The Missing Mini

No one was more disappointed by last week’s no-show of a Microsoft 8″ class Surface device than I was.  At the same time launching such a device at that particular event would have been a disaster, as I’ll get to in moment.  And the fact that Microsoft was willing to pull it from a launch event at which it was expected to be the star attraction is the best indicator yet of the care that Satya Nadella is putting into Microsoft decision-making.  A lot of Microsoft watchers have noticed this, with Matt Rosoff and Paul Thurrott offering up particularly good commentary.  I wanted to dig a little deeper on what could have been a disastrous launch.

As I discussed in my piece on what Microsoft needs to do for the Surface family to succeed, a so-called Surface Mini has to be a productivity-oriented tablet.  But launching a productivity-oriented tablet last week presented a catch-22 situation.  The software to really make such a device shine, particularly Office “Gemini” hasn’t been announced yet.  So no matter how cool the Surface Mini hardware may be, it would have offered little useful differentiation from OEM Windows 8.1 tablets let alone non-Windows competitors.  It would have come across has a case of another Microsoft near miss, strategically and on execution.

Of course Microsoft could have, and might have under the previous leadership, addressed that by launching Office “Gemini” at last week’s Surface event.  That would have been a disastrous blunder.  Office “Gemini” is something that all producers of Windows tablets desperately look forward to as a prerequisite to their success.  Tying its launch to the Surface family would have been a slap in the face to the OEMs at the very time Microsoft is trying to reinvigorate their commitment to Windows.

Hence the catch-22, a Surface Mini can’t succeed without new software and new software can’t be introduced at a Surface Mini launch event.  So while there may be other reasons that the Mini was pulled from last week’s launch, breaking the catch-22 seems like the most likely cause.

The right way to go about a Surface Mini launch, or any hardware launch that requires new (generally available) software, is to launch the software first and then launch the hardware.  Take a look at the Windows Phone 8.1 launch.  They launched the OS and as part of that they introduced new WP OEMs, briefly showed off some of their hardware, and had then OEM Nokia do an introduction of new Lumia family members. The real Nokia Lumia launch came at a separate event later in the day.  Note that had another OEM had something new that was ready to launch they likely would have offered them stage time for a brief device introduction as well.

Office “Gemini” will most likely be introduced at a large Information Worker/productivity software event later this year.  And once that is done then Microsoft can launch a Surface Mini.  The launches might occur concurrently with something akin to what happened with Windows Phone 8.1  and the Lumia introductions or, if Microsoft is taking advantage of the announcement delay to revise the Surface Mini hardware, at a later point.  But I am picturing a Office “Gemini” launch where Microsoft asks a OEM CEO on stage, perhaps Michael Dell to introduce the next generation Dell Venue 8 Pro (something that has appeared in leaked roadmaps as being readied for later this year) as a great Office “Gemini” tablet, and then does the same with Stephen Elop and the Surface Mini.  The formal Surface Mini launch would then occur at another time (on that day or soon thereafter).  That would be an awesome way to introduce both Office “Gemini” and the next generation of Windows tablets.

How you message and launch products is one of the arts that deteriorated at Microsoft over the previous decade, and its clear that Satya Nadella is putting a renewed emphasis on thinking these things through.  That was also evident in the launch of Office for iPad.  Historically that would have happened as part of a bigger Information Worker event, perhaps with Office “Gemini”, that detracted both from the messaging that Microsoft is serious about non-Windows devices and the “Mobile First, Cloud First” philosophy that Satya is promoting.

Think about how launching Office for iPad and Office “Gemini” for Windows concurrently would have looked, based on the evidence that Office “Gemini” is a far more extensive offering that Office for iPad.  The reaction would have been how Office for iPad was a brain-dead version of Office “Gemini” for Windows!  By launching Office for iPad separately, and earlier, the reaction was around how rich the applications were, how well done the touch interface was, and how Microsoft had (surprisingly) not short-changed iPad users.  It was “Microsoft gets it”.  The reaction to Office for iPad was WOW! and the reaction to Office “Gemini” will (likely) be OMG!  And then the Surface Mini will be “I WANT”.  Whereas the same exact products launched carelessly could all fall flat on their faces and continue sending a message to users that “Microsoft doesn’t get it”.

So I’m disappointed the Surface Mini wasn’t introduced last week.  But my disappointment is tempered by the fact that Microsoft is getting back to being masterful about how it brings products to market.  Oh sure it will continue to make mistakes, as all companies do.  But the days of Microsoft shooting itself in the foot (or often more like blowing its foot completely off) before its even out of the starting gate appear to be over.

And I still want my Surface Mini.

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23 Responses to The Missing Mini

  1. Totally agree with you, Hal. Disappointed that the Surface mini has not arrived but I am OK with waiting for Gemini. I am not a consumer for the new Surface 3 as I have no interest in a 12″ tablet (my Lenovo laptop is just fine as a productivity tool) and, although I have the RT and the Pro 2 and use them both at meetings, conferences, and on-stage, they are both too heavy.

  2. Bill G says:

    Another point to consider here is Microsoft’s recent announcement that Windows with Bing will be free on under 9 inch devices, at least to manufacturers. The SP3 is priced similar to ultrabooks, placing it in the high end market. A pricing model based on search (read Bing) advertising might make it possible to offer a price-point for an 8 inch Surface that would be competitive with Android devices.

    • Mark says:

      The challenge with that model being that Bing itself isn’t profitable.

      • halberenson says:

        Bing profitability has always been a function of search share, it just hasn’t reached the inflection point yet. When it does, it should generate profit. If this pushed up share then it helps Bing towards profitability.

        • Mark says:

          That’s been the business argument to date. Seems to me it’s increasingly suspect and hard to defend. In any event, we can agree it’s not profitable now. Which means it can’t subsidize anything else.

          • Edgar says:

            Even if is not profitable it represent a lot of savings for microsoft to not doing business with google, also have an strategic value in terms of knowledge for microsoft ecosystem

          • halberenson says:

            Microsoft has already made the argument that it will price Windows at $0 for devices with less than 9″ screens because it is a new category. Someone buying an 8″ tablet, primarily a companion device, isn’t giving up a PC whereas someone buying a 10″ tablet might be. Keeping in mind that Windows is a high fixed cost, near $0 variable cost, business there is little margin pressure from doing this. I always said the mechanics of pricing at $0 were interesting, and that Microsoft wouldn’t likely literally set the price at $0. It would make it EFFECTIVELY $0. The Bing requirement is how they will do that. Bing is also high fixed cost and low variable cost. So adding searches doesn’t materially add to Microsoft’s losses in that business; it actually improves Bing profitability by increasing ad serving opportunities. So there is no down side to this set of moves, only up side.

  3. dave says:

    Success on smaller devices will come down to price. The harsh reality is that no one really is expecting a “powerhouse” content creation device at the 8-inch size. But they would like: something beautiful, something fun, something inexpensive, something they can use to surf the net, something with a pile of well designed apps.

    A mini is going to be a secondary device. The primary device will be the content creation workhorse.

    Price, beautiful design and fun beautiful well made content consuming apps and games will be critical. And among these factors, if the price is xx% more than an Android tablet, the Surface mini will be relegated to become a fringe product to a small niche market.

  4. halberenson says:

    If this is mostly about price then why bother, the OEMs are on that. There has to be a compelling functional reason for Microsoft to do its own tablet. But I agree they can’t over price it either.

    • dave says:

      And so, I agree, why bother?
      If the plan is to release a low selling, marginal fringe device at a higher than popular price point, go ahead. And the press will have a field day making analogies about poor sales and MSFT relevancy, which only serves to tarnish the windows/msft brand.

      if only the SurfacePro 3 were CURRENTLY priced at the price it will have when the SurfacePro 4 is released.

      There are two main times when Surface devices sell: at launch when the gearheads pick up the latest kit; at price drop when the value proposition becomes more closely matched to competing alternatives. Compare that to the steady sales of iPads, Tabs and Nexus devices, and it tells you the SurfacePro line is perceived as too expensive.

      I really want MSFT to turn the corner and inspire people with amazing ideas and deliver amazing software and devices. A mini Surface may be a beautiful device, but if it can’t compete on price to the market’s expectations, it will fail. And another failure does much more harm to msfts device strategy

  5. fluxman says:

    I agree that the success of the Surface Mini depends on the availability of Office “Gemini”. However I think MIcrosoft has to quickly blur the dividing line between Windows Phone and Windows 8/RT especially when you have a 6″ Lumia 1520 on one hand, and a prospective 8″ Surface Mini on the other. It’s bad enough that there is a huge app gap between Windows RT and iOS/Android — it gets worse when you consider that Microsoft hasn’t bridged the app gap between Windows RT and Windows Phone.

    As for “Tying its launch to the Surface family would have been a slap in the face to the OEMs at the very time Microsoft is trying to reinvigorate their commitment to Windows.” — I think Microsoft already made a few announcements on Tuesday that are tied to the launch of the Surface Pro 3. First, the updated touch-enhanced Adobe Photoshop. Second, the Final Draft showcase. Third, NYTimes Crossword. These three examples aren’t particularly egregious as they are made by third-party developers. Still, it’s obvious that Microsoft has partnered with them to be able to make the Surface Pro 3 a more compelling product.

    I think the worst “slap-in-the-face” is the Surface Pro 3 pen-OneNote tie-in. Being able to launch OneNote instantaneously with the pen, being able to take a picture from the OS camera app directly to OneNote, being able to share a webpage “printout” directly to OneNote (not just a summary, and not using Print to OneNote 2013), etc. Would these features be available to other OEMs? Probably. Were these first-party software features first announced for a first-party hardware product? Yes. Not too far from announcing Office Gemini first with Surface Mini?

  6. halberenson says:

    I don’t see how third party apps play into this problem at all. The Surface team is free to do deals with third party software developers, just as OEMs do. There is no conflict of interest there.

    Those OneNote items are pretty minor, and yes I’m sure they are available to OEMs as well if they were done by the OneNote team. If OneNote hasn’t changed, and these are external things (e.g., Pen driver) that interact with public OneNote APIs then it really isn’t even relevant to the slap in the face possibility.

    • fluxman says:

      Still, MIcrosoft made it a point to showcase never-before-announced/seen OneNote tie-in capabilities to launch their own product. Maybe you’re right that this is just a minor quibble. It’s still interesting to ask where the interests of Microsoft as an OS licensing company ends and where the interests of Microsoft as a hardware company begins. For example, did Microsoft as a Windows/Office company encourage OEMs to push the OneNote tie-in? Or was it just the Surface team’s idea? Did the Windows team tell its OEM partners that they just realized that 3:2 is the optimal aspect ratio for tablets (and laptops?), or did the idea just come out of the Surface team?

      On another point, should Microsoft even consider OEM’s potential hurt feelings at this point if they decide to launch Surface Mini together with Office Gemini, especially considering that Microsoft dropped OS licensing costs for <9" devices? Traditional PC OEMs haven't shown any loyalty (and rightly so) to Microsoft with their launch of Android and Chromebook devices. Right now, the Surface line has the dual duty of convincing both users and OEMs that Windows still matters. If Microsoft thinks that the Surface Mini is the best embodiment of their idea of productive small tablets, then I think they shouldn't care less about launching Office Gemini with Surface Mini. This is of course provided that they have provider their third party OEMs the same assistance have provided the Surface team. If the Surface Mini is much better than what Dell can come up with, then it doesn't really matter whether Gemini launched separately or not. And if an OEM thinks it can sell more Windows devices than Android/Chrome devices now that Office Gemini has launched, do you really believe that they'll nix that idea over hurt feelings due to a simultaneous Surface Mini/Office Gemini launch?

  7. What are you thoughts about Microsoft possibly holding back the Surface mini to instead brand it as Lumia? I could see Microsoft using the Surface brand as the equivalent “Professional” version, and Lumia as “Home” version.

    • halberenson says:

      The idea that Microsoft would use Surface and Lumia brands that way makes sense. It also helps with some other positioning, for example the Surface line would be Intel-based while the Lumia line is ARM-based. The Surface line is primarily WiFi-Only, the Lumia line is always WWAN. The Surface line is primarily sold through PC channels and the Lumia line is primarily sold through Mobile channels. Etc.

      The problem with the Mini, to the extent one believes the spec rumors, is that it doesn’t really fit either model. It is an ARM-based device targeting professionals with an unclear WWAN support situation. Its specs (and thus cost) may be too high-end to price appropriately in the Lumia lineup. So a simple rebrand doesn’t seem like enough.

      But you may be right overall. Microsoft needs to clarify the relationship between the Surface and Lumia brands, and the Mini sits exactly at the point where the two currently collide.

  8. avro105 says:

    I don’t think that mini is the way to go. I wouldn’t like to do work on such a small device. Lately I have spoken to a number of Apple resellers about the decline in sales of the iPad and their responses were telling “The iPad Air is selling like Hotcakes, but the iPad mini sales have tailed right off”. I am not so sure that in a world with light full-sized Tablets and Phablets that there is a place for a mini. I think Microsoft was wise not to enter this declining market.

    • halberenson says:

      It is the inexpensive 7-8″ part of the tablet market that is still growing. The higher priced segments, be they 7-8″ or 9-11″, is where the slowdown occurred (and actually shrunk sequentially, but that is comparing against the holiday season). In particular the iPad Mini Retina is OUTRAGEOUSLY expensive. I’ve met few people who consider it worth the money even amongst Apple fanboys. If you read http://hal2020.com/2014/05/08/will-microsoft-get-the-new-surfaces-right-part-2/ you’ll see I pegged the Surface Mini, as a premium device, at an entry price point of $299-359. That’s against the 32GB iPad Mini with Retina Display pricing of $499. Meanwhile the market for mainstream 8″ devices is rapidly moving towards $199, and for entry 7″ devices we are talking $100. Microsoft’s OEMs will address those categories, as well as offering premium competitors against a Surface Mini.

      BTW, the question isn’t if you, or I, or any individual finds a particular device category interesting or uninteresting. The questions are (a) is there a suitably large subset of people who do and (b) will others change their minds if such an offering turns out to be so well executed that it strikes a nerve (which is what happened with the iPad). Even for myself, you can go back and read blog entries where I trashed small form factors (starting with the original Kindle Fire) and, after initially finding the Dell Venue 8 Pro’s screen too small, fell in love with it and the form factor. I have now made two multi-week international (non-business) trips where I took no computing devices other than my phone and my Dell Venue 8 Pro. Then I managed to break it, and I can’t wait for Dell to ship the repaired unit back to me!

  9. avro105 says:

    There are essentially two markets in Tablets. The full size market is dominated by the iPad while the mini market is dominated by low cost Android devices that are rarely, if ever, used on the internet. They are popular for keeping children amused in the back seat while on long journeys and in Asia they often come preloaded with films and more are available on USB sticks or SD cards. A Surface mini would not fit well into that market in terms of price or function. I think Steve Jobs will be proved very right about mini Tablets.

    • halberenson says:

      What I’m suggesting is that the Mini is (or rather should be) out to define a new market segment. It isn’t totally new in that Samsung sees the need and has tried to address it with the Galaxy Note family. However, Samsung does not have the right assets (e.g., Office, ability to rally the ecosystem around the Pen, etc.) that Microsoft brings to the table.

      • avro105 says:

        I did get excited about the Stylus, back in 2000 with my Palm IIIc, but those days are long gone. It seems that Microsoft is still trying to flog its concept of full fat Windows on a Tablet and that really hasn’t picked up much of a customer base over the last dozen years. I can’t see any reason why it will be any more successful this time around.

  10. halberenson says:

    Timing is everything. Microsoft has a habit of being early, often before the technology is ready for the mainstream, and then abandoning it just as the technological advances make the approach ready for prime time. That’s what happened to them in both smartphones and tablets. And search for that matter. But comparing stylus use on a Palm to what is in Windows even today is like comparing an old crank party-line phone of a 100 years ago to an iPhone. Other than the ability to make calls there is no comparison.

    Others see this opportunity. Samsung as I’ve mentioned. And there is a lot of use of capacitive pens in the iPad world, even though they are far inferior (many would say unusable) to a pen with an active digitizer. But success depends on making the use of ink fairly ubiquitous. For example, the other day I was reviewing a PDF file and wanted to mark it up just like I would a paper document. I couldn’t, and that tremendously reduces the usefulness of having a pen. If Microsoft can address scenarios like that then they have a potential winner.

  11. avro105 says:

    Actually it wasn’t just the technology. Think about why the iPad succeeded and Windows Tablets didn’t. For years mainstream customers have been frustrated by desktop operating systems with their archaic file structures and complexity. They want apps and media without the annoyances. Microsoft never understood that and over the years tried to shrink Windows into various form factors such as Tablets and SmartPhones with a notable lack of success. For example my 82 year old Mum never got to terms with her Dell XP computer, but took like a duck to water with her iPad Air and does far more with it than she could do with a Dell. At the other end of the age spectrum we know of a 2 year old who hasn’t been weaned yet and loves using pre-school apps on the family iPad. Microsoft has fallen into the feature set trap. There is a problem with that. It doesn’t matter what something can do, it only matters what you can do with that something.

    When it comes to Tablets, Microsoft just doesn’t get it.

    Capacitive pens on an iPad unusable? I think the renowned artist David Hockney would disagree.
    Much of his artwork is done on an iPad. But still the number of users wanting to use a pen on a Tablet will remain a small niche market and that isn’t the road to becoming a “winner”.

    • halberenson says:

      You’re missing that the technology drives much of the decision making. When Microsoft got into tablets there wasn’t a choice of a capacitive screen nor much choice in sub-$1000 devices. The choices were basically resistive touch screens or Wacom Digitizers. The resistive screens didn’t have multi-point touch, allow the smoothness and kind of gestures we’re now accustomed to, nor support a good writing experience. The Wacom Digitizer required use of a special pen rather than fingers or inexpensive passive stylus. Given a typical system would cost $1500 or more Microsoft decided to target Information Workers first, and that is what the Tablet PC became. But with both the immaturity of the software ecosystem (e.g., OneNote was a V1 product and the rest of Office didn’t fully support inking) and the entire hardware ecosystem (heavy, expensive, few pure slates) as well as the inability to use the screen without an active pen, they never caught on. On the phone side something similar happened. Smartphones were a merger of PDAs and mobile phones. Microsoft’s PDA offering, the Pocket PC, was by far the most touch friendly device out there (though limited by the resistive screen as well). But of the converged devices the one that caught on was the Blackberry, which did not have a touch screen but did have a front-facing physical keyboard. And, of course, it was a device aimed solidly at Information Workers. So Microsoft (and Nokia with Symbian devices) turned most of their attention to a similar form factor. With the launch of the Samsung Blackjack and Motorola Q9 Windows Mobile actually achieved significant success and briefly matched the Blackberry in market-share. Then along came Apple and married an iPod, a mobile phone, and a bunch of new technology that wasn’t available in the years before that had been available when Microsoft made its Tablet and Smartphone design decisions and created the iPhone. Keep in mind in that the initial iPhone couldn’t run applications, so it was more of a feature phone than an actual Smartphone and the true Smartphone battle remained in the Blackberry-style devices until Apple added the ability to run apps on the iPhone. The iPad was just an iPhone with a larger screen.

      That Microsoft didn’t throw out its earlier work and react to the technology shift that Apple was able to demonstrate with the iPhone/iPad much more quickly is indeed its big failing. And that is partially due to the lack of success it had as a pioneer in the space making it cautious, and largely due to the screwed up state it was in as a result of the antitrust actions and the Longhorn project failure. Having fallen behind it must now look at ways to address the market other than creating a “me too” product. I think it has the core of the right idea in focusing its tablet efforts on enabling more content creation, but its execution to date has been terrible.

      As for the artist thing, that is a bad example. Artists specifically target seeing what interesting work they can do given a specific medium and tools. So if you hand an artist an iPad and a capacitive pen they will see what art they can create with it, not say that can’t use it because it lacks the necessary precision. Other professions do not have that level of freedom.

      Even for something as simple as taking notes, comparing using a capacitive pen to an active digitizer is like when Microsoft and others tried to claim a resistive screen was as good as a capacitive screen for touch. The capacitive pen isn’t as smooth, fluid, or accurate. It’s just a finger on a stick. Taking notes with a capacitive pen is painful! Even comparing different active digitizers you feel a very noticeable difference. The Synaptics technology used by Dell in the Venue 8 Pro is just a step above a capacitive pen. It’s useful, but problematic enough that it’s kind of a turnoff. The Wacom technology used in the Surface Pro 2 is very nice and I find it quite useful for note-taking. My big complaint is around software, where there are things I want to do (e.g., mark up a PDF document with notes) that aren’t supported. But if you try the Surface Pro 3 you notice an immediate qualitative difference. It really feels like you are writing on a pad of paper with a good quality pen.

      And did you really compare Windows XP to iOS, two environments with user experience roots a couple of decades apart? Why didn’t you just compare your Mother’s ability to use an IBM S/360 to an iPad?

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