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24 May 2017

We do not think that it has ever been Microsoft’s intention to take market share away from its

Microsoft gives the PC makers room to breathe. Microsoft updated its Surface Pro at an event in Shanghai but left plenty of space for its partners to innovate within the fledgling tablet-PC category.

Microsoft has followed Apple in dropping the version number from the name and the new product makes incremental improvements:

Microsoft claims that despite looking very similar, the new product has 50% more battery life than the Surface Pro 4, clocking in at 13.5 hours under optimal conditions. This will be well received by road warriors who spend a lot of time in airports and coffee shops looking for power sockets.

The new Surface Pro is fan-less in the m3 and i5 versions which is a meaningful saving both in terms of power and noise. Microsoft is very late to fan-less computing and we see it as behind the curve as there are other devices available that run the same processors but are fan-less across the whole range. We are assuming that as the i7 version also runs Intel Iris Plus Graphics 640, more heat may be generated under heavy load than the i5, necessitating the presence of a physical fan. Going fan-less is a good opportunity to reduce thickness and weight but again Microsoft does not appear to have taken this route as it is keeping the same chassis for all versions. Instead it is leaving this to other companies like Samsung, Huawei, Eve Tech and HP which has clearly been doing some work on its form factors.

A new hinge has been created to enable what Microsoft calls studio mode. This is where the device is almost horizontal but is slanted at the same angle as the workspace of an architect or illustrator. This is very similar to the use case provided by the popular but expensive all-in-one PC Microsoft launched last year called Surface Studio. Outside of these upgrades, the new Surface Pro is an incremental upgrade which leaves plenty of room for others to address this space.

We do not think that it has ever been Microsoft’s intention to take market share away from its partners but more to show them the way forward. Historically, PC makers have really been starved of form factor innovation, having outsourced almost all of its to the ODMs. However, there are signs of this coming back. A good example is HP which as seen huge improvements its form factors with the Envy line of laptops finally living up to its name. Most PC makers now offer a Surface Pro-like product which if marketed properly, still has the potential to change the nature of PC market. A tablet PC with a separate keyboard and mouse offers a more productive, healthier and more ergonomic computing experience which renders the laptop form factor obsolete. However, PC makers and the marketing departments of Intel and Microsoft have been selling laptops for 40 years which has become a very difficult habit to break.

We still believe that this has the potential to kick the PC market back to growth as old laptops are quickly replaced, but given that this is just a product cycle, it would only last for a few years. This rising tide would float all boats but we would prefer to be aboard either Microsoft or Lenovo for this ride.

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