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Does Microsoft’s Surface really challenge Apple?

By Aldo Panessidi

The opinions are flying around the internet about how Microsoft’s Surface stacks up against the Apple iPad 3. Some of the loudest Microsoft critics are insisting that Surface is just an iPad imitation, and not the tablet with the heart of a PC Microsoft that proclaimed it to be just hours ago.

Does Microsoft’s Surface really challenge Apple?

According to Topeka Capital Markets analyst Brian White in a note to investors on Tuesday, Microsoft’s debut tablet amounts to an iPad clone. He said, “Last night, Microsoft announced Surface, a ‘new family of PCs for Windows’ that are tablets with some of the functionality of a PC. If imitation is the sincerest form of flattery, the compliments from Microsoft poured down like a torrential storm on Apple last night. At the same time, this event indicates to us that Microsoft is still searching for its own identity in the post-PC era, something that has come naturally for Apple with the rise of the mobile Internet.”

White said there are enterprise niches that the new Microsoft tablets can fill, but he doesn’t see Surface appealing to the masses. “On the surface, we believe Microsoft’s tablet-related products may have a place in certain parts of the enterprise world that require Windows-based solutions; however, we found little in yesterday’s presentation that would convince us that a consumer would prefer Surface over an iPad.”

Just competing on price with the iPad is going to be a challenge for Surface. White said Surface will have to come in at a price point that offers a “healthy discount” compared to Apple’s tablets.  He doesn’t see how Microsoft can beat the iPad 2′s $399 price or even the new iPad’s $499. Then there’s the iPad “mini” that’s due to arrive later this year with a price point of somewhere between $250 and $300. As White put it, “that will provide a more cost competitive product for Apple and [open] up a new market segment.”

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