Is Microsoft CEO Nadella Ready For Surface Tablets?

by Sohini Bagchi    May 16, 2014

satyanadella

After completing 100 fairly successful days as Microsoft’s CEO, Satya Nadella, now has a big challenge in front of him. If an accidental leak on the company’s website is to be believed, the tech giant may unveil a new version of its Surface Pro tablet next week.

Critics however say, this isn’t the first time they have heard that Microsoft has an updated tablet in the pipeline. An industry source told CNET that there’s definitely a new Surface device based on Intel’s hardware in development. “The tablet is likely to run on Intel’s Haswell processor, the chip maker’s newest power-optimised processor for PCs. This hints that it will be a Surface Pro rather than a new Surface RT tablet, which uses a different processor made by Nvidia that’s optimised for mobile devices,” reports the source.

Reports also suggests that Microsoft will announce both Surface Pro 3 and Surface Mini coming Tuesday, hinting at a smaller tablet, to address the fast-selling lower end of the market dominated by Apple’s iPad mini, Amazon.com Inc’s Kindle Fire, Google Inc’s Nexus and Samsung’s Galaxy range.

The real challenge

Until now, the tech giant has stressed the services side of the business. One of the major changes was putting Microsoft’s Office suite on Apple Inc’s iPad. This move became a milestone, with customers performing 27 million downloads in a matter of weeks, something they seemed to be waiting for until now.

While Nadella’s Mobile-first-cloud-first strategy placed the company several notches above his rivals, Microsoft’s device side is yet to be tested. The tech giant has had a hard time selling its tablets since the first Surface originally launched in 2012. Now, two years later, the company only reported $500 million in Surface revenue as of last quarter.

The devices side of the strategy however has been a challenge. Microsoft has had a hard time selling its tablets since the first Surface originally launched in 2012. Now, two years later, the company only reported $500 million in Surface revenue as of last quarter, which is about 2% of the market and has not made a dent on Apple’s iPad, reports Business Insider.

In such a scenario, some investors believe Microsoft should not have wasted time and money on the low-margin hardware business. Many believe that turning around the tablet and mobile business in the next 1-2 years will be a Herculean task for Nadella.

A fresh start

Others however believe that despite unspectacular sales, there are signs that Microsoft’s Surface Pro 2, which runs the full Windows operating system, has started to attract Microsoft’s core business customers.

Read: Microsoft Cannot Afford Any Delay, Anymore!

“There’s certainly tons of interest in the Surface Pro as an Ultrabook replacement that has tablet capabilities,” J.P. Gownder, an analyst at tech research firm Forrester to Reuters.

Even if the Surface never dominates the market, Gownder states Nadella and Microsoft are right to persevere with hardware, if only as a way of showing other device makers how best to make use of Windows.

Despite speculations, for Microsoft, the Surface is an important platform to showcase its overall vision for Windows, and the May 20th launch will further highlight whether Nadella is ready to take up the challenge of Surface Tablets.