NEW YORK (TheStreet) -- I can report that after living with Microsoft's (MSFT) new Surface Pro 3 computer for a few days, it's the best Surface I've ever had the pleasure of trying. That's the type of statements companies love to quote in advertisements. In reality though, it only tells a small part of a large story about this third-generation tablet computer.

To tell the story properly we need to look at the Surface Pro 3 from two different directions - hardware and software.

The original Surface RT (which ran on a Nvidia (NVDA) Tegra 3 processor) and the Surface Pro (with a dual-core Intel (INTC) i5 chip) were announced a few weeks shy of two years ago. The Surface RT went on sale in Oct. 2012, with the Pro hitting retail channels three and a half months later, in Feb. 2013.

Microsoft then updated both products, having released its second-generation Surface tablets in October of last year, when it also introduced the Windows 8.1 operating system. This week's announcement only mentioned the Surface Pro 3, with a new Windows RT device nowhere to be seen.

The Surface Pro 3 hardware is where all of Microsoft's hard efforts have been centered. The specs are relatively similar in many ways to what was inside the latest versions of second-generation Pro - from a fourth-generation Intel Haswell series of processors to a choice of either 4GB or 8GB of RAM and 64, 128 256 or 512GB of internal storage. The Surface Pro 3 also offers 5 megapixel cameras front and back.

But the Pro 3 also contains a few big differences that make the tablet/laptop (tabtop? laplet?) even more appealing. This includes the new, larger 12-inch touch screen (up from the Pro 2's 10.6 in. display). Microsoft has increased the screen size and changed the aspect ratio from the old 16:9 to 3:2. That new touchscreen is capable of providing 2160x1440 pixels, which looks great in person.

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The new screen is also a touchscreen, with Microsoft bragging it's worked hard to improve that part of the equation as well. The touchscreen now supports increased layers of sophisticated input awareness. As demonstrated at the launch, the harder you press down, the harder the lines get drawn (or the letters/numbers being written) get bolder as well. It allows for a new level of visual differentiation and options when you're using the Pro 3 as a tablet.

The new Surface Pro 3 has a new hinge on the back. I know that sound like a ridiculous item to point out, but it's probably the most important change in the new device. The first-generation Surface opened to allow only one viewing angle. The second-generation models open at two different angles. In this new model, the hinge allows for an nearly infinite number of angles, from nearly vertical all the way down to relatively horizontal. That's a very big deal because now, the Surface Pro can actually be balanced for use in your lap so that you can comfortably see the screen and type at the same time.

The Surface Pro 3 is quite lightweight. The redesigned cooling fan and housing have allowed Microsoft to reduce the overall bulk while increasing the size of the screen. The Pro 3 is thinner and weighs only 1.7 pounds (sans keyboard) which, as demonstrated on stage, is about half of the weight of the new computer's targeted competition, Apple's (AAPL) MacBook Air. Even with the optional keyboard cover attached, it is super lightweight.

Microsoft improved the battery life, giving the hybrid device as much as nine hours. The MacBook Air claims as much as 12 hours of Web browsing with it's battery pack. Microsoft also bragged about the fact that the Pro 3 is 60% louder than the last model. Although the sound quality coming from the new device is terrific, it still really doesn't go loud enough in some instances.

As for inputs and outputs, there's only one USB 3 port and one display port, which supports 4K video. That's not enough these days for a tablet or laptop. The $899 (and up) MacBook Air has two USB 3s, an optical audio out and a super-high-speed Thunderbolt port which can handle high-res video and audio. To add further expandability for the Pro 3, you need to purchase the optional desktop Docking Station ($199). That adds two additional USB 2s, an Ethernet and some analog audio in and audio out ports.

Microsoft must be commended for redesigning the Surface's AC connector. In the past, it was always a pain to carefully align the adapter to the tablet. The new connector is much easier to use.

The company let reviewers try that optional Touch Cover ($130), a combination of snap-on, lighted, keyboard/touchpad and screen protector. The Touch Cover offers a clever, new adjustment for the keyboard which raises the back of the cover and makes typing even easier. On the other hand, I was never able to find a software setting for the touchpad which allowed me to keep the cursor from jumping all over the screen.

Don't get me wrong. Overall, Microsoft has done a wonderful job with the new Surface Pro 3. It is mostly an absolute delight to use. It has a great screen, a fast processor (the test unit came with an Intel i5, 8 GB of RAM and 256 GB of storage) and handled everything I could throw at it. I like the size and format a lot. I love it as a laptop and in the tablet mode. I can't wait to try the upcoming, tablet-enhanced version of Adobe  (ADBE) Photoshop made especially for use on the Pro 3 using the (included) digital pen input system. In the live demo, it looked amazing.

The other half of the equation is the software. The Pro 3 runs on the latest 64-bit version of Windows 8.1. It's a huge improvement in usability over Windows 8.0, mainly because you can choose to have your computer boot to the much beloved Windows home screen instead of the newer Start tiled version. The Start was designed to be tablet-friendly, but it works better as a survey-at-a-glance home screen for Microsoft smartphones.

There's no need to detail everything the software can or can't do. While 8.1 runs smoothly on the new hardware, the OS is still a work in progress. That's the same with every other operating system on the planet. The next version (Windows 8.2?) is expected later this year, which will hopefully make the opening home screen change permanent.

I also hope Microsoft will do something about it's audio software. It is so far behind what Apple offers as standard equipment, it's not funny. When it comes to high-quality video, Microsoft is competitive -- when it comes to high-quality audio it's still stuck in the 1990's.

Unlike Apple's computers, you still need to download special software drivers to playback audio files which sound better than MP3s. In this world of new high-quality devices like Pono and download services like HDtracks one would think Microsoft would want to get involved.

I've been told that Microsoft has been busy trying to find the right audio engineering team to bring everything up to date. I hope they succeed soon. Most of the audio/music world is ignoring Windows computers and are depending on Macs.

Finally, we have to discuss pricing. Depending on what you want, the Surface will find itself competing with both MacBook Airs and MacBook Pros as well as all the other Windows 8.1 computers out there.

Prices will start at $799 for a model with an Intel i3 processor, 4 GB of RAM and only 64 GB of storage. You'll need a really good-sized SD card too. Our test unit (i5/8 GB/256 GB) will sell for $1,299. The top-of-the-line model (i7/8 GB/512 GB) will retail for a goosebump-raising $1,949. Don't forget, you really need to add $130 for the Type Cover for the best portable results.

Any way you try to rationalize it that comes out to a lot of money. I understand why. The Surface is still a niche product sales-wise. Microsoft doesn't make enough of them to be able to offer lower prices. That doesn't take into account whether the company would ever want to lower the prices - to keep them competitive with Apple laptops.

The new lower-end Surface Pro 3 tablets could begin to make waves against Apple's higher-end iPads. We'll have to see how Microsoft chooses to market those products - and frankly whether Apple or the buying public really care.

I'd like to personally thank Microsoft for not announcing any new Windows RT devices - big or small. That was a wise decision. Concentrate on the full Windows versions of the Surface and think in terms of getting the price even lower for at least one model.

The hardware is getting better, with third-generation usually the charm for Microsoft products. The software still needs some work, and the tablet capabilities hold much promise for the future.

Pro 3s are available for pre-order now and will officially go on sale June 20.

-- Written by Gary Krakow in New York.

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Gary Krakow is TheStreet's Senior Technology Correspondent.

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