Instead of spending hundreds of millions of dollars on
marketing, one analyst believes that Microsoft (NASDAQ:
) should give away its new tablet. "One hundred million to two
hundred million dollars [worth of these] devices should be given
away for free," Trip Chowdhry, the Managing Director of Equity
Research at Global Equities Research, told Benzinga. "[Give them]
to developers, educators, business users, CEOs, for whatever
Chowdhry also suggested that Microsoft could initially offer
the tablet as a freebie to those who purchased a brand-new
While this might sound a bit unorthodox, Chowdhry argues that
if Microsoft takes the normal route and spends hundreds of
millions of dollars on marketing but offers no free tablets, the
product will be, as Chowdhry puts it, "Dead on departure."
"People switch from some other devices when the new one is 10
times better than what they're using," Chowdhry explained. "What
I've seen so far, I don't find anything that compelling. It's a
good thing they're doing for Windows 8. It's good for the
ecosystem. But I think the most prudent thing for Microsoft to do
is not repeat the same mistakes that HP made."
Chowdhry is referring to the
$100 million loss
that Hewlett-Packard (NYSE:
) incurred when it was forced to pay for
Chowdhry thinks that HP would have been smarter to give out
$100 million worth of free TouchPads
the product flopped.
"Microsoft has got the pricing wrong," said Chowdhry, who
$700 to $800 price point for Surface
. But he believes that if Microsoft can get people to use the
device today and worry about sales later, the company could
capture 5% to 10% of the tablet market.
"The problem Microsoft has is that people just run away from
their products," Chowdhry warned. "There is a mental block that
Microsoft has created because of its past actions."
That mental block was largely eliminated with the Xbox 360, a
game console that slowly transformed into a multimedia
Still, Chowdhry believes that people are "hesitant to try"
Microsoft products. "They don't think the products are stable,"
he said. "They don't think they are innovative. They think they
are difficult to use."
But based on what was shown yesterday, Chowdhry does not
believe that Surface will be difficult to use.
There are, however, other hurdles for the Windows maker to
overcome: security issues.
"Security is not a product; it is a policy," said Chowdhry. He
said that consumers don't live in homes with iron doors, barbed
wire, bullet-proof windows, and 10 guard dogs. But security
(anti-virus) companies have given us the impression that we need
to guard our Windows PCs at all times.
"Microsoft let all these security companies….create an image
that Microsoft products are bad," said Chowdhry.
Still, Chowdhry believes that Surface's success could all come
down to marketing.
"The way the company sees a product and the way the customer
sees a product are usually….very different," Chowdhry concluded.
"Let the market define how it wants to use it. That was Apple's
) genius [with the iPad]."
(c) 2012 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.