The company announces the third iteration of its Surface Pro tablet with the hope that its long nightmare -- an Apple-dominated computing category -- will finally end.
FORTUNE — To hear Microsoft’s top brass tell it, their 101,914-person, $327 billion company is made up of fanciful dreamers with a mission to empower the masses.
At a press event today to introduce the Surface Pro 3 tablet, chief executive Satya Nadella and Surface Computing head Panos Panay repeatedly spoke of the “dreams” and “empowerment” that can be achieved with the company’s new mobile device. The new Surface Pro is sleeker, faster, thinner, and lighter than its previous version, the executives said. It will allow people to perform business tasks such as word processing. And it “will replace the laptop.”
If nothing else, the Surface Pro 3 may be Microsoft’s latest attempt in fulfilling its own long-held dream: To be a major player in a tablet market dominated by Apple, Amazon, and Samsung.
Though the company has long offered “tablet computers,” the device’s modern incarnation has been a problem for Microsoft MSFT . Even before Apple AAPL introduced the iPad in 2010, pundits predicted that tablets would eventually replace the laptop, just as the laptop had largely replaced the desktop computer. For Microsoft, that spelled trouble: Office and Windows have long been two of the company’s most lucrative products. While PCs running Windows still dominate the laptop market, Apple’s iOS leads the tablet market. To say that Microsoft is a distant third is an understatement.
One of the best ways for Microsoft to get its software on tablets would be to make its own. Thus, Surface.
To date, Surface hasn’t been a success. Microsoft has lost more than $1.2 billion on its tablet business so far, prompting analysts to call it a “money pit.” Even with sales doubling year-over-year in the fourth quarter, Surface tablets make up less than 10% of the market, according to industry tracker IDC.
Today, amid the fluffy talk of dreams and empowerment, Microsoft showed it has at least listened to past criticisms of the Surface.
The flimsy attachable keyboard made it hard to work on your lap? Microsoft added an extra magnetic attachment to make it more secure.
The upright “kickstand” angle made the tablet hard to draw on? Microsoft made it fully flexible. (The crowd applauded at this feature.)
The keyboard’s track-pad performed badly? Microsoft reduced the friction on it.
The small 10.6-inch screen made it too small to get real work done? Microsoft expanded the Surface screen to 12 inches, without adding any weight. Microsoft also reduced the device’s thickness from 10.6 millimeters to 9.1 millimeters without making it weaker, and demonstrated the feat by dropping a device on a carpeted floor.
And so on. Panay walked the crowd through an hour’s worth of feature demonstrations, showing off the Surface’s versatile click-pen, automatic cloud synching, and side-by-side computing abilities.
With the Surface Pro 3, Microsoft is saying that it is no longer scared of tablets killing laptops. (The market incentives are certainly helping.) In fact, it wants to fire the first shot, and Panay closed the event by proudly declaring that the Surface Pro 3 will be the tablet that will replace the laptop. (It goes on sale tomorrow with a $799 price tag.)
His premise is flawed, of course. The laptop doesn’t need replacing, at least not yet. Today, the laptop remains a “need-to-have” product; the tablet is a “nice-to-have” product. Analysts are even predicting a peak in tablet sales — last quarter, unit sales of iPads actually declined.
But Panay clearly wants the Surface Pro 3 to change that. In saying so, he inadvertently made the best argument against the dominance of tablets himself: 96% of iPad owners also own a laptop, he noted. “You’ve been told to buy a tablet, but you know you need a laptop,” he said. By declaring war on the laptop, Microsoft is fighting an enemy that might not be there.