Microsoft Surface will cannibalize PC, and make it history

On October 26, Microsoft (MSFT) will release its Windows 8 software alongside its Surface tablet. This package deal highlights Microsoft's march to bridge gaps between the smartphone, tablet, and personal computer (PC) platforms. If Microsoft is successful, its deep-pocketed Silicon Valley rivals Apple (AAPL) and Google (GOOG) will follow suit and introduce more functionally complex tablet designs to the marketplace. At worst, the Microsoft marketing machine will confuse ordinary technology buyers and cannibalize sales within the very same traditional PC market that it dominates. PC Magazine technology writer Dan Costa is spot on when he opines that Windows 8 is a "huge gamble" for Microsoft.

Microsoft's Image

Microsoft is now cast as the underdog within the tablet market. Meanwhile, Violet Blue and ZD Net report that Apple and its "fan boys" have united to form a phalanx around market share through lawsuits and intimidation tactics against criticism. Apple's dominance of the counter-culture set emerges as direct consequence of an integrated product line that includes the iPod, iTunes, iMac, iPhone, and of course, the iPad. During third quarterly period ended June 30, Apple sold 17,042 iPads, which is a spectacular 84% increase above the year-over-year period. For Q3 2012, Apple posted $9.2 billion in iPad related revenue. Last quarter, the iPad accounted for roughly 25% of Apple's total $35 billion in sales.

Certainly, Microsoft executives would love to get a piece of this tablet action and drive bottom line growth. To do so, Microsoft must rehabilitate its image away from the out-of-touch relic that introduced Zune and Bing to the marketplace. With the Surface, it is imperative for Microsoft to offer a viable alternative to both the Apple iPad and Samsung Galaxy Tab market leaders. Writer Daniel Bailey dismisses the Samsung Galaxy Tab as a "big smartphone."

Microsoft Windows 8 and Surface Specifications

Windows 8 software will launch as a fusion of conventional smartphone, tablet, and PC interfaces. For example, laptop and desktop personal computers will offer touch screen technology, while Windows smartphones and tablets are now set to feature Office functionality. The Surface will allow for more computing firepower above the conventional tablet best used for Internet access, gaming, and taking pictures. As multiple technologies converge together, the PC market is most at risk. PC sales alongside Microsoft profit growth have remained stubbornly stagnant since late nineties Y2K hysteria.

Microsoft Surface specifications are indicative of a trend calling for tablets to ultimately replace notebook computers. The Surface tablet is notable for its sleek profile and portability. The Windows 8 Pro Surface weighs in at 903 grams and is 13.5 millimeters thick. The 10.6-inch screen offers high definition videos. For portability, the Surface keyboard and kickstand can be folded up to double as protective covers.

The Surface tablet can convert into two separate cameras, while also featuring speakers and microphones for video-conferencing. One attached USB port provides flexibility for printing documents and charging smartphones. Microsoft offers its Surface with 32GB, 64GB, and 128GB of memory. The Microsoft Surface is effectively a low-powered notebook computer. This machine is therefore ideal for the education market, as it allows students to read digital text, formulate calculations, and type out basic documents.

In terms of Surface pricing, Microsoft executives have remained mum up to this point. Technology writers present contradictory reports opining that the Surface will price anywhere between $199 and $1,000.

According to Forbes, Microsoft is set to offer its Surface for a mere $200.

I am speculating that the rumored $200 price tag may be a suitable entry point for the low-end and Windows RT Surface at 32GB memory. Most likely, the Windows 8 Pro Surface will retail closer to $500. Microsoft, with its deep pockets, can afford to sell product at cost to steal market share. After selling Surfaces cheaply, Microsoft can lock customers into Office 365 subscriptions to generate regular cash flow.

In either scenario, the Microsoft Surface is at the forefront of a computing revolution that will inevitably make the PC go the way of the horse and buggy.