Is Apple feeling the heat from the Microsoft Surface Pro?

Slowly but surely, consumers are beginning to want more than the ability to surf the web, check e-mail, and play games on their tablet devices; and many who have become aware of the power, capability, and versatility of the Surface Windows 8 Pro, are opting to buy it, instead of the iPad.

Essentially a well-designed small form factor ultrabook, The Surface Windows 8 Pro has the portability and versatility of a tablet. Considering its capabilities, it’s a great product at a great price; and comparing it to the iPad is a stretch. But the reality is that consumers typically consider the iPad before they consider any other tablet; which might explain why Microsoft, leading up to its North American launch, went to great lengths to compare its Surface Pro tablet to Apple’s MacBook Air.

On Wednesday, less than two weeks after announcing a 128GB iPad “Maxi”, Apple announced that its 13-inch MacBook Air will now cost $1399 (instead of $1499) and that it will be configured with a 1.8GHz dual-core Intel Core i5 processor, 4GB of RAM and a 265GB flash hard drive. This represents a quick response from a company that has traditionally been teasingly slow to upgrade its products.

In contrast, the 128GB Surface Windows 8 Pro has a base price of $999, is powered by a 1.7GHz dual-core Intel Core i5 processor, and also comes with 4GB of RAM. However, adding either the touchcover or typecover keyboards will add $120 to $130 to its base price. That Apple has found it necessary to upgrade the MacBook Air at this point seems to validate Microsoft’s new Surface tablet as a legitimate challenger.

But though Microsoft may be gaining converts with the Surface Windows 8 Pro, Apple’s retail stores remain its primary advantage in regard to product sales. In October 2012 when Microsoft launched the Surface RT, consumers could only purchase it online or at one of the few Microsoft retail store locations that were available. That setup possibly crippled Surface RT sales, which, dependent upon the source, number somewhere between 600,000 and 1,000,000 units sold; which is nowhere near the sales figures Apple posted for the iPad. In December 2012, Microsoft began selling the Surface RT at Best Buy and Staples, which expanded its retail presence and gave consumers a better opportunity to interact with the device.

Apple CEO, Tim Cook, underlined the crucial role that physical retail space plays in selling high-tech products during his keynote speech at the Goldman Sachs Technology and Internet Conference on Tuesday when he said, “One of the things that’s not understood that well about the stores is that I don’t think we would have been nearly as successful in the iPad as an example if it weren’t for our stores”. He went on to explain that without being able to test drive an iPad and speak to Apple staff, potential customers would still believe that a tablet is “a heavy thing that no one wanted”.

Microsoft apparently agrees with Mr. Cook, and have announced that they plan to open five more locations in addition to the six new locations they previously said they planned to open in 2013.