The company on Monday unveiled its newest tablets that feature jacked-up components and nifty new dual-position kickstands. The Surface 2, which runs Windows RT, now will come with Outlook, while the Surface Pro 2, which runs Windows 8.1, will continue to operate like a full PC. Microsoft fixed nearly every hardware issue that buyers criticized in the first versions of the devices while sticking with the same essential design.
But it faces a big hurdle in getting consumers to look at its newest products differently from their predecessors. As much as Microsoft has tried to make Surface seem cool, it's still largely seen as a tablet for business users. The first Surface Pro ran work-related programs, but its battery drained faster than some laptops. Meanwhile, people who bought the RT version of Surface quickly found it couldn't access old programs, and it didn't even have some of the key consumer apps, such as Facebook.
Microsoft has fixed some of those issues with its new devices -- such as making Facebook available later this year -- but it will be tough to make those changes clear to buyers. Many already are confused about the differences between the full version of Windows versus RT, and that's not something that will become any less confusing with the newest Surface products.
"The trick is getting people to look at this thing fresh," said Rob Enderle, principal analyst at tech research firm Enderle Group. "If it carries the stigma of the old product, it's not going to sell any better now."
Sales of Microsoft's first Surface tablets -- the Pro with an Intel chip and RT with an Nvidia processor -- have been dismal since their launch nearly a year ago. Microsoft had to write down $900 million for Surface RT in July, and the software giant that same month revealed it had generated only $853 million in revenue from Surface RT and Surface Pro since their debut last fall.
Windows RT is the first version of the operating system that runs on low-power chips normally used for cell phones. Making Windows compatible with such processors was Microsoft's attempt to better address the mobile market, an area where it has traditionally struggled. Because the x86 processors from Intel and AMD found in Windows-powered laptops and PCs require more power, they haven't been suited to mobile devices. Windows RT, which runs on chips based on ARM Holdings technology, is a way around that.
However, Windows RT has some big drawbacks compared with Windows 8. Perhaps most important, it's not compatible with many older applications, including iTunes. But it also has some big benefits, like allowing thinner and lighter designs.
Overall, the first generation of Surface forced users to make tradeoffs. They could get a product that ran all of their old programs (Surface Pro) or one that had better battery life and didn't cost a fortune (Surface RT). It wasn't possible to get all of that in one device, which is what many people wanted.
"They've addressed a lot of the concerns of the first generation," Gartner analyst Carolina Milanesi said. "And they pushed the envelope in terms of specifications."
Along with product features, Microsoft is trying to avoid some of the first gen's other missteps. Rather than releasing Surface only in Microsoft stores and online, the company will sell the device through numerous retailers, including mini Windows shops inside places such as Best Buy. It will release the Pro and RT versions at the same time and will provide free services such as Skype and SkyDrive to lure users. Microsoft also will rejigger its advertising campaign, giving potential customers more details about what the products can do rather than featuring dancers swinging around their tablets.
"In general, we're focusing on explaining the difference a little bit more," Julie Larson-Green, executive vice-president of the devices and studios group at Microsoft and a potential heir to the Microsoft throne, told CNET at the Surface 2 launch Monday in New York. "There are two kinds of people -- the ones that don't want the complexity of a full PC and people who really need a full PC. We'll talk more in those two dimensions."
Much of that burden will fall to Tami Reller, Microsoft's executive vice president of marketing. The first Surface ads a year ago didn't really explain what Surface did or why anyone would want it. The advertising has since evolved to compare Surface to the iPad, but Microsoft needs to go even further, explaining Surface without boring viewers to death with spec details.
Reller told CNET that Microsoft is working to educate retailers about its products, something she believes will help boost sales. And it's also working to tell a consistent story about Surface through its marketing.
"We feel great about the product," she said. "Letting the product truth come through in the advertising more is critical, the fact that you can use Office and that the performance is amazing."
That's fine. But it will take more than a fresh ad campaign to fix this image problem.
Here's an early Surface ad, in case you missed it the first time around: