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Microsoft (MSFT) Rolls Out New Surface Products: Key Takeaways

Zacks Equity Research
·4-min read

Microsoft MSFT recently unveiled a new range of Surface devices, including the new Surface tablet and laptop, along with some other updates to Windows 11, new AI platforms for creativity, and an Audio Dock that doubles as a USB-C hub.

Microsoft introduced two versions of the Surface Pro 9, one with 12th Gen Intel Core processors. The Intel-powered Surface Pro 9 comes with two USB-C ports with support for Thunderbolt 4. The other one, based on Microsoft’s SQ3 processor, has been designed in partnership with Qualcomm QCOM and brings 5G connectivity to the device. The Qualcomm version of the Surface Pro 9 comes with a 512GB SSD, whereas the Wi-Fi version comes with a 1TB SSD.

Microsoft launched the Surface Laptop 5, which provides an all-day battery life, powered by the 12th Gen Intel Core processor series. Available in 13.5 or 15-inch options, the smaller version is available in i5 or i7 variants but the 15-inch version is locked to i7.  Both models are available in 8GB, 16GB or 32GB RAM and up to 1TB of storage.

Surface Studio 2+ is an all-in-one PC that can easily handle heavy workloads and is designed for those who need raw processing power and for professional artists. Powered by the 11th Gen Intel Core i7 processor and backed by NVIDIA GeForce RTX 3060 laptop version, the AIO comes with 32GB of RAM and 1TB of storage. The Surface Studio 2+ comes with three USB-C ports with thunderbolt support, two USB-A ports, one 3.5mm audio jack and a gigabit ethernet port.

Apart from the Surface devices, Microsoft introduced adaptive accessories like a customizable mouse, an adaptive hub that either connects wirelessly or via USB-C and a joystick button among many more. Microsoft also announced a new app named Designer. It is a tool for graphic designers powered by AI.

Microsoft Corporation Price and Consensus

Microsoft Corporation Price and Consensus
Microsoft Corporation Price and Consensus

Microsoft Corporation price-consensus-chart | Microsoft Corporation Quote

Improved Features in Surface Devices to Boost Competitive Position

Intensifying competition from lower-priced products developed by Samsung, Huawei, Lenovo LNVGY and expensive ones made by  Apple AAPL will continue to impact market share, which is a major concern going forward. In the smartphone space, Surface Duo 2 faces tough competition from the likes of Samsung and LG.

Walmart is currently selling a Lenovo convertible laptop for $279 with $260 off the MSRP. The device has a Core i3 processor and 128GB of storage.

Apple is benefiting from the growing demand for the all-new Mac Studio, which is a high-performance desktop system with a reimagined compact design consuming up to 1,000 kilowatt-hours less energy than that of a high-end PC desktop over the course of 12 months. The newly released desktop helps clients render massive 3D environments and playback 18 streams of ProRes video with the M1 Ultra chip. It remains quiet even under the heaviest workloads.

Mac Studio features unified memory of up to 64 GB on M1 Max systems and up to 128 GB on M1 Ultra systems.

The upcoming holiday season as well as the continuation of work-from-home and online-learning trends may benefit Microsoft’s new Surface lineup and boost revenues from the Surface hardware business.

In fourth-quarter fiscal 2022, Surface revenues were up 10% (up 15% at cc) year over year, driven by commercial sales. We also note that Microsoft has lost 32.8% of its share price year to date compared with the Zacks Computer & Technology Sector’s decline of 37.8%.

We expect the rejuvenation of the Surface product line along with an improving Office 365 subscriber base and strong growth prospect for Azure to help this Zacks Rank #3 (Hold) company maintain its upside in the rest of 2022. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


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