Home Technology Microsoft Surface 2 Doesn’t Impress Analysts

Microsoft Surface 2 Doesn’t Impress Analysts

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Microsoft Corporation (NASDAQ:MSFT) released its Surface 2 and Surface 2 Pro tablets yesterday to little aplomb. The announcement was a little overshadowed by the Apple Inc. (NASDAQ:AAPL) announcement of record iPhone sales and the Valve SteamOS announcement. A new report on the devices’ potential from JPMorgan takes a look at the effect it is likely to have on the company’s stock. The answer seems to be not much.

Microsoft Surface 2 Doesn't Impress Analysts

The report keeps a Neutral rating on the company’s stock. The release of a new Surface tablet did not exactly rock the world of the analysts who wrote the report. The release is an incremental update to the tablet that lost the company close to $1 billion last year.

Microsoft tablet potential

The Surface 2 will retail for $449 for the base unit while the Surface 2 Pro will go for $889 at the lowest level. The Surface 2 Pro is not being sold as a tablet, however, it’s being sold as a replacement for a laptop. The devices did not sell well last year, because of problems with Windows 8 and competition from cheaper Android tablets.

Microsoft Corporation (NASDAQ:MSFT) should have a lot of potential in the tablet market, but its products are not making an impact. The company’s presentation on the new surface tried to sell the potential of Windows 8.1 as a major driver of success for the business, but the change seems incremental.

Microsoft hardware of the future

Microsoft Corporation (NASDAQ:MSFT) is going to acquire the smart phone business of Nokia Corporation (NYSE:NOK) very soon, and the company is clearly looking to stick in the hardware business long term. With the large range of players making Windows 8 tablets and convertibles,  the company may not need to stay in the business for much longer.

After the massive failure of the original Surface, this launch may be serving as a dirge. The company has not made an impact in the hardware business outside of the Xbox. It might be better off folding its tablet making arm into the Nokia Corporation (NYSE:NOK) hardware business, and killing the Surface brand.

That may be what the company plans to do. There is no doubt that the firm will be making less tablets this year than it did last year, and it might wind down production early. For the JPMogan analysts, the Surface tablet has had little impact. Microsoft knows this. The disappearance of the device next July might not even be remarked upon, given the response to yesterday’s reveal.

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