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Memory bump and NFC may also be added

Despite a rocky start for its tablet experiment, Microsoft Corp. (MSFT) is reportedly prepping its second generation of Surface tablets for this holiday shopping season.  The Surface Pro 2 is expected to receive Haswell Core series chip from Intel Corp. (INTC).  

I. First Gen Surface Pro Was Sunk Largely by it's Intel Processor

Before 2010 no tablet had achieved strong enough sales to be characterized as a hit and the market was considered a niche space.  Then in 2010 Apple, Inc.'s (AAPLiPad debutedposting stunning sales.  A key to its success was its decision to dump the power-thirsty Intel processors that littered its underappreciated Windows predecessors and instead adopt a weaker but more power-efficient core design from ARM Holdings Plc. (LON:ARM).  Thanks to the ARM chip, the tablet boasted a battery life of 10 hours -- a key selling point.

Two years later, Microsoft, still steaming from missing the tablet craze, ditched its OEM partners to launch its own first-party tablet hardware -- Surface.  And Microsoft offered up a variant dubbed Surface Pro that packed a 1.7 GHz dual-core Intel i5-3317u Ivy Bridge chip.  The hot question was whether Intel's primary "Core" chip line had come far enough power-efficiency-wise to truly compete with hit ARM-equipped Android tablets and the iPad.
Things looked promising at first.  The tablet launched in Feb. 2013 to much buzz and some retailers sold out of their early stock.  In fact in its first month the tablet reportedly moved 400,000 units.  But eventually sales petered out leading Microsoft to take a whopping $900M USD write-down and slap a permanent $100 USD discount on the struggling tablet.

Data-mining indicates that Surface RT is actually the stronger seller, comprising about 9.5 percent of Windows 8/RT devices sold, while Surface Pro occupied a measly 1.0 percent.

Surface ARM
The Surface Pro has been outsold by the ARM-equipped Surface RT.

The deal breaker for many was the high price ($799 for 64 GB and $899 USD for 128 GB after the latest discount) coupled with the poor battery life.  The Intel chip shaved the ample 7-hour battery life of the ARM-equipped Surface RT down to a little over 4 hours.  Arguably, Intel is to blame on both of these counts as it demands up to $300 USD more for its power-hungry chips, versus popular ARM competitors.

To make matters worse, the tablet at times felt sluggish during heavy use with "only" 4 GB of RAM and the Windows 8 OS consumed much of the storage, leaving only 83 GB free on the 128 GB Surface; 23 GB on the 64 GB Surface. By contrast the iPad -- which requires about 10 percent of storage to be free, plus room for the OS -- offers about 105 GB for the 128 GB version and 54 GB for the 64 GB version [source].  It appear the Windows recovery technology is primarily to blame -- of the 10.4 GB allocated for Windows, 7.9 GB of it is reportedly for recovery.

II. Fixing Surface -- Haswell May Do the Trick

Microsoft has already moved to remedy storage shortcomings by bumping the capacity to 256 GB in the first-generation models.

But the pivotal question remained what to do about the power-hungry Intel chip.  It appears Intel has sold Microsoft on the idea of a Haswell brain for the Surface 2.  A recent analysis by AnandTech showed Intel making serious power-efficiency gains with Haswell, with a projected battery life of 8 hours with a 42.5 Wh battery.  Of course these numbers were based on Apple's OS X and iOS -- but they suggest that if Microsoft does its homework on the firmware front, their may be hope that the Surface Pro 2 fixes the abysmal battery life of its predecessor.

Haswell die
Haswell is offering 8+ hours of battery life on a 42 Wh battery.

The aforementioned tests were done on a Haswell ULT processor (13.5 W TDP).  In June Intel also announced an even more efficient ULX line (10 W TDP) (with 'Y' tacked onto the chip numbers), which could bump battery life even higher.  If Microsoft can get it hands on ULX chips, it has a shot at least doubling the battery life of the first generation Surface Pro.

The Surface Pro 2 is also expected -- according to Neowin -- to pack a "refined" kickstand, improving on a popular feature in the first model.  It's also expected to bump the memory to 8 GB.  TechRadar reports that other Surface Pro 2 rumors point to NFC, wireless charging, an LTE variant, and 802.11ac Wi-Fi support.

Meanwhile the Surface 2 (the second generation Surface RT) is expected to receive a predictable bump from NVIDIA Corp.'s (NVDA) Tegra 3 arm processor to a Tegra 4 chip -- possibly the Tegra 4i.

The only official word from Microsoft is that it has committed to "updates" as noted in a video from Microsoft captured by ZDNet.  However AdDuplex -- which claims to be the largest Windows 8/RT-specific advertising network -- has noted Surface 2 and Surface Pro 2 devices are already logging internet hours, indicating that Microsoft is likely dogfooding prototypes in preparation for a launch.

Microsoft FY2014
Microsoft has confirmed a "refresh" of Surface. [Image Source: ZDNet]

Those same numbers hint that Microsoft may be competing with its own recently acquired subsidiary -- Nokia Oyj. (HEX:NOK1V) -- as a pair of Nokia tablets (codenamed RX-107, RX-108) also show up in the mined data.

Sources: NeoWin, TechRadar, AdDuplex, ZDNet

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Lower the price
By tayb on 9/4/2013 1:31:30 PM , Rating: 2
Lower the price or the gains in battery life and usability are meaningless. Consumers are just not willing to spend $900+ on a tablet. Get it to $600 and you'll have a hit otherwise prepare for another massive write-off.

If that means selling the device at a 10% loss so be it. Try to make up for the margin elsewhere. The goal is to get your foot in the market.

RE: Lower the price
By xti on 9/4/2013 1:52:37 PM , Rating: 2
i'm down for $900 if it has good battery life and as much bump into the integrated graphics as possible.

basically i'm looking for a lite-gaming laptop replacement

RE: Lower the price
By troysavary on 9/5/2013 5:23:04 AM , Rating: 2
Same with me. The only thing that stopped me from picking up a 1st gen Surface Pro was battery life. Fix that and I'm sold. I played around with one and the build quality is incredible. The Surface Pro is easily an ultrabook and tablet in one device.

RE: Lower the price
By TheEinstein on 9/4/2013 1:57:38 PM , Rating: 2
at $600 it does indeed become a factor for me. A Surface with enough memory would be in my range easily then, and I would buy one for sure. Right now they hover just barely out of range.

RE: Lower the price
By w8gaming on 9/4/2013 2:31:14 PM , Rating: 2
Writeoff only happens if the CEO decides to over produce the devices while the public is not buying. It is a consequence of reading the market wrong.

RE: Lower the price
By inighthawki on 9/4/13, Rating: 0
RE: Lower the price
By tayb on 9/4/2013 5:14:08 PM , Rating: 2
If the Surface Pro were an Apple product it would sell out at $900. It's not. Apple is just about the only company out there that can manage to be successful selling overpriced gadgets. Everyone knows the margins on Apple products are sky high but they buy them anyway.

Windows users are conditioned to cheaper products. A $900 tablet is a non-starter. It doesn't matter if it is feature competitive with a Macbook Air because it's not competing with the Macbook Air. It is competing with $230 - $400 tablets and $500 notebooks.

I like the Surface Pro. It's a great product. My company bought a few to see what they were all about. Besides battery life and monitor scaling issues it is great. But I am not indicative of the general market. The general market will not buy a $900 windows tablet from Microsoft. They just won't. If they were the Surface Pro wouldn't have been a flop. It's a great product as it is.

I maintain that the biggest flaw with the Surface lineup is not the features but the price. People are just flat out not willing to pay what Microsoft wants. The perception of Microsoft is inferior/cheap products.

RE: Lower the price
By Mint on 9/4/2013 6:18:15 PM , Rating: 2
It's not just competitive against the MacBook Air. It's competitively priced against all sub-3lb ultrabooks with great screens. The Acer Aspire S7 is a 1080p notebook w/ a 128GB SSD and costs $999.

A Haswell Surface is an ultrabook (with a high res touchscreen display) and 10" tablet with inductive stylus in one package, an if designed right, has basically no compromises. $1000 is a bargain for that, even if you don't care about the stylus.

I don't think MS is going after the general market. 5% market share of notebooks would be more than they're aiming for. From there, other manufacturers can create lower price alternatives that copy various elements.

RE: Lower the price
By w8gaming on 9/5/2013 3:46:59 AM , Rating: 2
Surface Pro is in the same league of competing Windows 8 Pro tablets and ultrabooks. If Microsoft has decided to price it way below the average market price of such device, you can bet the devices will fly off shelf in droves. Every vendors will also complained MS undercut them. I guess if Microsoft has really decided to go at the PC and enterprise market all by itself, and allowing their software to run only on their own hardware, they could start doing that! Or they could sneakily try to undercut and hope no one notices, and has to deal with the consequences when other vendors start bailing from MS platform.

RE: Lower the price
By damianrobertjones on 9/5/2013 4:08:16 AM , Rating: 2
The write off was on RT. Consumers WILL pay stupid amounts of money for things.

RE: Lower the price
By InsGadget on 9/5/2013 7:56:50 AM , Rating: 2
More than just a tablet.

"The Space Elevator will be built about 50 years after everyone stops laughing" -- Sir Arthur C. Clarke

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