Panos Panay, the corporate vice president in charge of Microsoft’s Surface tablet business, made a brief appearance this morning at the company’s U.S. Public Sector CIO Summit in Redmond, running through the basics of the devices and dropping a hint about where the Surface is headed next.

surfaceproHe began by telling the audience that Microsoft is aiming to broaden the market for the Surface well beyond consumers to large companies and governmental agencies.

“Granted, for your organizations … it wasn’t our primary target at launch, but please understand that when we designed these products, we designed them with you in mind,” Panay said. “We did design them to get the consumer market first, or retail. No doubt. But we’re right on the cusp of turning that corner and bringing these products into the market where we really want to be.”

Microsoft recently began offering Surface RT and Pro through its volume ordering program for enterprise customers, as detailed by ZDNet’s Mary Jo Foley. However, the company hasn’t yet allowed its large network of partners to buy the devices at a discount for resale, among other steps needed to ensure wider distribution.

Panay didn’t take questions from the audience or address reports of lackluster Surface sales. But he did address criticism of the Surface Pro, the version that runs full Windows 8 and uses Intel chips, starting at $899 with half the battery life of the ARM-based Surface RT.

“Surface RT was designed as a tablet first,” he said. “I want to be super-clear on what we designed Pro for. Very easy to understand. This should be the fastest PC you pick up. Period. People get confused because of the form factor. … It was designed as a PC. We often get judged as designing a heavier tablet and not enough battery life. Be very clear: What we designed was a PC.”

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  • Mike E. Delta

    Surface RT is a great Windows Tablet (as in, an actual tablet) it just needs more apps and development…

  • Aar Zand

    Windows 8 tablet market share will surpass Android tablets very soon according to the IDC’s estimate. The IDC’s market share estimate is based on number of units. Windows 8 tablets are more expensive now, so it will sell fewer for now. But low cost models will come out soon. On the other hand, Android is going after the lower and lower end market at cheaper and cheaper prices.

    In terms of market share based on revenue, Microsoft’s Surface is selling at $999, or $1140 plus the touch cover, that’s about 5 times of 7″ Android tablets. Revenue-wise, Microsoft only needs 1/5 of Android’s market share to beat all Android manufacturers combined. Moreover, Surface has a gross margin of 45%, vs. cheap Android devices at less than 20% of gross margin, in terms of gross profit, Microsoft makes 11 times more profit selling one Surface Pro than Android vendors selling one Android tablet!

    And price-wise, Dell, Asus, HP and Lenovo are offering lower end Win 8 tablets at about $399 to $499, which is very competitive to iPad and 10″ Android tablets. Lastly, don’t forget that Microsoft receives $5-$10 of royalty for each Androud device sold.

    • Guest

      If this is the kind of math that Microsoft uses to rationalize their strategy, they are in bigger trouble than I thought. The amount of sold Surface tablets to date is nowhere near any profit at all, it doesn’t even remotely cover the $1.5 billion in advertising. But whatever makes you happy I guess.

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