Friday, October 19, 2012

For want of a pricing model, the product was a flop

There are 3 simple, time-tested rules that set a company up for success in the open market:

1. Create: Create a great product with differentiated features
2. Undercut: Launch it at a competitive price point
3. Sell: Facilitate sales by eliminating all doubt from the purchasing decision

Let's evaluate the Microsoft Surface RT product against these rules:

1. Create
On the surface, the Surface is a great product. The finished product does not belie the meticulousness of its creators, and I know Microsoft has invested an unprecedented sum of money in the device's fabrication. Kudos!

2. Undercut
Alas, this is where the Surface falls flat, pun intended. The tagline is, "Click in". Yet, the base model does not come with a keyboard. The argument is you get a 32-GB device with a keyboard for the same price as a 32-GB iPad. The truth is you only get about 22-GB of space on the Surface; the operating system, like humanity, is obese without scope for remediation. It is *not* sufficient to compete with the incumbent on features alone. You have to beat the incumbent on price.

You must wonder if I have forgotten about the keyboard. I have not. The Surface has been heavily marketed with the keyboard. If the marketing sticks, people will perceive the keyboard as a necessary appendage without which the device's true potential cannot be unlocked. This relegates the base model "adopted child", "neutered pet" status, thereby hurting its adoption.
The keyboard is the albatross that will sink the Surface RT.
I predict that the base model will sell very poorly, making the first Surface model that gains any traction to be the $600, 32-GB model.

3. Sell
This brings me to the Sell piece. If I am about to spend $600 on a computer equivalent, I am going to evaluate the product using the following criteria:

a. Build Quality: The Surface comes up aces in this regard. 'Nuff said.

b. Usability: This is a relative unknown with the Surface. Windows 8 is receiving mixed reviews from its early adopters, especially on the "Familiarity and Ease of Use" scale. This augurs poorly for the Surface RT.

c. Applications: The applications ecosystem for the Surface is miniscule in size compared to the Google Play Store. I don't even want to compare it to the iOS Store because that would be useless and unfair. Reports have been released that Microsoft is paying developers to build apps for Windows 8, which is a mistake in and of itself; Charlie Kindel's articulate prose addresses the many cons of this approach. Back to applications - people are making the argument that the Surface RT can be used as a laptop. This is a dubious claim! You cannot run existing Windows applications on the Windows RT because they are designed to run on traditional Intel chips. The Surface RT is built on the same CPU technology that powers the iPad and the Google Nexus 7, among other tablets. If you want to use this device as a laptop, you will have to wait until the apps and applications that you need and love are ported over to the new architecture. This can take a long time.

d. Degree of Buyer's Remorse: Is the device worth "swiping" for at the checkout stand? Is there a competitor that will give me greater bang for my buck right now, not 2 years from now?

The Surface falls short on all but the first criterion. This increases the doubt in my mind as I am about to fork over my hard-earned $600, thereby increasing the obstacles in the path of making a Sale. I am not alone in this line of thinking.

Microsoft has a potential hit product on its hands. My advice is it replace the team that promulgated the daft marketing, pricing and sales strategy with a set of go-getters like the ones that worked on the XBox 360. Unless Microsoft does something in short order, the Surface RT will go the way of the daft dodo.


Anonymous Anonymous said...

You realize the base model you just took a dump on is sold out in US, Canada & UK?

10/20/2012 6:35 AM  
Blogger Manoj Mehta said...

A preorder selling out does not guarantee the success of a product - Motorola Xoom is a case in point. Even if the Surface RT does not suffer this fate, it has created a lot of confusion in the mind of prospective customers. The eminent Microsoft blogger Paul Thurrott wrote this piece on the topic:

10/21/2012 2:21 PM  

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