Microsoft Surface 3 To Come With Tegra K1 Processor

As it happens with almost all devices, a newer and better next-gen device replaces the old one, and the same thing is going to happen with Microsoft Corporation. A popular Microsoft news leaker on Twitter has indicated that Microsoft will be releasing the Surface 3 tablet during late Q3 or early Q4 2014. However, the exciting news is that Surface 3 will be featuring the newly-announced Tegra K1 processor from NVIDIA. For those who don’t know, this is NVIDIA’s recently announced SoC, built on a 64-bit platform and featuring a Kepler GPU with no less than 192 cores.


As per early benchmarks, Tegra K1 SoC is faster than the Qualcomm’s Snapdragon 800 and Apple’s A7, which in a sense makes it the best performing mobile processor in the market. This third-generation Surface tablet will feature full Windows 8.1, while lower-end Windows RT version is unconfirmed at this time.

Twitter user MSFTNerd also revealed that Microsoft Corporation (NASDAQ:MSFT) is indeed working on new Surface Mini tablets which will compete with such 7 and 8-inch Android tablets and iPad Mini. The Redmond company surely won’t want to miss the small tablet market, as the mini version works great for many. In fact, 7-8 inch tablets have become popular because of their small size and portability that 10-inch tablets can’t offer. This new Surface Mini is expected to offer Full HD 8-inch screen, 4G LTE connectivity and motion sensor. The source reveals that 2014 will be the year of mini tablets and LTE.

Overall, it seems that 2014 is going to be a year of Windows 8.1 for tablets, NVIDIA Tegra K1 and Surface Mini. Amidst all these, how can we forget that Microsoft Corporation is going to hire a new CEO this year? Indeed, this will be a busy year for the Redmond-based company.

Microsoft OS May Become Free

As Microsoft Corporation prepares to release Windows 9, which goes by the code name “Threshold,” and the software firm tries to move past Windows 8, an interesting question is swirling: will the Seattle, WA based giant give away its operating system?  Windows and Office are two of the firm’s cash cows, providing a revenue annuity that is the foundation of the firm’s earnings, which could impact overall earnings.

In a research note dated January 10, JPMorgan’s John DiFucci noted additional challenges to the core operating system.  “We believe that for Microsoft Corporation, despite being attractive from a valuation perspective, the core businesses of Windows and Office—from which the company derives about 80% of total profits—remain vulnerable to cannibalization from tablets,” the note said.  JPMorgan maintained a $30 price target.  The stock is trading just above the $35 level on Monday.  “We anticipate that this trend could accelerate in the coming years as Android tablets and Apple Inc, iPad gain even wider adoption,” the report said. “Meanwhile, Microsoft’s own tablet offerings based on Windows 8 have been met with limited success to date.

On the plus side, DiFucci noted that recent anti-piracy efforts, if successful, could improve performance, particularly as a larger piece overall PC market, Microsoft Corporation  growth is expected to come from emerging markets.  This is a double edged sword, the research note points out, as “the higher levels of piracy, if not successfully countered, could imply lower client growth than that exhibited by the overall PC market.”

While JPMorgan noted that Microsoft Corporation Xbox franchise continued its market leadership, revenue contribution from this business line “remains inconsequential.” The research note sounded what is a familiar theme of competitive threats from open source software and software as a service business models, specifically mentioning free open source operating Linux and Google.

Brad Reback, an analyst at Stifel Nicolaus, noted that “Microsoft is the only vendor that explicitly charges for the OS software. We believe this could prove untenable in coming years, forcing Microsoft to give away the OS and attempt to monetize Windows usage/support via various methods depending on the end-customer. We believe this is the single biggest challenge Microsoft’s new CEO will face in coming years.”  Talk of giving away the operating system centers on the consumer markets, as the expectation is that enterprise customers will continue to pay for the operating system.

It should also be noted that:

• Apple Inc doesn’t charge for its Mac OS anymore.
• Google Chromebooks have become more popular.
• PC makers are now adding Android desktop systems because they can customize and probably get better margins.
• Price will be king in the PC market and Android and Chromebooks could be counterweight to Microsoft.
• Mobile operating systems are driving computing.
• Windows 8 was a black eye for Microsoft and it’s going to be a challenge to come back from a Vista-ish flop twice.
• The PC market is being splintered into multiple operating systems.

Chromebooks have become more popular and functional, Android is emerging as a PC option. Both of Google Inc, computing operating systems are free to hardware makers. Microsoft can pitch Windows as a premium OS, but the margins will be increasingly difficult to defend. The move for Microsoft Corporation will be to off Windows free to hardware makers and profit from the ecosystem—subscriptions, apps and other revenue streams. Here’s the problem: Windows is a huge business. Microsoft will have to preserve and navigate a move to free with precision timing.