Microsoft Plotting Next-Gen Surface Tablet

Analysts have been questioning the success of the Surface tablet computer for a while, but the buzz got louder at the end of May when Microsoft trimmed $150 off the price of the unit. At the end of July, a report to the Securities and Exchange Commission showed Microsoft lost more money on the Surface than expected and apparently took in just $853 million in revenue related to the device, nearly $50 million less than the $900 million write-down required to accommodate the price reduction.

Despite the bleak outlook, recent information suggests that both Nvidia and Qualcomm are working with Microsoft on a second-generation device. The new tablet will allow Microsoft to offer Outlook, which was not available on the first-generation Surface.

“It’s a killer app for Windows,” said Jen-Hsun Huang, CEO of Nvidia, to c/net. "Now, we’re going to bring it with the second-generation Surface. We’re working really hard on it and we hope that it’s going to be a big success.”

Bloomberg reported that Microsoft could be planning at least two more Windows RT devices with a smaller 7- or 8-in. screen using the Qualcomm chip and the 10-in. screen currently in production staying with the Nvidia processor. While Microsoft isn’t commenting, it did present a slide show in July that included updated Surface tablets and accessories in a variety of colors. CEO Steve Ballmer reportedly told employees that new devices are being tested.

Microsoft Cuts Surface Tablet Prices

While Microsoft isn’t talking about how the Surface RT is selling, it is cutting its price on the tablet. The device was offered to schools and higher education institutions at a special discounted price at the TechEd conference in May and now that discount is open to everyone.

Microsoft is offering its least-expensive 32 GB Surface RT model without a keyboard cover for $349 on its web site, trimming $150 off the original price. The same machine with the keyboard cover has gone from $599 to $449 and a unit with double the memory and a keyboard cover is now $549 instead of $699.

Microsoft could be trying to move units ahead of updates to both Surface RT and Surface Pro. Rumors have also surfaced that Microsoft is planning a switch to a new processor that would allow it to increase the Internet connectivity of the devices.

However, industry-watchers also estimate Microsoft has sold just 1.5 million units since the Surface launched in October, leaving it far behind in a field dominated by the Apple iPad and the Amazon Fire.

Microsoft Pushing Surface RT to Schools

Microsoft has been trying to ramp up sales of its Surface RT tablet by offering free covers and keyboards. Now, it’s offering the device for $199 to K-12 schools, colleges, and universities.

The price jumps to $249 with cover and $289 with type cover and is only available to institutions.

“It’s important Microsoft does its part to help get devices into the hands of educators that help prepare today’s students with skills modern business demand,” a Microsoft spokesperson wrote to PC World in advance of the program’s official announcement at the International Society for Technology in Education conference.

While that sounds very good, cutting the price for schools helps the company gets more Windows devices in the classroom, borrowing a page from the Apple playbook in trying to create a new generation of Windows users. It also helps Microsoft move a device that simply has not been selling well at its retail list price of $399.

Microsoft Surfaces with a New Tablet

Microsoft’s Surface tablet generated plenty of buzz, but it remains to be seen whether it will sink or swim. A good portion of the attention has centered on the Surface’s ability to compete with the Apple iPad. It seems as if every new device introduced is immediately proclaimed the iPad killer, and the new Microsoft gadget is no exception.

However, the Surface does appear to be a serious contender, with a neat smartcover that features a keyboard included in the purchase price. The device will also run the new Windows 8 operating system, which should attract many business clients already using the system in their office. In addition, the Surface has USB and micro-HDNI ports and a micro-SD card expansion slot, items critics have long wanted Apple to include.

The reviews have been generally positive, but questions remain. The tech press didn’t get a chance to test the new device and Microsoft was silent—perhaps intentionally so—on the availability of apps. The firm also failed to mention how much the Surface will cost, which is the biggest question yet to be answered.

In this video, Greg Harper, president and founder of Harpervision Associates Inc., talks to The Washington Post about how the Surface stacks up against the iPad.