Why the Surface RT Failed and the iPad Did Not

JULY 19, 2013, 10:34 AM

Why the Surface RT Failed and the iPad Did Not

By NICK BILTON

At first glance, to most consumers, the Apple iPad and Microsoft Surface RT tablet computer look somewhat similar. They are both rectangular, have crisp screens and can boast a slick and clean design interface. Yet on Thursday Microsoft announced that it was taking a $900 million write-down to reflect unsold inventory of the Surface RT. That’s a stark comparison to Apple’s iPad, which continues to break record sales and has sold more than 100 million devices. So why is one still succeeding while the other has failed? I have a theory. But it begins with a story.I often receive tech support phone calls from family members — my dad, grandfather, cousins — seeking help with a variety of computer problems. A few months ago I received such a call from my sister. She was having an issue with her iMac, and I started to walk her through a number of steps to diagnose the problem. Halfway though my narration, I asked her, “O.K., what’s the computer doing now?”

“My computer is restarting,” she said, triumphantly.

“Why, what happened?” I said, confused. “Did it crash?”

“No, I just got impatient so I unplugged it and plugged it back in.”

This is exactly one reason the Microsoft Surface RT failed to garner large sales: Impatience.

When Steve Ballmer, Microsoft’s chief executive, announced the Surface tablets last year, he stood on stage and touted a number of new and exciting features to try to separate the company’s offerings from the iPad. Among the new gizmos were additional ports, a USB drive, a microSD memory card slot, the ability to use a pen with the Surface Pro and a built-in flip-up stand. Pens sold by Microsoft also work with the Surface RT.

Just thinking about all those options is enough to make your head spin.

Today’s consumers don’t want options. They are impatient. They want to tear their new shiny gadget from the box and immediately start using it. They don’t have time to think about SD cards or USB drives or pens or flip stands.

The Surface RT didn’t allow that. Customers had to think about it.

Even the ads for the iPad and Surface RT are different. Apple simply shows the device, making the iPad the hero. Microsoft usually unveils snazzy ads that make the ads the hero, not the product.

Last year when the Surface RT was announced I wrote a post noting that one of the device’s new features did look appealing: the flap that doubled as a keyboard and might make it easier to type on a tablet. But Sarah Rotman Epps, an analyst with Forrester Research who specializes in tablets, reminded me that too many options could easily overwhelm consumers.

“Microsoft will be its own worst enemy in this market,” Ms. Rotman Epps wrote at the time. “More so than Apple or Google. Apple gets this, and limits options to connectivity, storage and black… or white.”

Maybe it’s time for Microsoft to do the same thing. It could even skip the black or white option.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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