This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Who Benefits From The Refresh Of Microsoft Surface?

Chris Lau, Kapitall: Bloomberg reported that Qualcomm (QCOM) and NVIDIA (NVDA) could power the refreshed Microsoft (MSFT) Surface RT tablet. This comes at a time when the future of the RT is uncertain, but it creates upside for the two chip suppliers.

[Read more from Kapitall:  Ken Fisher Owns These 7 Undervalued Stocks With Rising Profits - Should You?]

If the Wi-Fi only tablet is powered by the NVIDIA Tegra chip, it gives NVIDIA the opportunity to be the standard for graphics and mobile gaming. The company would earn royalties, and would strengthen its relationship with the developer community. For the 3G/4G RT models, Microsoft may use the Qualcomm Snapdragon processors for the newer Surface models

RT Market Share Small

Microsoft has less than 1% of the tablet market share, so NVIDIA and Qualcomm may not be big beneficiaries as suppliers. Microsoft recently began giving a free touch or type cover for each Surface RT sale. Still, Microsoft does not appear to be backing down on pushing RT to the market.


If Microsoft decides to wind down the Surface RT to focus on the Surface Pro, there are still benefits for NVIDIA and Qualcomm. Microsoft could choose these companies to develop the chips for the more expensive tablet. Even though Apple still dominates the tablet space with 40% of the market, Microsoft recognizes that building its user base will take time. Ultimately, the success of the Windows tablet will depend on developer support. Without software development on the platform, the Surface line will fail.

Share Performance

[Analyze These Ideas:  Access a  performance overview  for all stocks in the list]

Surface Pro Mispriced

The Pro version of the tablet could give Microsoft more market share, but the high starting price ( at $899) will deter many buyers. A 128GB Surface Pro tablet costs $999, compared to $929.99 for an Apple iPad.


The refresh in the RT will be moderately beneficial for the chip suppliers, but it will not act as a strong catalyst for them. Until Microsoft lowers the price of both the Surface RT and Surface Pro, sales will remain weak. Catchy commercials might help sales, but it will hurt profit margins considerably. Competitors will continue to dominate the tablet space because of greater app availability and deeper familiarity by consumers. There is still hope. In the smartphone space, Windows Phone 8 will continue to grow in popularity. Microsoft just needs to offer an affordable tablet solution that complements the mobile experience.

Written by Chris Lau, Kapitall Contributor



Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free


Chart of I:DJI
DOW 17,050.75 +138.46 0.82%
S&P 500 1,995.83 +15.91 0.80%
NASDAQ 4,810.7880 +19.6360 0.41%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs