Microsoft unveiled its third-generation own-brand tablet, the Surface 3 on March 31 with a size and industrial design similar to those of the previous-generation models, but instead of using an ARM-based platform and Windows RT operating system, the device has adopted Intel's Atom processor and Windows 8.1, which can be upgraded to Windows 10 at a later time.
Currently, Microsoft is avoiding direct competition against brand vendor partners by setting its Surface products pricing higher than the average; however, Microsoft is expected to face weak sales for its Surface 3 since the device's target market segments see much fiercer competition than those for its Surface Pro 3.
Following the Surface Pro 3's strong sales performance in the fourth quarter of 2014, Microsoft announced the Surface 3, looking to extend the momentum. The Surface 3 is priced over US$600 with keyboard and is expected to only have limited impact on other branded 2-in-1 products, which are priced below US$350 on average. The device is unlikely to significantly undermine vendors' Intel Core M-based models, which are priced at a similar range.
Unlike the high-priced Surface Pro 3, which is in a market segment with mild competition, the Surface 3 is mainly targeting the education, niche application and second PC segments in mature markets, and these segments already see fierce competition among brand vendors.
With Microsoft turning more aggressive on the Surface business and vendors less optimistic about Windows-based tablets' growth, Digitimes Research expects the Surface series shipments to account for almost 30% of worldwide Windows tablet shipments in 2015.
