Microsoft Surface: 5 Reasons to Pay Attention to This iPad Challenger

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Microsoft surfaceMicrosoft’s (MSFT) plan to take on Apple’s (AAPL) iconic iPad finally surfaced on Monday.

The arrival of Surface — the name of Microsoft’s upcoming Windows-based tablet — will naturally be met with a lot of skepticism. Despite the company’s success in software and video game consoles, it has done poorly when trying to play catch up with Apple in the past.

The Zune was no iPod. Last year’s commitment giving Nokia (NOK) billions in support in return for the handset maker’s championing of Microsoft’s fledgling mobile operating system has yet to result in any serious inroads against Apple‘s iPhone.

Why should Microsoft fare any better with tablets?

Well, there are plenty of reasons to take the world’s largest software company seriously in its push to make Surface a mainstream device, and not just because it’s taking a big gamble by breaking from tradition and putting out the computing hardware on its own. Here are some reasons to get excited.

Microsoft surface

1. Microsoft’s going bigger

Early tablet makers tried to match the iPad’s screen size of 9.7 inches, but the push to beat Apple on price eventually found companies saving money by thinking smaller.

Amazon’s (AMZN) Kindle, Barnes Noble’s (BKS) Nook, and Research In Motion’s (RIMM) PlayBook have all settled on 7-inch touchscreens.

Surface is going with a larger 10.6-inch screen. The end result is a tablet that may be larger in terms of lugging around, but it should provide a better device to consume video. The fact that the Surface features a kickstand — allowing it to stand up like a photo frame — makes this a device that folks can simply place on a desk or table and enjoy.

2. Surface is coming in two flavors

Microsoft watchers weren’t sure what they would be getting ahead of Monday afternoon’s rollout. Would they be getting a simplified tablet or a high-end computing device? Well, buyers will have a choice.

The first Surface that will hit the market in a few months will be fueled by the stripped down Windows RT version of Microsoft’s new operating system and will use the same ARM-based processor architecture as many of popular tablets already on the market. A few months later, the company will introduce a beefier model using Intel (INTC) chips and running Windows 8 Pro.

Aiming for both ends of the market matters.

3. Two words: Flash and Office

Apple’s iOS doesn’t support Flash, something that has helped Android gain a foothold with visitors of sites using the popular video platform. Surface will support Flash.

As a Windows-powered device, Surface will also play nice with the undisputed champ among productivity suites: Microsoft Office. There may be Android and iOS apps that indirectly work with Office files, but this is the real McCoy.

4. Microsoft has friends in high places

It’s pretty convenient that Netflix (NFLX) CEO Reed Hastings sits on Microsoft’s board of directors. That relationship may have been instrumental in granting the Xbox 360 a year of streaming exclusivity before Netflix became available on the rival PS3 and Wii consoles.

It wasn’t a surprise to hear on Monday that Netflix will stream on Surface.

5. Microsoft isn’t afraid to spend money to make money

Microsoft reportedly sells the Xbox at a loss, knowing that it can make it back in software and digital goodies. Its move to spend billions in support of Nokia’s Lumia initiative is another example of Microsoft willing to take a near-term hit for the potential of long-term reward.

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Microsoft didn’t reveal pricing information on either Surface model this week, but it would be a surprise if the company is aiming for Apple-sized profit margins. Microsoft knows that it has to sacrifice margins to hit a price point that’s compelling to mainstream audiences. It will also need to shell out big bucks to top developers to make sure that they’re porting over the hottest iOS and Android downloads for Surface.

Microsoft’s not going to bow out quietly here. It knows that it has too much at stake as tablets and smartphones are eating into the traditional PC market.

Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article, except for Netflix. The Motley Fool owns shares of Apple, Microsoft, Intel, Amazon.com, and Netflix. Motley Fool newsletter services have recommended buying shares of Intel, Amazon.com, Apple, Microsoft, and Netflix; writing puts on Barnes Noble; and creating bull call spread positions in Microsoft and Apple.



Tagged: Amazon Kindle, Amazon.com, Android, Apple, Barnes Noble Nook, best tablets, BestTablets, Intel Corporation, Ios, IPad, Microsoft, Microsoft Office, Microsoft Surface, MicrosoftSurface, Nokia, Reed

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