A few days ago I was contemplating a blog post with my speculation about a 7″ Microsoft tablet when rumors of an “Xbox Surface” re-surfaced. I tend to believe this rumor because I’ve been expecting that a portable Xbox family member would appear, something I discussed back in a March 2011 blog posting. Seems like I speculated on the wrong specific solution but may have gotten it right on the strategic side.
Anyway, the reason I was thinking about this topic was Windows marketing chief Tami Reller’s comment that there were no 7″ Windows tablets on the way. Given that this area is exploding, and has now been legitimized by Apple, I was wondering how Microsoft could ignore such a high-volume market segment. Doing so is incredibly risky since a customer buying into one of the other ecosystems with a 7″ class device is somewhat locked in to that ecosystem going forward. Or if you follow the MpD theme I’ve been on then the way to look at this is that not having 7″ class devices can dramatically reduce the Minutes per Day of Windows use. I don’t think Microsoft is stupid enough to let 100s of millions of MpD sucking devices enter the market unchallenged.
So what could Microsoft’s strategy be? Long-time readers know of my fondness for the Content Consumption-Content Creation axis for understanding devices and it makes sense to use it here.
Microsoft’s strength and strategy for differentiating Windows 8/RT is its better content creation capabilities than either IOS or Android. Meanwhile 7″ tablets are deep into the pure content consumption device space. So it makes sense for Microsoft to target the 10″ and above class devices with Windows 8/RT and avoid taking it, as is, down into the 7″ class where it loses its differentiation.
With this in mind my assumption became that rather than produce a “pure” Surface in 7″ that Microsoft would pursue a more customized content consumption device to play in this category. It would be based on Windows 8/RT, but be marketed quite distinctly. My own thinking had focused on the partnership Microsoft has with Barnes and Noble around the Nook.
We still don’t know what is expected to come out of the Barnes and Noble partnership, but it is clearly something bigger than just getting a Nook app for Windows 8/RT. I’ve been expecting a Windows RT-based Nook that is B&N branded and sold and/or a Nook Surface that is Microsoft branded and sold. And have been expecting that such a device would combine the Nook ebook offering with the Xbox Music and Video services to create a Kindle Fire (and its ilk) competitor. I still think this likely.
The question now becomes what are all the components of a Microsoft assault on the 7″ class tablet space. Could we see multiple 7″ class consumption oriented devices or will there be just one? Put another way, is there a Nook Surface and an Xbox Surface or is an Xbox Surface Microsoft’s all-encompassing vision of what a 7″ device should be? As they have done with the Surface, making content creation a differentiator, Microsoft’s vision could be to differentiate in the 7″ space by focusing more broadly on entertainment than purely on content consumption. Certainly that’s what being part of the Xbox family implies.
Perhaps an Xbox Surface is the device Microsoft offers while B&N offers a Nook RT. Microsoft would focus on the more premium offering, pricing it more like the iPad Mini, while B&N would focus on the price sensitive segment of the market pioneered by the Kindle Fire. Squeezing on a market segment from both the top and the bottom is a classic way to attack entrenched competitors, and for once Microsoft might be well be positioned to do this.
What of the OEM community? Do they play in the 7″ class? Does it matter? In what most of us think of as the big war going on in the 7″ space it probably doesn’t. So the question becomes what other market niches might a 7″ Windows RT-based tablet address? Are their places where a very business-oriented 7″ tablet makes sense? What about using a 7″ device for going after emerging markets? The former might be a small niche, the latter a very large (but so price sensitive it is not very profitable) one. I can see Microsoft encouraging OEMs to address these areas, but perhaps wanting to give Windows RT some time to establish itself in its primary market before risking dilution of its positioning.
I expect Microsoft to enter the 7″ class device space with a content consumption, and perhaps broader entertainment, optimized device sometime in 2013. Until this week I would have bet on that being a “Nook Surface”, but rumors of an “Xbox Surface” make even more sense. If done right it could be a real game changer.