Can Microsoft’s Surface Pro 3 tablet challenge Apple’s products?

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Can Microsoft's Surface Pro 3 tablet challenge Apple's products? (Part 2 of 5)

(Continued from Part 1)

Microsoft claims that the Surface Pro 3 can replace the MacBook Air as the preferred premium laptop

In the previous part of this series, we discussed the history of Microsoft’s (MSFT) tablets and whether the latest version, the Surface Pro 3, can be a success. During the launch event of the Surface Pro 3, Microsoft claimed that the Surface Pro 3 can replace both the iPad Air and MacBook Air so consumers need not carry two devices. Although the Surface Pro 3 has some appealing qualities compared to the MacBook Air, such as a lighter weight and cheaper price, it will be hard for Microsoft to take Apple’s (AAPL) supremacy in the premium laptop market. The iShares U.S. Technology ETF (IYW) and Technology SPDR (XLK) are some of the ETFs that have decent exposure to Microsoft.

Apple continues to dominate the premium computer market

As the chart above shows, Apple’s Mac sales have increased at a rate of 19% and 5%, respectively, in the last two quarters, whereas the overall PC market continues to decline. According to Gartner, the global PC market—currently led by Lenovo (LNVGY)—has declined from 341 million in 2012 to 299 million in 2013 and could continue to decline to 268 million by 2015. Plus, Apple dominates the premium laptop market, as according to a report from NPD, Apple has a 91% share in the $1,000+ computer market.

On paper, the Surface Pro 3 has some more appealing qualities compared to the MacBook Air. For example, the Surface Pro 3 was launched with a starting price of $799, against a $999 starting price for the MacBook Air. Also, the Surface Pro 3 weighs 1.76 pounds, which is lighter than MacBook Air’s 2.96 pounds. However, it will require much more effort for Microsoft to replace the MacBook Air with its Surface Pro 3 due to the stickiness associated with Apple’s products.

Continue to Part 3

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