The Surface 3, which will sell for $499, offers a full version of Windows, putting an end to the Windows RT track that the two predecessors — Surface and Surface 2 — were on.
Microsoft announced a lower-priced Surface tablet Tuesday, the company’s latest push into a tablet market dominated by Apple and Google.
The Surface 3 will sell for $499, the same starting price as Apple’s iPad Air 2. The device is available for pre-order online, with arrival in brick-and-mortar retailers expected in early May.
Microsoft’s 3-year-old foray into the tablet market probably hasn’t been profitable, analysts say. The company in 2013 took a $900 million charge related to unsold inventory of the first generation of Surface.
But there are signs the devices have gained some traction. Microsoft says the Surface group was profitable on a quarterly basis for the first time in the second half of last year, using a metric that excludes advertising charges and other costs.
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“They’re still telling people ‘Hey, this exists,’ ” said Jeff Orr, a mobile analyst with ABI Research. “They haven’t succeeded yet, but they are starting to create that awareness. People are starting to consider Microsoft” when buying tablets.
ABI estimates Microsoft sold about 7 million Surface tablets in 2014, with the Surface Pro 3 accounting for the vast majority. That’s up from 6 million in 2013 by ABI’s reckoning.
Apple sold 67 million iPads during the company’s most recent fiscal year.
Beyond profit and market share, the Surface is also something of a demonstration tool for Microsoft, analysts say.
The tablets give the company a chance to show off its view of what Microsoft’s lineup of software is capable of on specially designed mobile devices. That could, in turn, spur third-party hardware makers to roll out improved hardware designed for Windows.
By those measures, the Surface has been a success, said Mikako Kitagawa, an analyst with researcher Gartner. “It is really a good showcase for what Windows can do on a tablet,” she said. “A lot of [hardware] vendors are trying to compete against the Surface Pro.”
In an extensive advertising campaign last year, Microsoft touted the Surface Pro 3 as a tablet powerful enough to replace a traditional laptop. From office workers to creative types to NFL players and coaches using customized Surface tablets as part of a sponsorship deal, Microsoft portrayed the devices as tools to get things done.
The new Surface 3, which runs a full version of Windows 8.1 and is eligible for a free upgrade to Windows 10 when that operating system is released later this year, breaks what had been a two-track universe for Microsoft’s Surface lineup.
The original Surface and the Surface 2 were powered by a slimmed-down version of Microsoft’s operating system, dubbed Windows RT, making them unable to run the full suite of applications for desktop computers. (The Surface Pro roster ran full versions of Windows).
In a blog post announcing the launch of the Surface 3, Panos Panay, the Microsoft vice president in charge of the Surface team, said the change should broaden the appeal of the devices.
“With full Windows, it will run the desktop applications you depend on for work or school,” Panay said. “You are not compromising anything when you buy this device.”
Kitagawa said Microsoft may be aiming for a small target among consumers. People looking for a basic device to surf the Web or watch videos already have plenty of options in cheaper tablets running Windows or Google’s Android. They have a few more in the laptop realm, too, after Google on Tuesday announced new laptops running its Chrome operating system that sell for as low as $149.
The Surface 3 features Intel’s quad-core Atom x7 processor and is available with 64GB or 128GB of storage. The device also has a 10.8-inch screen, front- and rear-facing cameras, and, at 1.37 pounds, is the lightest tablet in Microsoft’s lineup.
It comes with a free, yearlong subscription to Microsoft’s web-based Word, Excel and other Office productivity tools.
The keyboard attachment, featured prominently in Microsoft’s advertising for the Surface, costs $129.99. The optional pen costs $49.99.