Microsoft's new Surface tablet takes aim at Apple's MacBook

NEW YORK Wed May 21, 2014 1:24am IST

An attendee photographs the new Microsoft Surface Pro 3, during the event in New York May 20, 2014.  REUTERS/Brendan McDermid

An attendee photographs the new Microsoft Surface Pro 3, during the event in New York May 20, 2014.

Credit: Reuters/Brendan McDermid

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NEW YORK (Reuters) - Microsoft Corp (MSFT.O) unveiled a larger but lighter version of its Surface Pro tablet on Tuesday, hoping that the company's expertise in business software will help it take on Apple Inc (AAPL.O) in mobile devices.

At a presentation in New York, new Chief Executive Officer Satya Nadella made it clear that Microsoft, which recently acquired Nokia's handset business, is committed fully to making its own devices, despite a lack of success for its phones and tablets so far.

"We are not building hardware for hardware's sake," said Nadella, at the event. "We want to build experiences that bring together all the capabilities of our company.

The Surface Pro 3 tablet, which comes in three models starting from $799 and costing up to $1,949, features a 12-inch screen, much larger than Apple iPad's 9.7 inches. It also comes with access to Microsoft's Office software suite, employed in businesses around the world.

Microsoft executives made frequent comparisons with the MacBook Air at Tuesday's launch, making it clear that Apple's lightest laptop, which starts at $899, was the device to beat.

The same executives, highlighting a focus on the enterprise segment of the market, also talked up the limitations of existing tablets in a full office environment.

Microsoft "has concentrated on its key strength - business users who look at tablets as extensions and/or replacements for full laptop capability," Jack Gold of J. Gold Associates wrote. "Microsoft finally seems to understand it cannot go head to head with Apple's iPad, and must offer a superior business device."

Microsoft, which is recasting itself as a 'devices and services' company, has not made much headway on the devices side, except for its Xbox game console.

The Surface, launched in October 2012 and updated last year, has about 2 percent of the tablet market, failing to make a dent on Apple's iPad. Microsoft has only 3 percent global share in smartphones, chiefly through Nokia.

(A look at the global tablet market: link.reuters.com/ker49v)

The Surface Pro 3 runs the full Windows operating system, and Microsoft hopes it will be the device consumers and companies go to when they are replacing laptops.

Initial reaction was positive, but analysts have doubts that Microsoft can easily haul itself into a meaningful position in the hardware business.

"This is Microsoft's best shot yet to move the needle in the right direction on market share gains," said Daniel Ives, an analyst at FBR Capital Markets. "The odds are stacked against Microsoft, although we have to credit Nadella with putting his pedal to the metal to go after tablet market share, which remains key going forward."

The new device, which like previous versions uses Intel Corp (INTC.O) processors, will be available to order this week.

(Reporting by Bill Rigby, Editing by Franklin Paul and Tom Brown)

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