in two or three quarters, customers like Dell and HP are offering products on Google's (GOOG) Android platform. Maybe Dell was already moving toward an Android device and this was Microsoft's only hope of keeping a strong name in tablets.

Microsoft's move certainly makes a lot more sense if they know Dell was about to leave the Windows family of tablets for Android. With an estimated cost of $45 to $50 per unit for Windows 8 RT operating system vs. free for Android, the cost difference is substantial for an OEM producing hundreds of thousands of tablets. Microsoft does include office with RT, raising the value of Windows significantly. Also, most manufacturers are claiming RT costs closer to $85, but either way the retail price of a tablet with RT is going to cost more than the same with Android.

The Surface introduction video sounds like it was produced by Nine Inch Nails and falls short of providing much in terms of technical information beyond the built-in kickstand is included. Surface comes in several colors including black, white pink, blue, orange, and pink.

Netflix (NFLX) received positive attention today from the press release as well. The Surface will include a Netflix app to play movies. I would have guessed that playing Netflix movies was a given, but Microsoft believed the point was noteworthy enough to include the feature today.

More technical specifications include a Nvidia (NVDA) ARM chip, or Intel (INTC) chip in the pro model. The Surface will weigh about 1.5 pounds and sport an ultra-slender Parris Hilton summer bikini size of 9.3 mm. The pro version with an Intel processor will weigh in at 2 pounds and still be respectably thin at 14mm. Consumers can add a keyboard/cover only 3 millimeters thick, and the pro version has perimeter venting.

Don't expect to find the Surface in Wal-Mart (WMT), Best Buy (BBY) or Amazon (AMZN) anytime soon. Microsoft stated sales will begin in Microsoft stores and Microsoft online. It's hard to know if this is to control the product or lack of production ability (at least in the beginning). I assume the ability to stock retailers and the financial exposure leaves Microsoft with only the one choice.

The feeling is probably mutual with Amazon. I imagine another product competing with Kindle is the last thing Amazon wants to promote right now. Amazon continues to edge closer to the iPad in baby steps, now Amazon has one more significant competitor in the space.

Does Microsoft have another Xbox type of product on their hands? No one knows for sure, but Surface will require perfect execution to justify what must have taken a lot of time, money and resources to produce so far. Without knowing the price, margins, or even the expected release date, we really haven't seen much more than a wish list item.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Author does not hold a position in any stock mentioned.

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