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Microsoft to Unveil New Surface Tablets

Stocks in this article: MSFT

NEW YORK ( TheStreet) -- Microsoft (MSFT) is planning a big event here in New York to unveil its second-generation Surface tablets. Last night the company invited journalists to attend a big shindig on Sept. 23 to see what has changed. There haven't been too many leaks to warn us in advance about what to expect. That could mean we'll be very surprised. Or, maybe not.

The new Surface RT tablet (which runs Windows RT, made especially for ARM (ARMH)-based processors) and the new Surface Pro (running Windows 8.1 on Intel (INTC) processors) are not expected to change much from the current, first-generation models. That could be a big problem for Microsoft.

Microsoft shares closed up 2.29% at $32.38 on Tuesday.

Those first Surface devices have not been big hits with the computer-buying public. The new Windows 8 interface was confusing to most Windows fans. And many users weren't ready to end their laptop/PC experience and run Windows on a tablet. But the most important factor was that the new devices were just too expensive. All of this added up to Microsoft having to take a $900 million charge for unsold inventory at the beginning of the summer.

So the software giant began lowering retail prices for Surface tablets. The move was somewhat expected after a year of lackluster sales and with new models on the way. Microsoft also began advertising on TV. Those ads boasted about Surface being able to do more than Apple (AAPL) iPads and do so at much lower prices. Those ads also began laying the groundwork for next-generation devices.

The new Surface tablets will reportedly have higher resolution screens, faster processors (capable of even better battery conservation) and possibly a redesigned prop-up stand on the back. The blogs are hard at work trying to guess every detail Microsoft might actually announce.

The best new feature will be Windows 8.1 software. Microsoft has been busy making lots of improvements to both of its Windows 8 operating systems. A few months back, Microsoft released free, downloadable beta versions of Windows 8.1 and Windows RT 8.1. We tried both and noticed a number of welcome improvements - including the return (in some form) of the infamous Windows "Start" button.

Our biggest surprise was with Windows RT 8.1. The beta software allowed the first generation Surface RT to zoom through tasks. Combined with lower hardware prices (currently down to $350) the Surface RT begins to make a lot of sense. We expect the final release versions of Windows 8.1 and Windows RT 8.1 to be even more polished.

Microsoft Surface tablets' future success will ultimately depend on what Microsoft decides to charge. The hardware really is top-notch. The software is improved greatly. The ingredients are there. Now the company needs to keep prices low to attract more buyers.

We'll be in attendance at the New York event in two weeks to let you know exactly what Microsoft announces.

Written by Gary Krakow in New York.

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