Microsoft was betting on the Surface RT to catapult it to the next level – but it failed – abysmally.
Why did Microsoft fail and just how abysmal was it?
For one, Microsoft was forced to make a $900 million dollar write off on the infamous Surface RT tablet even after it slashed the price to allure buyers. And then on Friday, the stock price plummeted by almost 12% in a single day. That calculates to $30 billion dollars axed from the value of the company in less than 24 hours.
To say Microsoft was having a bad day is a gross understatement: Can you imagine the bedlam that erupted in the company as the bad news unfolded like a dirty pair of socks for the world to smell?
Fail: The Problem
I have to ask – what precipitated this mess? I think the $900 million dollar loss was a corollary of two concurrent factors:
- No ubiquity of retail stores
- Poor price point
For starters, I don’t think Microsoft has enough retail stores in existence to generate enough consumer demand for the Surface RT.
I mean, look at Apple: it has almost 300 domestic retail stores. Microsoft? A paltry 30. I think this is a problem because most users want to try out a product before they buy a product and with the omnipresent Apple store looming around every corner Microsoft has a lot to catch up to. The bottom line is that people want to walk into a technology store and hold the tablet in their hands, feel how light it is and observe the user interface before they buy it. Apple got this right, Microsoft got it wrong.
Secondly, the Surface wasn’t priced right. Currently the Surface costs more than the iPad mini by #20 dollars; however, before Microsoft dropped the RT to $349.00 there was almost a $200 price difference between the two tablets.
Now let me ask you a question: if you’re shopping for a tablet, how likely are you going to consider the costlier Surface especially if you already own an Apple product? Microsoft should have priced the Surface more competitively from its inception.
But aside from the poor pricing and the dearth of retail stores, Microsoft is at the brink of failure because no one wants to use its stuff.
There’s nothing ethereal or magical about Microsoft.
Windows 8 was an exciting attempt to galvanize excitement around it’s flagship OS; however, Windows 8 perturbed more people than almost any other OS it ever produced (Windows ME is a close second). The issue is that people don’t really want touch desktops and laptops. Just because it works on a smartphone doesn’t mean it works on the desktop – that’s linear thinking.
It’s simply not feasible to expect an end-user to line up his fingers on the home row and happily type away on his oversized monitor. It not practical to expect users to completely supplant their keyboards and mice for a digital on-screen keyboard. And since Windows 8 has a strong “touch first” disposition, it alienates anyone without a touch screen and even confuses those who do.
Because the Windows 8 interface is clunky.
It isn’t intuitive.
It isn’t familiar.
And even though Windows 8.1 is poised to breathe new life into Microsoft, I don’t know if consumers are ready to make Microsoft’s dream of a “touch-world” come true.
I think if Microsoft wants to get back in the game they need to do three things.
For one, it should stop deriding Apple in television commercials; it just makes Microsoft look silly. Instead, Microsoft should concentrate on educating people. Tell your audience what Microsoft will do for them today. Microsoft needs to show the world that it is capable again. It did that with Windows XP, tried that with Windows 8 but failed with the Surface RT.
Secondly, Microsoft should desist from thinking that touch technology is going to replace desktops and laptops, especially in a modern enterprise. When I’m in the office, I have 20 tabs open in my Opera browser, Adobe Fireworks running in the background, Outlook cascading pouring in emails from everywhere and a HD movie streaming in the background: try doing that on your tablet! Admittedly, tablets are getting bigger processors and more RAM; however, they’re still subordinate to business workstations because they aren’t powerful enough to handle the load.
Furthermore, nobody wants to spend 30 seconds trying to touch the tiny send icon with exacting precision; it’s so much easier to simply click Send on a traditional computer.
Poof, email gone.
Third, I think Microsoft postulated that since people are buying tablets for recreational use people will use them at work too – but that’s like saying since people love watching movies in their personal time it’s a good idea to make them do the same in the workplace. It’s a rudimentary and quite frankly sophomoric way to think about the market.
Microsoft needs to get back in the seat of innovation and really think about its mission again. And I’m not talking about strategy but execution. Microsoft didn’t execute as deftly as Apple and Samsung because by the time they tried to enter the door the market was already saturated and full of competitors. Microsoft tried to do too much at the last minute. Instead of innovating while the market was maturing it waited pass the inflection point of growth and then tried to fundamentally change the PC all at once.
But that’s not the way things work and just because you’re a monolithic company with lots of mass doesn’t mean you can barge into the market whenever you want to affect positive change.