Microsoft launches Surface enterprise assault with cautious approach

By Gabey Goh October 2, 2013

Six authorised resellers announced for Surface device family in Malaysia
Microsoft embarking on measured, cautious approach to commercial expansion

JUST over three months after the official Malaysian entry of Microsoft’s Surface line of devices in June, the company has launched its commercial expansion phase with six new authorised resellers.

Part of what the technology giant described as a “measured and phased” approach to supporting the growth of its Surface business in the country, the announcement of the newly designated group of authorised device reseller follows the addition of Malaysia to the list of 29 markets now that have opened up commercial channels.

Microsoft launches Surface enterprise assault with cautious approach At the official announcement on Tuesday (Oct 1), Azizah Ali (pic), Microsoft Malaysia’s director of Small and Medium Solutions and Partners, said the new partners are already able to conduct transactions, while Microsoft would work closely with them to help scale their sales and marketing capabilities in the coming months.

The six authorised resellers are: Alphamatic Systems Sdn Bhd; CTC Global Sdn Bhd; Felda Prodata Systems Sdn Bhd; Jardine OneSolution Sdn Bhd; Night Electronics (M) Sdn Bhd and Sistem RKK Sdn Bhd.

They will offer Microsoft’s extended warranty and accidental damage; as well as a variety of value-added services to the Surface family such as asset tagging, custom imaging, kitting onsite service and support, device recycling and data protection.

“The addition of these authorised resellers greatly expands the reach of the Microsoft devices and services strategy, extending [our] family of devices enabled by cloud services to more organisations,” said Azizah.

“This is very much in line with what we’ve been striving to do since the launch of Surface, to provide avenues for businesses to harness the power of Surface.

"Today, Malaysian businesses will have more commercial options in terms of purchasing Surface, allowing them to concentrate on what matters most -- building their business,” she added.

A cautious front for Surface

The expansion of commercial channels in Malaysia for Surface products follows the recent launch of Microsoft’s next generation offering, the Surface 2 and Surface Pro 2, on Sept 23.

This came after the company took a US$900-million write-down on its new devices, admitting that it had overestimated demand, and made Surface RT inventory adjustments. Initial reports from analysts and technology media since the launch have been relatively positive, with Forbes contributor Dave Altavilla calling it a “competitive offering.”

Most notably, Delta Airlines announced plans to equip its 11,000 pilots with the Surface 2 tablets running Windows RT 8.1, despite reports that the pilots themselves were against the shift away from using iPads.

Microsoft launches Surface enterprise assault with cautious approach Responding to queries from Digital News Asia (DNA), Clement Teo (pic), Asia Pacific senior analyst at Forrester, noted that the new devices provide an option for enterprises and SMEs (small and medium enterprises) to “ditch their Ultrabooks/ MacBook Airs and use a Microsoft-enable device.”

“The key challenge for Microsoft is in getting past the iPads/ Android tablets/ Ultrabooks/ Macbook Air brigade, which is a sizable figure compared to the Surface,” he said.

However Teo said that on the positive side, the new Surface devices offer better performance, battery life, kickstand and displays; while its range of new accessories — such as the dock, battery and backlit keyboard covers, and more — is proof of an expanding hardware ecosystem which could be enticing to users.

“In addition, the Surface Remix, a musical controller that magnetically clicks in like the TouchCover, is a very creative and novel addition to the possibilities of mobile devices,” he added.

When asked for his thoughts on adoption rates, Teo said that the research firm does not expect the uptake to be huge in terms of the bring-your-own-device (BYOD) trend, where individual consumers bring their personal devices to their workplace.

“However, should there be a corporate purchasing programme or policy in place for Surface, that could change the adoption rates for Microsoft in Malaysia,” he said.

When asked what would be the value proposition to prospective corporate clients for adopting the first-generation tablets if they knew that newer hardware would soon be making its way to local shelves, Azizah claimed that the decision to expand Microsoft's commercial channels stemmed from market feedback and expressions of interest.

“We have received many queries by companies interested in procuring Surface tablets for their workforce. In quite a few cases, companies could not afford to wait for the latest, and we wanted to better support these customers after [their] purchase,” she said.

Forrester’s Teo noted that businesses would probably opt to get the upgraded versions if they hadn't bought the first version, but said it would still depend on their overall computing strategy and whom the Surface will go to, whether C-level executives or field staff.

Azizah said that the establishment of these commercial channels was not solely for the current Surface models, but rather an investment into building up an ecosystem of channels and partners geared toward supporting and servicing the needs of enterprises in the months and years to come.

“This is the first time Microsoft is going into the devices business; we’re already in the hardware business with our accessories and XBox [game console], but we’re now going the mainstream in terms of devices. We are taking a phased, cautious and thoughtful approach with the commercial extension of our business,” she said.

Increasing Surface exposure

Azizah said Microsoft would observe initial demand and uptake before expanding beyond these six partners, but added that the company is confident about market demand.

She declined to share specific figures or data points to illustrate this interest or the state of consumer-side adoption of Surface products, but said that with the Surface family of devices, the company is going back to the fundamentals of the Windows proposition.

“The key value proposition lies in security, which is a top priority for many organisations. How do I empower my users without sacrificing organisational security? With the Surface, organisations no longer need to sacrifice anything. You get the ease of use and user experience with the emphasis on data protection and enterprise corporate security. That’s the balance in what we’re offering,” she said.

When asked what bundled offerings Microsoft has in store for interested organisations, Azizah said that there was no special promotion or bundling of hardware and software solutions, pointing to existing offers the company already has with Office 365 (its cloud-based productivity suite) and Azure (its platform as a service offering) among others.

However, she added that Microsoft's partners would be working closely with coporate clients to support deployment and to cater to their needs.

Findings from Forrester also appear to back up claims of rising market demand, with the research firm’s Foresights Workforce Employee Survey Q4 2012 noting that the trend of users switching to Windows 8 tablets from their current non-Microsoft tablets in their next purchase has risen from a negligible 0% to 20%.

However, Microsoft’s biggest value proposition is not so much its hardware portfolio, but rather the suite of software and cloud-based services that it can offer to enterprises.

Forrester's Teo noted that Microsoft’s real strength is the breadth and capacity of the online ecosystem for consumers and enterprises that it has built with the Microsoft account, SkyDrive, Office 365, and Azure.

“This online platform is the foundation for serving the growing ‘digital self’ that online individuals are building,” he said.

Teo also said that the success of Microsoft’s hardware should also be measured within the context of the uptake of Windows 8.1, the update to Windows 8, and especially the downloads and sales of apps via the Windows Store.

“We would probably have to wait till the third quarter of 2014 to see results in Surface adoption as the market absorbs the significant improvements in Windows 8.1,” he added.