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Microsoft Launches Surface Pro 3 Without Channel Strategy Change

Surface-Pro-3-300x168Larry Walsh, Channelnomics 

Microsoft Corp. has started a new war — the secret weapon is a sleek hybrid computer that supersedes the value of existing tablets and legacy laptops — and it’s choosing to open this new front without its reseller army.

Today, Microsoft took the wraps off Surface Pro 3, a larger, lighter and faster version of its existing tablets. The announcement came with no surprises: Redmond didn’t expand its go-to-market channels; it’s maintaining its current sales approach constraining Surface to its direct outlets — Microsoft retail stores and Web site — and a handful of direct market resellers such as CDW.

When asked about opening Surface to general channel resellers, a Microsoft spokesperson told Channelnomics, “We’ve taken and will continue to take a measured and phased approach to Surface commercial channel expansion to meet customer demand and partner expectations.”

Microsoft has kept out of the channel since the Surface’s launch in October 2012. The primary route to market remains direct: enterprise account teams, retail stores and Web site. In July 2013, it expanded sales to DMRs in 17 countries, but the total number authorized to sell the tablet remain in the dozens. Microsoft has more than 600,000 reseller partners worldwide.

Microsoft has said it’s constraining Surface sales while it gains experience with sales, logistics, technical support and returns. Partners charge Microsoft with replicating the Apple Inc. sales model, which is exceedingly restrictive on the number and types of partners authorized to sell hardware products.

The absence of a channel policy change is curious given the change in direction Microsoft is making with the Surface Pro 3. By the company’s own description, the device is designed as a laptop replacement – with a faster processor and better functionality and battery life than most commercial notebooks. Thus, it functions as both a laptop and a tablet; to do that with Apple products you’d need to carry both a Macbook Air and an iPad, which combined weigh more than the Surface 3 and its Type Cover accessory.

At the launch event in New York City, Microsoft returned to an old criticism of the Apple iPad and other tablets: They’re built for information consumption and force the acquisition of multiple devices. Microsoft even used as evidence the present press, who were tapping away on laptops — mostly Apple Macs —  to show the limited utility of tablets as a productivity device.

The Surface Pro 3 has a 12-inch display, an Intel Core i7 processor and Windows 8.1. This puts Microsoft in direct competition with longtime allies including Acer Inc., Dell Inc., Hewlett-Packard Co., Lenovo and Samsung Electronics Co.

While the starting price is $799 for a basic model, the price climbs $1,700 with accessories and added features such as more memory. At that range, the Surface Pro 3 is in the same price band as premium business notebooks.

Surface Pro 3 hits the market as Microsoft’s traditional PC partners (the companies listed above) and Intel Corp. are shifting loyalties. No longer are they beholden to the WinTel paradigm; they’re fielding devices running Google Inc.’s Android and Chrome operating systems. While Microsoft is struggling to get PC users to adopt Windows 8, Google is having little trouble getting people and businesses to adopt its Chromebook platform.

Some analysts and reviewers are already saying Surface Pro 3 puts Microsoft in a different league — and in a war it can win.

While Microsoft may finally have a marketable product, it’s going to battle without help. Its competitors, though, have plenty of channel support, which is stabilizing PC sales. Comparatively, Microsoft has lost $1.2 billion on Surface over the last 19 months.



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