With the 7-inch Market Continuing to Grow, is Microsoft Missing Out Here?

While the Microsoft Surface RT has far from been a total failure – given its limited retail position throughout most of Q4 2012 – it hasn’t exactly hit it off as a mainstream success for businesses or consumers either.

So what is it about the Surface RT that hasn’t flown off the shelf? Honestly, price and form factor are probably part of the reason. While I think that the Surface RT was needed, so was a counterpart, a Surface RT Mini.
The Case for the RT Mini
According to NPD DisplaySearch’s forecast, it is believed that 7 to 7.9-inch displays will account for 45 percent of tablet shipments this year. In contrast, NPD says 9.7-inchers will fall to 17 percent. Bottom-line is that Microsoft’s Surface and Microsoft’s hardware partners have all went after the 10-inch+ market (with 11-inch+ being quite common).

This made a lot of sense in 2010 or even 2011. Had the Surface RT existed back then in its current form, I suspect it would have seen a much stronger demand. The bottom-line is that the tablet market is changing.

Like the PC market in the late-80s and into the mid-90s, the tablet market started out as a premium space. Those with higher-incomes or simply those willing to drop big $$ on electronics were the main buyers of PCs during the old days, the same goes for tablets in 2010 until basically 2012.

These consumers didn’t mind paying a higher price, on the case of the tablet: the Apple tax. Now that more casual users are ditching the PC and moving to the tablet, there is an expectation that tablets are mainstream enough that they should be “dirt cheap”.
That’s where 7-inchers come in. They don’t cost as much, they fit easily in handbags, purses and backpacks. They are big enough to make media watching great, small enough for books. The 7-inch market is booming and Microsoft has dropped the ball here.

Surface RT or a Sub-$350 Tablet?

Apple held to the idea of bigger as better in the tablet space for quite a while, but even they have now given in. What’s happening as a result? There $330 iPad Mini is cannibalizing part of the sales on their more premium iPad line. Nevermind that it has a smaller screen, over considerably weaker parts.
What Apple is doing, as apparent by the release of an 128GB model of the iPad, is starting to change things up. I have a feeling Apple will start pushing its “bigger” iPad ahead as a productivity device, and start referring to the iPad Mini more and more as a consumption device.

This is what Microsoft is largely doing with the Surface RT and Surface PRO. The problem is that a $500 consumption device is a hard sell. Sure, it has Office so it is more like a “consumption plus” device, but its lack of hardcore business apps and x86 compatibility does hold it back a little.

The solution? If Microsoft would have had a Surface RT Mini around $250-$350, and priced the Surface RT and PRO as they are– they could have easily had their bases better covered.

It’s not too late. Microsoft could still unveil a Surface RT Mini sometime later this year and I suspect that it could do quite well. Add a few extra Xbox Live and Xbox 360/720 integration features and maybe even sell it at a slight loss around $200-$250 and it would likely fly off the shelf.

Such a size or price point isn’t unachievable. A 7-inch Surface RT Mini wouldn’t need “premium” parts. It could get by with 1-2GB of RAM and a dual-core Qualcomm processor, or even an old Tegra 2 chipset. The iPad Mini is using aging iPad 2 parts and selling like crazy.

The only downside to a 7-inch tablet is that desktop mode probably wouldn’t look or work great. Office would also be a pain-in-the-butt to use. Honestly though, if they dropped the desktop (or limited it) and sold it without Office, I’m not sure too many people would care, as long as it was cheap enough.

Here’s to hoping that Windows 8 Blue brings changes that optimize Windows 8/RT for smaller screens. I truly think that if Microsoft would make a move on the smaller-size/lower-cost market they could find success.

What do you think, is a 7-inch Surface a good idea or not? Share your thoughts below.

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