Microsoft Unveils Surface 3, Pitching It As Tablet That Will Make People Forget About Their Laptops

Microsoft CEO Satya Nadella kicked off the company's Surface 3 launch event in New York City Tuesday by noting that Microsoft isn't "interested in competing" with its OEM partners in the hardware market.

Yet in light of all the features and functionality that Microsoft has packed into Surface 3 -- including a bigger screen, faster performance and longer battery life -- it's hard to see how Microsoft's laptop and tablet partners could come to any other conclusion.

The most significant addition in Surface 3 is a 12-inch, high-contrast screen with a 3:2 aspect ratio and 2,160 x 144 resolution. Not only is it larger than the Surface Pro 2's 10.6-inch display, the 3:2 aspect ratio allows Surface 3 to display 6 percent more content than a typical 13-inch laptop screen.

Surface 3 also comes with a choice of Intel Core i3, i5 or i7 processor and delivers 10 percent faster performance than the Surface Pro 2, with 15 percent to 20 percent longer battery life.

"This is the tablet that can replace your laptop," Panos Panay, Microsoft's corporate vice president for Surface Computing, said at the event.

Panay also peppered his one-hour presentation to tech reporters with frequent references to how Surface 3 delivers "the full power of a PC" in a tablet form factor.

At 9.1mm thick, Surface 3 is 1.5mm thinner than the Surface Pro 2 and, at 800 grams, it's also lighter. Panay described Surface 3 as "the thinnest Intel Core product ever made."

Surface 3 also has a new docking station that features more ports and connects the tablet to 4K monitors. Even the speakers are 40 percent more powerful than previous versions.

There's a new kickstand that can recline into virtually any position, and an improved, thinner Type Cover to match the Surface 3 design. Microsoft also has improved the Surface 3 Track Pad, making it 68 percent larger and addressing the usability issues that hampered previous Surface models, Panay said.

The lack of apps has been one issue stalling Surface sales, and Microsoft brought in Michael Gough, vice president of experience design at Adobe Systems, to demo an upcoming touch-optimized update to Photoshop that also features pen input.

Panay showed how a Surface 3 user could use the Surface pen to write a memo on the device and have it automatically backed up to Microsoft's OneDrive cloud storage service. There was also a demo of a New York Times crossword being done with a Surface pen.

Surface 3 will be available for pre-orders starting Wednesday. Pricing starts at $799 for a Surface 3 with an Intel Core i3 processor, 64 GB of storage and 4 GB of RAM. The Core i7 Surface 3 starts at $1,549, which includes 256 GB of storage and 8 GB of RAM.

The Surface 3 Core i5 will be available June 20, and Microsoft says the other versions will be available in August.

NEXT: Microsoft Partners React To Surface 3 Unveiling

Microsoft's primary target with Surface 3 is Apple's Macbook Air, but partners told CRN there is a lot of potential for collateral damage to Microsoft's OEM partner relationships.

Hewlett-Packard has aligned itself with Google and Chromebooks, but Dell and Lenovo may consider Surface 3 to be an aggressive incursion into their laptop business, according to some Microsoft partners.

An executive from one large Microsoft solution provider partner told CRN he sees Surface 3 as a direct shot against hardware OEMs.

"They are going after the laptop market and competing with all of their OEM partners," said the executive, who spoke on condition of anonymity. "They are biting the hand that feeds them."

It remains to be seen whether the improvements in Surface 3 will move the needle on sales. Microsoft, Redmond, Wash., took a $900 million write-down on unsold Surface RT inventory last July, and has seen around $2 billion in operating losses on Surface so far, according to an estimate from Nomura Securities quoted in The Wall Street Journal.

Microsoft's Surface fortunes could improve if it decides to expand distribution to a wider range of channel partners. CDW, CompuCom Systems, En Pointe Technologies, Insight Enterprises, PC Connection, PCM, Softchoice, Softmart, SHI International and Zones are the only Microsoft partners currently authorized to sell Surface.

Microsoft reached out to a number of other partners in December to see if they'd be interested in selling Surface, but those efforts went nowhere, and those partners are now being told to wait until the company's Worldwide Partner Conference in July for more information.

Ira Grossman, CTO of end user and mobile computing for Cleveland-based MCPc, a national Microsoft partner with a large mobility practice, said he sees Surface as more of a consumer-oriented tablet than an enterprise tablet.

"There is no way a corporate customer would adopt Surface," Grossman told CRN. Enterprises are concerned with things such as parts availability and planned product life cycles, and Microsoft hasn't provided much insight into its plans with Surface, he said.

STEVEN BURKE contributed to this story.

PUBLISHED MAY 20, 2014