Windows RT 8.1 snafu, new iPads overshadow Microsoft Surface Pro 2 launch

Microsoft and Nokia launched new Windows tablets, but the two companies may cannibalize sales of each other's products as they take on Apple.

BOSTON --The tablet wars heated up this week as Microsoft, Nokia and Apple launched products aimed at buyers who rely on their devices for work and personal use.

Microsoft held a midnight launch event in 10 cities around the country to preview its new Surface 2 and Surface Pro 2 tablets. Business users at the pre-launch event here contemplated buying the devices to bring to work.

Carlos De Los Santos, a business analyst with a software development company in Needham, Mass., said he is  thinking about purchasing a 256GB Surface Pro 2 for business and personal use. De Los Santos, who frequently travels, likes the second generation features such as the docking station, backlit keyboard, better battery life and multitasking capabilities.

Some departments in his company, such as marketing and finance, are pushing for more mobile devices and have experimented with Apple Inc.’s iPads. However, other groups in his company work solely with Windows applications and a Surface device would meet those employees' needs, De Los Santos said.

The Windows [RT] 8.1 release pull should have a chilling effect.
Chris SilvaHigh Rock Strategy

At the Boston launch, Cam Neely, president of the Boston Bruins, also eyed the devices.

"I'm a PC guy," Neely said, adding he liked the “good-sized screen” of the Surface device that could be useful as a lightweight mobile device to ease his workers’ travels.

Microsoft claimed that its pre-order sales of Surface 2 and Surface Pro 2 have done well. Microsoft made similar claims when the Surface Pro originally launched in February, which turned out to be misleading based on lackluster sales.

There was a "huge demand" on pre-order sales but there is still some inventory left for buyers, said Ty Hapworth, store manager for Microsoft's Boston retail store. He declined to quantify the number of pre-orders.

Windows 8.1 RT issues overshadow Surface 2, Nokia tablets

The Windows RT 8.1 update snafu last week, which caused Microsoft to pull the OS update from its store, tarnished Microsoft’s Surface 2 launch. The problem affected one out of every 1,000 Windows RT tablets, according to Microsoft, with a boot configuration file preventing a successful boot.

“The Windows [RT] 8.1 release pull should have a chilling effect on the minority of enterprise customers rushing to roll out either Windows 8 or the dot release update,” said Chris Silva, principal analyst for High Rock Strategy LLC, an IT advisory company based in Melrose, Mass. “I can see this stalling decisions of those enterprises on Win 7 contemplating making the leap.

"The pullback on the dot release, and the remediation steps needed to fix the problem among affected users is terrible timing for the OS and new device roll outs,” he added.

Meanwhile Nokia, Microsoft’s soon-to-be acquired device manufacturer, launched a competing 10-inch Lumia 2520 Windows RT tablet, Lumia 1520 phablet, and other low-cost Asha phones.

Listed at $499, the Lumia 2520 represents Nokia’s first foray into the tablet market. Analysts liked the Lumia 2520's integration of LTE support compared with Microsoft’s own Surface 2. But questions remain as to how well the tablet will sell because the device is based on Windows RT.

“Nokia needed to offer a tablet to be more competitive, and RT was the least difficult approach to getting there,” said Jack Gold, principal analyst for J. Gold Associates, LLC, based in Northborough, Mass. “And they don’t necessarily need to sell huge volumes like HP or Lenovo or Asus would, to be successful for them.”

Lumia 2520/Surface 2 comparison

The $499 Nokia 2520 offers a 10.1-inch display, LTE, 6.7 MP camera, 32GB storage, and Qualcomm Snapdragon 800, quad-core 2.2 Ghz. processor. In comparison, the $449 Surface 2 comes with a quad-core NVIDIA Tegra 4 chip, Windows RT bundled Office productivity applications, 32 GB storage, HD video out port, 10.8-inch display and services including 200 GB of free SkyDrive storage for up to two years.

Whether Nokia’s tablet efforts will survive after Microsoft’s acquisition of the company’s devices operations remains to be seen. The Lumia 2520 distinctly competes against Microsoft’s own Windows RT-based tablets, although it is priced about $50 higher than the Surface 2.

“The features and pricing of the Nokia and Surface devices are too close together for both to stay in the market unless Microsoft dramatically cuts the price of one or the other,” Gold said. “It is unlikely the Nokia tablet will have a long life, as its more probable Microsoft would continue its own Surface line as a priority.”

Microsoft and Nokia must each determine how to keep their products relevant, even as Microsoft attempts to grab a bigger market share.

"It's hard to get customers to rally around an experience when multiple brands are selling it multiple different ways,"  Silva said.

Nokia also launched the Lumia 1520 phablet, a 6-inch HD screen smartphone with 20 MP Pureview camera technology and a host of enterprise-ready security features, such as the ability to remotely lock and wipe the device, secure NFC and application sandboxing. It ships this quarter and retails for $750 through AT&T.

In addition, Apple unveiled the next generation of iPads and updated its iPad mini with a Retina screen. The new products come on the heels of Apple's September launch of the iPhone 5S and iPhone 5c.

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