Surface Pro 3 may stop IT from writing off Microsoft mobile devices

The Surface Pro 3 is a return to Microsoft's PC roots with a larger screen, digital pen and the ability to run enterprise apps.

IT pros wondering whether Microsoft will return to its PC roots with its mobile devices have their answer with the launch of the latest Surface Pro tablet.

The new Surface Pro 3 is an Intel-based 12-inch 2-in-1 device with a digital pen and the potential to entice IT pros into adopting the new device for mobile end users.

"It's classic Microsoft [that] gets everything right on the third try," said Bob O'Donnell, founder and chief analyst for TECHnalysis Research LLC, of Foster City, California He sees the Surface Pro 3 as a PC taken to the most modern extreme. "It's better as a tablet [than previous versions] but also acknowledges people use [the Surface Pros] as a PC."

The sweet spot for Surface Pro 3 is for users that need a full screen but want something more portable, said Jack Gold, president and principal analyst for J. Gold Associates LLC, an IT strategy firm based in Northborough, Massachusetts.

"[Enterprises] will be happy with this kind of device because it looks like a PC," Gold said. "It runs the same apps and infrastructure, and [you can] load it up with images. So for those that are not absolutely tied to an iPad, Windows becomes an option."

Third time's a charm?

IT administrators have not been particularly keen on Microsoft's mobile devices but cautiously view the new product in a more favorable light

It's classic Microsoft [that] gets everything right on the third try.

Bob O'Donnell, founder and chief analyst for TECHnalysis Research

For some IT professionals the most important advantage the Surface Pro offers over Apple iOS tablets is that the Surface product line uses Intel processors. Some say the chips give them options to run a much wider selection of both internally developed and off the shelf applications.

“If they know they could use some internally developed apps on a Surface Pro 3 with no questions asked, some IT buyers would be more inclined to put in a volume purchase order for Surface Pro 3s instead of iPads," said Mike Drips, a solutions architect with WiPro based in Houston. “Now Microsoft can say, ‘We have a tablet like [Apple] has a tablet, plus Intel chips, USB ports and hardwired Ethernet support.’"

While the new version has some technical capabilities its predecessors lacked, Microsoft continues to price the Surface upwards of $799 -- out of reach for many IT shops.Some suggest Microsoft bundle in the price of unit’s keyboard-cover and not charge the extra $129.

“[Surface 3] continues to be a tough sell because it is at a price point where you say, well it is not cheap but it is not crazy expensive either," Drips said. "It is mezza-mezza. If you were thinking of buying one, the price could make you think a little longer.”

Slow market adoption

Microsoft must claw its way to make a mark in an industry that has dramatically slowed due to the entry of larger screen smart phones and end users holding onto tablets for a greater length of time.

Worldwide shipments for tablets and 2-in-1 devices dropped to 50.4 million units during the first quarter of 2014, according to recently published data from IDC, based in Framingham, Massachusetts. The shipment represent a sequential drop of 35.7% but was up 3.9% compared with the same quarter in 2013, the company said.

How Microsoft will continue to sustain the Surface business still has the industry scratching their heads. The company has been repeatedly slammed for losing money on the product and competing with OEMs, but that perspective may change. Observers said it is more about Microsoft leveraging sales of other products in the Windows ecosystem rather than the hardware alone.

"The money to be made is not specifically in the device," Gold said. "The money to be made is making sure that Microsoft and the Windows ecosystem [on the back end] remains in place. Anything they can do there is good news."

Microsoft partners have seen a shift in how the company sells its Surface to customers.

"Microsoft is less concerned about [customers] adopting Surface versus adopting innovative devices," said Chris Hertz, CEO and founder for  New Signature, an IT system integrator  based in Washington, D.C. "It's not just about market share. Microsoft has dedicated mid-market sellers around devices and they talk about Surface and OEMs with equal weight. [Those sellers] say [you] should buy a device that fits your business."

Microsoft's CEO, Satya Nadella, claims the company is not competing with OEM partners.. "Our goal is to create new categories and that is what inspires us with what we are doing with our devices and hardware," he said during the Surface Pro 3 launch this week.

What about Windows RT?

Microsoft did not address its commitment to Windows RT. Although the Windows RT-based Surface devices have enjoyed some success with large customers such as Delta Airlines, it is clear Microsoft has not been able to compete with the iPad and Android-based tablets. Businesses would rather gravitate toward the full-fledged Windows device.

"RT was a reaction to Android and iPad," Gold said. "Microsoft had to get something out cheap on ARM and with decent battery life." As newer technology such as Intel's Haswell chip provide more computing power combined with long battery life, there is less need for a Windows RT unit, especially since  it's a "decapitated OS," said Gold.

Microsoft declined to comment on any changes to its Windows RT strategy and said it will keep Surface RT.

Surface Pro 3 specs

The Surface Pro 3 has a 12-inch diagonal screen, 38% bigger than the Surface Pro 2, clear type HD resolution of 2160 x 1440 pixels, a hinge that goes from zero to 150 degree angle, and support for a new Type Cover that sports a larger track pad. The product will include either an Intel Core i3, Core i5, or Core i7 Haswell chip and comes with flash storage ranging from 64 GB to 512 GB and 4GB or 8 GB of RAM.

The device weighs 1.76 lbs. and is 0.36 inches thick, with nine hours of battery life.

Microsoft also incorporated more accurate digital pen technology. The aluminum pen's functionality is not only used as a writing tool on the tablet, but also acts like a remote control. The company showed how a click of the pen can turn the Surface Pro 3 on or take pictures.

"It's the kind of thing that allows them to really do touch-based apps," said O'Donnell.

Microsoft also demonstrated the tight integration of OneNote with the pen on the Surface Pro 3, providing end users with a pen and paper-like feel combined with computing technology.

Pricing for the Surface Pro 3 starts at $799 for a 64GB Intel i3version to $1,949 for the high-end 512GB Intel i7 device. Shipments begin on June 20.

Senior Executive Editor Ed Scannell and Executive Editor Jamison Cush contributed to this story.

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What do you think of Microsoft's Surface Pro 3?
Too expensive. I would rather buy a Macbook Air or Pro for that amount of money.
The improvements seem significant here - especially the bigger screen, which makes a difference when it comes to productivity -- but I'm not convinced it's going to make significant inroads in the market. Maybe I'm underestimating the appeal of the digital pen?
THockman - what would be your ideal price point for the device? 
This is over priced in a world of many choices in tablets. Sure most are consumer devices but why should corporate pay a premium for something with security that we can all benefit from.
Still more expensive when compared to a macbook air.
If we compare apples to apples, a 512MB i7 air with 8gb ram, costs $200 less than the surface, and it comes with a keyboard and trackpad, which is an option on the surface.
Why I keep hearing that the microsoft product is less expensive, when, if we compare relatively the same hardware, they are more often more expensive, is beyond me.
More propaganda from whoever pays more for advertising, I guess
This is just the kind of touch screen computer I've been longing to see, ever since being introduced to the iPad. I'm currently using the Surface Pro 1, which I purchased instead of a laptop. My only concerns with this machine is the rather small screen size of and singular USB slot. The larger screen and improved keyboard for the SP3 means I will most certainly be upgrading. I'm also really loving the 'instant on' feature of the pen with OneNote.
There's a market in IT and it sounds good, but they need to bring the price down.
WWAN missing...
I am using the Surface Pro 2 as a replacement to my company laptop. It works very well. Currently using the docking station and a separate monitor for in office work. I would prefer a larger screen away from the office but functionally works VERY well.
Specifications are now hitting a Level, that business can us this device. Battery life needs some careful consideration to sustain a 8 hour working day. The next generation Intel Laptop-processors may be a killing factorfor the Surface 3 if they will be avaiable in Q4/2014
After running a Surface RT (ver 1) in one year and a half, with first std and then type cover I'm more convinced that the RT line is a perfect line to keep. I have never been as productive with a cheaper gadget in my whole Life. Office rules. Used IPAD before, but very disapointed. At first I thought the store apps would limit my productivity. Now I actually do not miss any app there and I prefer not to install anyting at my home computer (Win 8.1) that has not passed the store. It is convinient and safe. I have used the RT for coorparate access with Citrix and Azure and Amazon Virtual Machines with remote desktop, with mousesupport. That feature is still missing at IPADS. I'm actually thinking of upgrading to Surface 2 because of the better performance and great price Point. One argument for that is that I now see that developers starts using Universal code base enabling simult. launch on Microsofts three legs at the same time. It does not cost extra to deploy on RT, Mobile or x86.
It fits my work mode. I spend a lot of time in remote administration automating scripts and powershell in excel. I spend a lot less time looking at content. My own and other end user mailboxes are too large to look at in a web browser. We really need outlook. More like a laptop but can function as a tablet. My kind of tool.
But still, the elephant in the room is not addressed: can you get it with a 3G or better yet, LTE cellular/data modem, and the answer is no. How OEM after OEM making Windows tablets fail to get this right is mind blowing. Many IT departments are desperately looking to standardize onto a Windows tablet that offers the capability of a full PC, can run their company's entire application landscape, and acts just like a desktop PC with the help of a docking station and monitor, but offers the mobility and touch interface when simply used as a tablet, and like a smartphone or an iPad - has Internet connectivity when out in the field away from Wi-Fi. There are, by my count, only two manufacturers offering this: Dell with their Venue 11 Pro 7139 (Haswell i5, 8GB, 256 SSD, LTE, 10.3") plus Panasonic has something as well (at a much higher price point). Fujitsu is a couple months away from offering something too. Offering a mobile device that lacks mobile connectivity beyond just Wi-Fi is a deal breaker for so many IT shops.
I have been using the Surface Pro for well over a year now and absolutely love it. My son has a iPad and its not even in the same league as the Surface Pro. They have obviously added some much needed features to the Pro 3 and if MS can get the price point down then I think it will do well.
Love it! If MS can get the price point down some it will be a iPad killer. I have been using the Surface Pro for a little over a year now and not sure what I would do without it. My son has a iPad and he can't keep his greasy little fingers off of my Surface Pro.
@KFoster1 I'm not sure what IT shops you are working with but I can't say I've ever heard one say the lack of 3G or LTE data was a deal breaker. Now there may be some customers out there that do need wireless connectivity for a mobile workforce but not nearly as many as you make it out to be. In fact I see IT shops looking for ways to reduce costs and one of the first things they look at is services such as mobility data plans.
Sounds like a winner.
It looks pretty good (spec wise) and is aesthetically pleasing anyway.

I hate Apple products, having used them on and off for years, so the iPad was never going to get a look in.

I am also very interested in the top end Sony Tablets.
with a entry point of $799 and the pen it become the idea solution for medical applications that are unavailable to a mac air, or iPad, and higher end models could become a doctors workstation for home/office and hospital. These are the first convertibles I have been interested in for my practice.
now you can get patient sign off of charts where ever you are, and if you need cellular access a pocket hotspot covers multiple devices and you don't have to change the device if you change providers or want to upgrade like my iPad now that I want LTE or 3G that were not offered when I got mine. I only wish it had a better keyboard without going to a usb add on in the docking station.
It is what I have been waiting for ! I have help on to an old IBM x61 tablet with a pen using One Note for what seems forever. I also have an Ipad 3 but that doesn't cut it. It's pen is a joke !
This is perfect !!
held - not help
I agree with fuzzyZuZuVa as WiFi is for the most part sufficient for the majority of businesses and workers. There is a need for cellular/data communications for some applications or for job-specific cases but I think those needs are for a smaller subset of the business segment.
I think the larger screen and ability to run enterprise apps will have a huge impact on adoption of the SP3. Competitive pricing with configurations ranging from pretty basic to pretty healthy will also be appealing to IT departments looking to upgrade hardware without breaking the budget.