Microsoft – On the job.

Toys for workers. 

• Microsoft has given its Surface line-up a badly needed refresh and is having a go at Bose and Sony with the launch of Surface Headphones.
• Of the much-anticipated phone sized Windows 10 folding device (Andromeda), there was no sign but the indications are that Microsoft has not killed this project.
• The new launches were:
  • First, Surface Pro 6: which featured a series of incremental upgrades as well as a new black colour scheme in addition to the trademark grey.
  • The processor is now Intel 8^th generation with the screen getting a little bit brighter and a few other tweaks.
  • The main impact of the upgrade is better battery life and I hope better wireless connectivity.
  • Wifi and Bluetooth stability have always been a weak spot for these devices and it would be good to see Microsoft put this issue to bed.
  • Second, Surface Studio 2: which is an incremental upgrade to the previous product with better graphics performance and the first-time addition of USBC.
  • This is a product that has no real competitor in the market and hence this update is more about bringing the device into the current generation rather than enabling a new use case.
  • Third, Surface Laptop 2: adds 8^th generation Intel as well as a new black colour like the Surface Pro 6.
  • The main selling point here again remains better performance and better battery life.
  • Fourth, Surface Headphones: This was the one surprise from the event.
  • The headphones are priced at $350 meaning that they have some big promises to keep when trying to part users from their money.
  • This price point puts Microsoft up against the excellent Sony 100XM3 and Bose’s leading Quiet Comfort II series.
  • A lot of thought has gone into the controls which are intuitive, and the headphones are very comfortable to wear.
  • The downside of these headphones is Cortana which has been integrated into the headphones.
  • The issue is not that the unit has an assistant but that the assistant that it does have is second rate.
  • Cortana is a hangover from the Windows Phone days and feels like a hapless refugee on a PC where its functionality is poor at best and very irritating at worst.
  • Given Microsoft’s departure from the consumer, I can’t see why it cares about Cortana and so what it should have done was to allow the consumer to choose an assistant of his liking.
  • Consequently, if Google comes out with a set of headphones just as good but with Google Assistant built-in, Surface Headphones will be at an immediate disadvantage.
• Microsoft has done what it needed to bring its older devices up to date and the focus on productivity and office is clearer than ever.
• This further underlines how important Office has become to Microsoft and I still believe that it is by far Microsoft’s most valuable asset.
• With its steady transformation away from the consumer, Microsoft has continued to be a very solid performer with good earnings growth and cash flow.
• However, I think that the valuation is beginning to look a little stretched would consider taking some money off the table.