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Microsoft Wants You To Believe Its Tablet Isn't A Tablet

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MICROSOFT SURFACE PRO 3
Panos Panay, Microsoft's vice president for surface computing, introduces the Surface Pro 3 tablet device at a media preview, Tuesday, May 20, 2014 in New York. The device will have a screen measuring 12 inches diagonally, up from 10.6 inches in previous models. Microsoft says it's also thinner and faster than before. (AP Photo/Mark Lennihan) | ASSOCIATED PRESS

Much of the focus with Microsoft's Surface, the software giant's family of tablets, has been on how it's fared against the iPad.

Spoiler alert: It hasn't done that well … at all.

On Tuesday, Microsoft made clear that it's shifted tactics. Now, the software giant is going after the Macbook. This won't be easy.

To a room full of tech reporters typing on MacBook Airs, Panos Panay, Microsoft's vice president in charge of Surface tablets, explained that the company's new Surface Pro 3 is a tablet that can also function as a laptop. The device's tagline is, after all, "The tablet that can replace your laptop."

"Tablets are designed for you to sit back and watch movies. They are designed to read books. They are made for browsing the web," Panay said. "Laptops are not designed that way at all. They are designed to help you get stuff done." The new Surface Pro 3, he said, is "everything in one package."

The base model Surface Pro 3 has a larger screen, and is thinner and weighs less than its predecessor. It starts at $799 and doesn't include a keyboard, which is available for $129. The top model comes in at a whopping $1,949 without accessories.

The 13-inch MacBook Air starts at $999. The computer is widely considered the best laptop out there.

In a display of showmanship, Panay highlighted the weight difference between a 13-inch MacBook Air (2.96 pounds) and a Surface Pro 3 without a keyboard (1.76 pounds) by placing them on a scale alongside one another.

The Surface Pro 3 has a 12-inch screen, and with the optional keyboard attached it comes in at 2.41 pounds. That's still lighter than a 13-inch MacBook Air, but heavier than an 11-inch Macbook Air.

Microsoft has not fared well in the tablet wars. The company was late to release its first tablet, which had a relatively high starting price and wasn't available in very many stores. Despite a refresh last fall, it's still had trouble making a dent in a category that has largely been dominated by Apple and Samsung. One analyst quoted in the Wall Street Journal estimated that Microsoft has taken as much as $2 billion in operating losses on the Surface.

Shipments of Surface tablets accounted for only 1.3 percent of all tablets shipped worldwide in the first three months of this year, according to data from IDC. Apple and Samsung together accounted for over 54 percent of tablets shipped last quarter.

Tablet growth has also begun to slow. Even Apple, the company that invented the category, is feeling the pinch, reporting less-than-stellar iPad sales last quarter.

Microsoft has taken the productivity laptop-meets-tablet tack with its previous Surface marketing. But now that the screen size is larger (12 inches over 10.7), and the device is lighter and comes with a much-improved stand that makes typing on it easier, it may have a better shot.

"This was a PC announcement, not a tablet announcement," said Ryan Reith, an analyst at market research firm IDC who covers tablets. "At the end of the day this can be used as a tablet, but it's a PC first."

The device's starting price places it at the high end of tablets in terms of cost, Reith noted.

"If you compare this to a tablet, you're going to say this is the most expensive tablet out there," he said. "If you compare it to other ultrabooks and the Macbook Air, it's going to win in a lot of categories, including price."

Microsoft spent much of Tuesday's event talking up the benefits for people whom Panay described as "mobile professionals" -- doctors, architects, screenwriters and others in creative fields.

Peter King, the director of tablet research at Strategy Analytics, said that although tablet growth is slowing, there's still opportunity to sell to large corporations and professionals.

"By introducing possibly a larger screened Surface fully integrated with Windows 8.1, with Office, they will be opening themselves to those legacy IT guys who are still pretty much controlling Windows empires within their organizations," King speculated before the announcement.

Growth in this category is delayed, King said, because unlike consumers who walk into a store and buy a tablet or PC, organizations can take up to a year and a half experimenting with devices and writing software before making a large-scale purchase.

"The sky isn't falling in the tablet market," King said. "It's not mature, it's not saturated by any stretch. We've got a lot of exploring to do to find where the best fit for a tablet is within organizations and even within the home."

 
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