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A Lesson In Missed Opportunities: Why Microsoft’s Surface Go Disappoints Right Out of the Gate
by Olivier Blanchard | July 12, 2018
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Part 1: The Facts.

Earlier this week, Microsoft introduced Surface Go, an affordably-priced addition to its clever and successful Surface ecosystem of tablets and hybrid laptops like the Surface Pro, and other solutions. (If it wasn’t clear already, I am generally a fan of most things Surface. Microsoft has done a pretty solid job with that product line.) Here are some Surface Go basics: Smaller, cheaper, more budget-minded. Frontline specs: Intel Pentium Gold 4415Y processor (with options for either 4 or 8GB of RAM, and 64GB of eMMC storage or 128GB SSD). 9 hours of battery life.

Per The Verge: “The processor is a dual-core seventh-generation model, which Microsoft says was chosen because of its balance between performance, battery life, and thermal properties that allow for a thin, fanless design.”

Surface Go features a 10-inch screen, the same kind of integrated kickstand found on other Surface products, and runs Windows 10. The most basic model starts at $399, which is to say that the realistic price-point for a Surface Go with features and accessories that most consumers will actually need falls more in the $500 (with keyboard/cover) to $700 range (+ other accessories and upgrades). And if you want more than the basic specs, Surface Go‘s pricing jumps to $549 for 8GB of RAM and 128GB of SSD storage. Add the cover/keyboard to your purchase, and you quickly find yourself in iPad Pro’s pricing orbit, albeit without iPad’s massive app library, putting Go‘s prospects as a legitimate alternative to iPad for the average consumer on somewhat shaky ground. (Apple’s comparable iPad, spec-wise, is priced at $329.) Caveat: Surface runs Microsoft’s Windows OS, which is pretty handy for a work laptop. The dilemma for users is simple: Do you want to run Windows on your device, or do you prefer the iOS ecosystem and its millions of apps? Without getting too far off topic, the point I want to make is that by virtue of this alone, I find it difficult to suggest that Surface Go is “taking on” the iPad market, as has been suggested in the business press.

Now that the initial round of reviews and reactions are in, let’s cut through the noise and talk about why this move, while perhaps clever at first glance, is disappointing and ultimately self-defeating for Microsoft. It pains me to write this because Microsoft has otherwise been hitting home runs with regard to design and innovation recently.

Part 2: Some observations from the trenches.

Why don’t we start with a few general observations – not limited to Microsoft:

  • Long term, you don’t improve your market position by releasing cheapened versions of your successful products. There is no universe in which a brand can build a strong foundation for trust, product quality, product reliability, and product performance by releasing cheaper, lower performance, lower quality versions of products people love and have come to expect a certain level of experience from. Releasing lower quality products with cheaper components and lower performance characteristics is always a dangerous move. Lower quality products with branding similar to flagship products run the risk of dragging the brand down if quality issues begin to scale.
  • If your industry values quality and reliability, price wars are self-defeating. The race to the bottom of a price war is also a race to the quality bottom. If Microsoft really want to release a cheaper version of the Surface, it would make more sense to do it under completely different branding, or to make it highly specialized. If all you are going to do is make it cheaper, don’t put the Microsoft logo on it. Don’t call it “Surface” anything. Push that product out as a cheap import under a different brand and/or mantle.
  • If you really want to dominate a low price category, either price your product at least 25-30% lower than your competition, or release a product that provides 25-30% more value for the same price. Merely matching the price-point and performance of an established competitor in that bracket isn’t enough. While the $399 low end price tag that Microsoft leads with here hits the right notes on paper, it quickly becomes clear that $399 isn’t what the majority of consumers will pay for a Surface Go, and for the more realistic $500-$600 range, Go‘s real value relative to price takes a giant hit.

On the one hand, I completely understand Microsoft’s thinking here: Surface products are pretty great, especially the Surface Pro, but they are also priced a little high. Wouldn’t it be nice to be able to offer a more basic, low cost version for under $600? If I were working in Microsoft’s Surface ecosystem, I would have probably been lobbying for this from Day One. It needed to happen, and in my opinion, a more affordable Surface option was long overdue.

On the other hand, I think that the lower-price version needed to have a user-focused purpose in order to be successful. The direction that Microsoft took was too traditional and formulaic: Instead of asking what a more budget-friendly Surface should actually do and why, Microsoft decided to just cut cost out of the product and release a lackluster, uninspired, and ultimately ill-designed product that precious few consumers will fall in love with. The question that doesn’t seem to have taken root when product management decisions were made was “who are we designing this product for?” That should have been a more important question than “how do we put out a $399 Surface?” The mistake I see here is designing for a price-point rather than designing for users. This is something I would expect Ballmer’s Microsoft to have done. It isn’t something I expect Nadella’s Microsoft to do, and as both an analyst and a fan of Microsoft’s direction in recent years, I am disappointed by what happened here.

One last observation before I move on: Who thought that a 10″ screen was a good idea for a $400-$600 tablet laptop? That one seems like a head-scratcher to me. Hint: Just because Apple has a 9.7″ tablet doesn’t mean you should. Initiative is leadership. Mirroring your competitor’s moves without a compelling reason to isn’t.

Now let’s backtrack a bit, and run through a quick little exercise in reworking the problem: How else might have Microsoft approached this opportunity?

Part 3: Who should Microsoft have designed a budget-friendly Surface product for?

Students: Let’s talk about the K-12 market so everyone can get their bearings. Based on a March 2018 report by our peers at Futuresource Consulting: “Global sales of Mobile PCs into the K-12 market increased in 2017, with annual shipments growing 11% year-on-year, reaching 29.2 million units, up from 26.3 million in 2016. The second quarter of the year was the most successful one, growing 21% to 9.2 million units, compared to the same period in 2016.”

Okay. Now let’s dive into what works and what doesn’t in that space: As Ben Davis, Senior Market Analyst at Futuresource Consulting, points out, “the sub $300 price category saw the largest rise in share, growing 6% year-on-year.” That’s the pricing threshold for laptops in that space: Sub-$300. Chromebooks marketed to K-12 students start at $149. Education iPads are priced at $299. If Microsoft really wants to compete in that market with hardware (and it should), a $399 price-tag for its most basic model, before you add a keyboard to it, isn’t going to cut it. In other words, even assuming that education rebates pushed through distributors and resellers will attenuate the Surface Go‘s price-point for schools and students, the $399+ Surface Go isn’t going to be all that competitive against other options available to the K-12 world. And that may prove to be a massive missed opportunity for Microsoft since Windows appears to have lost steam (share) in some key markets 2017. Again, per Futuresource Consulting:

 

“In the Asia Pacific region, several large regional and national projects have opted for Android based tablet devices, placing pressure on Windows share. In the US, the Chrome OS continues to hold a majority share of the market, reaching 59.6% of devices shipped in Q4 and 58.3% of devices shipped during 2017. The US market accounted for 87% of Chromebook shipments to K-12 schools globally in 2017, and Chromebook OS is continuing to grow its presence in other international markets. The Canadian market and the advanced markets of Northern Europe and Australasia are each seeing the rising adoption of Chromebooks in schools. Globally, the Chrome OS powered 31.3% of mobile PC devices shipped to K-12 schools in 2017.”

Per ZDnet, “in the US, Windows’ share of institutional purchases of mobile computing devices (notebooks, Chromebooks, and tablets, but no desktops) in the K-12 education market grew to 25.6 percent in the fourth quarter of 2017.” Globally, while Microsoft has gone from 64% market share in 2016 to 60% in 2018, in the US, Chrome OS is the dominant player, squeezing Microsoft into the 22-25% market share range. If Microsoft is trying to compete with Apple in that space, it should do well to look at how quickly Apple is losing ground, even with education iPads priced down to $299. And given the trend towards schools favoring complete ecosystem solutions over piecemeal software and hardware purchases, Microsoft should understand that a software play alone won’t get them where they need to be in that space.

If Microsoft is targeting students and schools with Surface Go (and I gather from this resource that it is), its pricing scheme doesn’t make any sense. If Microsoft isn’t targeting students and schools with Surface Go (or at least not as seriously or aggressively as it ought to), the obvious question is: why not? Either way, I can’t wrap my mind around the missed opportunity here.

Mobile workers: I’ve burned a lot of analytical matches with the student use-case, so let me just point out that at a $399-$600 price-point, mobile workers looking for a lightweight, easily packable, conveniently-priced laptop/tablet have a lot of options to choose from. As I pointed out earlier, North of $400 for a 10″ screen isn’t exactly a great selling point, not to mention that Surface‘s not-super-convenient kickstand isn’t always ideal when a more structurally stable laptop design is an option. At that price range, mobile workers can score laptops and tablets with far better specs than what Surface Go has to offer.

All of this to say that, unless I am missing something, the Surface Go doesn’t offer a single advantage over similarly priced laptops (or even iPads) that would make mobile workers choose it over a more elegant, convenient, and/or robust alternative. (It isn’t the only lightweight device to run Windows 10 at that price-point.) Another missed opportunity to address user needs in a growing and already rather large global market niche.

Road warriors: Microsoft had an opportunity to give road warriors something they actually (and desperately) need: a lightweight, packable laptop with massive amounts of battery life and possibly Gigabit LTE capabilities. A few months ago, we wrote about a new wave of always-on, always connected laptops with 20+ hours of active battery life that could connect to wireless networks (not just WiFi and BT connections). THAT should have been Surface Go‘s use-case direction.

Had Microsoft been serious about designing Surface Go for road warriors (and this applies to mobile workers as well), connectivity and battery autonomy would have top-of-list for the project’s product managers. While 9 hours of active playback time is nothing to complain about compared to the 3-4 hours we used to have to endure, it has become fairly standard for tablets, with iPad claiming 10 hours of active battery life per charge instead of a mere 9. For those of us who regularly spend more than 9 hours at a time between airports, business events, and competing time zones, 9 hours of battery life doesn’t have the same appeal as 10, let alone 20.

And again, a 10″ screen is fine if you want to play games, stream content, and browse Instagram, but it borders on absurd for anyone who actually works with Microsoft productivity solutions for a living. Working in Excel for more than ten minutes at a time on a 10″ ought to qualify as cruel and unusual punishment. Trying to create a decent PowerPoint presentation on a 10″ screen is more or less a recipe for disaster. And if you write for a living, or spend a lot of time in Word or WordPress, a 10″ screen’s limitations are going to become obvious fairly quickly. Microsoft should have at least tried to deliver something along the lines of 11-13″ for a practical device that mobile workers and road warriors could conceivably use every day. It also wouldn’t have killed engineers to make the screen/tablet section a little thinner. (If Apple can make its tablets thinner than 0.30 inches, so can Microsoft.)

And a productivity tablet laptop without built-in high-speed mobile connectivity? In 2018? Missed opportunity.

The fact that Surface Go, whose very name suggests that it is a productivity device for people who are “on the go,” doesn’t even come close to pushing the limits of battery life, doesn’t have a decent-sized screen, and doesn’t appear all that concerned with ubiquitous connectivity anytime/anywhere, is more than just disappointing. It is yet another missed opportunity for Surface Go to deliver on the promise of its name, as well as what should have been its logical purpose in a user-driven market.

In closing:

So again, the decision to design Surface Go around a price-point instead of designing for use cases and specific markets has created a product that may look great on paper, but which may struggle to find its purpose in a competitive marketplace in which real-world value, user-driven design, and innovative thinking trump spreadsheet-driven price-point slotting. As I see it, Surface Go doesn’t really compete all that well with Chromebooks on price, and doesn’t offer users the flexibility and elegance of the iPad, meaning that it isn’t likely to compete all that well against either. While that may be a great strategy for die-hard Microsoft fans and Surface Pro legacy purchases (Surface Pro Parents buying Surface Go for their kids), I don’t see where Surface Go really fits in the mobile laptop/tablet+ value ecosystem.

Feel free to agree or disagree in the comments, but, while Surface Go is a solid product all on its own, considering what Surface Go could have (and probably should have) been, I can’t help but be disappointed that Microsoft didn’t put a little more thought and design chops into it.

Photo courtesy of Microsoft. Infographic courtesy of Futuresource Consulting.

 

About the Author

Olivier Blanchard has extensive experience managing product innovation, technology adoption, digital integration, and change management for industry leaders in the B2B, B2C, B2G sectors, and the IT channel. His passion is helping decision-makers and their organizations understand the many risks and opportunities of technology-driven disruption, and leverage innovation to build stronger, better, more competitive companies.  Read Full Bio.