Microsoft tries again for tablets with Surface 2

MarketWatchSeptember 24, 2013 

SAN FRANCISCO -- Microsoft Corp. on Monday unveiled two new models of its Surface tablets, part of the software giant's efforts to make headway in the tablet market and come back from a huge writedown it took in July against an earlier version of the Surface.

At an event in New York, Microsoft showed off the Surface 2 and the Surface Pro 2, as well as several services the company hopes will lure consumers and business customers away from Apple Inc.'s iPad and tablets running on Google Inc.'s Android operating system.

The Surface 2 will come in two models, with either 32 gigabytes or 64 GB of storage, and starting at $449, while the Surface Pro 2 will come with an entry price tag of $899 for models ranging from 64 GB to 512 GB of storage. The new Surface models will be available Tuesday for pre-ordering and will be in retail outlets starting Oct. 22.

Microsoft said anyone purchasing either of the new Surface models will also receive free Skype calling to landlines in more than 60 countries and unlimited Skype Wi-Fi on their Surface devices for one year, and 200 GB worth of free cloud-based SkyDrive storage for two years.

The Surface releases come after a busy summer for Microsoft. Since July, Microsoft has launched a sweeping corporate reorganization, Chief Executive Steve Ballmer has said he would retire within a year, and Microsoft said it would purchase Nokia Corp.'s mobile-phone handset and device business for more than $7 billion.

And also in July, Microsoft said it would take a writedown of about $900 million related to inventory of its Surface RT tablet, which the company launched in October 2012. Still, some analysts say that even a charge like that isn't going to keep Microsoft from pushing the Surface and its Windows operating system as an alternative to the iPad and Android devices that rule the tablet market.

Sarah Rotman Epps of Forrester Research said in a research note Monday that Surface remains "a linchpin for Microsoft's new devices and services strategy," even though it won't be an immediate best seller for the company.

The company is "not giving up," Epps said. "Microsoft is doubling down on Surface (and) making needed hardware improvements to appeal to businesses and consumers."

Epps said that while the first versions of the Surface tablets couldn't compete well against Apple's products, the new models offer better features for potential customers.

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