Search Follow us
5 May 2017

Microsoft - Windows 10 S great for schools but not for the Surface Laptop.

For the education of children, Windows 10 S makes perfect sense but for college and everything else, we can’t see why anyone would want it. Microsoft held an education event this week where it launched a new version of Windows 10 called Windows 10 S and a stunningly beautiful laptop called Surface Laptop.

Windows 10 S

The main feature of Windows 10 S is that it is locked to running apps that are available in the Windows store. This allows a greater degree of security as each app will have been checked by Microsoft but also will run in its own container. This has the effect of not bogging down the operating system as often happens as devices age and ensures that performance will always be crisp and quick.

This is ideal for the classroom where all devices should offer exactly the same performance and teachers can’t waste time waiting for the older laptops to boot or load. Windows 10 S also allows the school to take complete control of the device just as enterprises do with the laptops within their organisations. This is highly appealing to schools whose aim is educate the students rather than to offer them a good and fun user experience on the device of their choice.

Microsoft has also added a handy feature enabling the creation of a USB drive that can install all of the required apps, settings and permissions on a Windows 10 S device in one go. This makes the set up and management of devices within a school much easier and faster. The app limitations mean that Windows 10 S can run effectively on devices that compete with Chromebooks which is clearly what Microsoft is intending with this version of Windows.

However, outside the controlled environment of a school, we can’t see anyone willingly running this version of Windows. This is because what is available in the Windows Store is a sad reflection of the wealth of software that is available for the PC. If we take the example of a student at university then this reality is put into sharp focus. Students tend not to have a lot of spare cash and therefore will rely heavily on free software which is they are using Windows 10 S needs to be on the store. Taking the top free PC software as recommended by TechRadar, we found that 3 apps were available compared to 10 that were not but of which, 2 or 3 had something similar in the store.

The Windows Store does not offer Google Chrome, iTunes, Google Drive or any BitTorrent clients, all which we suspect are pretty important for cash strapped students. Microsoft refers to its refusal to install the software that the user wants as a “friendly popup” that directs you to something similar in the store but we suspect that almost all users who have paid for their own devices will find this utterly infuriating.

Hence, to make Windows 10 S gain any traction outside of schools, Microsoft needs to dramatically improve the Windows Store. This will take some time and hence we see virtually no traction for Windows 10 S outside of the controlled education environment for which it has mainly been designed.

The good news is that users can unlock the device by upgrading to Windows 10 Pro for $49.99 (free for students) but how well Windows 10 Pro will run on a $170 PC remains to be seen.

Surface Laptop

Microsoft also launched a beautifully designed laptop that has looks and power but with the price tag to match starting at $999. Every detail has been attended and it is refreshing to see a device maker show such care and passion for a product that it has created. For high end users, who are not fans of the tablet form factor, this is a great option but in that regard, it has no business whatsoever being launched with Windows 10 S.

This product has clearly been designed to appeal to users and hence we suspect that almost every device will be shipped to users who have paid for it themselves. Furthermore, the vast majority of schools, will not be buying this product for their students but rather something much cheaper.

Hence, to create the best possible demand for this product Microsoft should offer the option for the device to ship with a regular version of Windows at no extra charge. This is because we suspect that almost everyone who buys this service will not want to be bound by the limitations of Windows 10 S. After paying up to $2,200 for this device being forced to pay another $50 just to run the apps that the user wants will really stick in the craw.

Microsoft have launched the Surface Laptop as a hero device to encourage the adoption of Windows 10 S on much cheaper devices but it makes absolutely no sense for the device itself to run this version.

The end result is that we like Windows 10 S for school as it will take the fight to Chromebooks which dominate the education landscape in the US. This is especially the case because Office is a far better option for content creation than Google Docs but where Google has an edge is in text books.

Google has spent a lot of time building up a huge library of e-text books for schools and this is something that Microsoft will have to quickly replicate in the store if it wants schools to switch. Furthermore, if Microsoft can win students over to Office when they are young it sets Microsoft up nicely to continue its dominance with Office as these students enter the workforce.

Microsoft looks better positioned in education with this release which to us looks like a very long term, but worthy investment. We continue to like Microsoft which is doing very well in the enterprise and fortunately the valuation does not demand excellence in consumer, where we continue to see indecision and slow decline.”

Disclaimer - Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. This document may contain materials from third parties, which are supplied by companies that are not affiliated with Edison Investment Research. Edison Investment Research has not been involved in the preparation, adoption or editing of such third-party materials and does not explicitly or implicitly endorse or approve such content. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of publication and is subject to change without notice. While based on sources believed reliable, we do not represent this material as accurate or complete. Any views or opinions expressed may not reflect those of the firm as a whole. Edison Investment Research does not engage in investment banking, market making or asset management activities of any securities. The material has not been prepared in accordance with the legal requirements designed to promote the independence or objectivity of investment research.