Surface Pro 3 fits into big-tablet market shift, analysts say

The launch of a larger Surface Pro may happen at a good time, as device makers see growth for traditional tablets plummet.

Surface Pro 3 has a large screen like a laptop and can be configured like one. Sarah Tew/CNET

Microsoft's Surface Pro 3, a larger device than its predecessor aimed at eliminating the Microsoft sees between the tablet and laptop, may be well-timed as device makers seek new markets.

For the first time, monthly tablet display shipments have shown a year-over-year decline to 24.2 million in April, down 4 percent from 25.3 million in the same period a year ago, NPD DisplaySearch said Wednesday.

There are a lot of reasons for this -- including incursion from large-screen phones and a slowdown in replacement purchases. But one thing is clear: The tablet market isn't seeing the through-the-roof growth rates of the past.

So, just as tablet makers went small a couple of years ago to sustain market momentum, now they're going big.

"It may be time for the whole chain to think about how to reverse the current mindset and to keep [the tablet] on the main stage of personal computing," David Hsieh, vice president, Greater China Market for NPD DisplaySearch, wrote in a research note.

"Moving to larger sizes and into the traditional notebook PC zone is the main strategy," he said, citing Microsoft's 12-inch Surface Pro 3 and Samsung's 12.2-inch Galaxy Note Pro as examples. That compares with the Surface Pro 2, which sports a 10.6-inch display.

And if products like the larger Surface Pro 3 are successful, "maybe another way to think about this might be to define the notebook as the tablet PC with keyboard," he wrote.

Other analysts chimed in today with similar sentiments.

Morgan Stanley's Keith Weiss wrote in a research note that the Pro 3 will be viewed as an alternative laptop solution for large corporations.

"Surface Pro 3 has the specs and the features that could help Microsoft make better inroads in the ultrabook market, particularly within the [corporate] enterprise," he wrote.

That said, Microsoft still has a ways to go to make a big dent in overall market share.

"Since the release of Surface 2 in Oct. 2013, Surface revenue has picked up steam, growing to ~$1,387 [million] in the most recent December and March quarters versus $853M recognized for Surface in all of FY13. However, this equates to only ~5 [million] Surface units sold to date, versus ~350 [million] tablets sold worldwide in the same period," Weiss wrote.

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