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Microsoft turns to Dell to push the Surface Pro into enterprise

Gregg Keizer | Sept. 10, 2015
'Selling devices is harder than it looks,' says analyst of deal that leans on Dell's enterprise sales and support.

surface pro 3 running windows10
A Surface Pro 3 running Windows 10. Credit: Blair Hanley Frank/IDG News Service

Microsoft last Wednesday announced a partnership with Dell that will let the latter sell the Surface Pro tablet-slash-notebook, a recognition that the device needs more support and service than Microsoft can provide to break into the enterprise market, analysts argued.

"This is an acknowledgement that they haven't really gotten past consumer and small business," said Tom Mainelli of IDC, referring to Microsoft and the rationale for striking the deal with Dell. It was also strongly reminiscent of the Apple/IBM partnership of a year ago, Mainelli agreed, with Apple, like Microsoft, needing a partner to push into the commercial business.

Under the arrangement, Dell will start selling Surface Pro tablets and accessories in North America next month through its enterprise sales force, and later in the year, online. In early 2016, Dell will expand sales into the 28 other Surface markets globally.

Most importantly, Dell will sell not only the hardware -- something Microsoft has been doing since 2012, and selected resellers have done since 2013 -- but also its usual gamut of support services, ranging from hardware warranties and enterprise-grade support to configuration and deployment services.

Dell will continue to sell its existing lines of Windows-based tablets and 2-in-1 devices that compete with the Surface Pro.

Most analysts dismissed the idea that the deal signals a further reduction in Microsoft's device strategy priorities. "This is really indicative of a distribution play," said Patrick Moorhead, principal analyst at Moor Insights & Strategy. "This shows that the enterprise is really, really important to Microsoft, which is a big shift from where they started with the Surface Pro. It says, 'We're all in on enterprise devices.'"

"To date, there's been a fair amount of tire-kicking," added Mainelli of enterprise interest in Surface Pro. To really push the device into corporate -- although Microsoft has trumpeted some large-sized sales deals, much of the interest in the Surface has come from individuals -- Microsoft needed more than its sales and support infrastructure could provide to enterprise hardware buyers.

"Microsoft realized that selling devices is harder than it looks," said Al Gillen, like Mainelli an IDC analyst. "They can't do it alone. But it may [also] be part of a reduced device strategy."

Two months ago, after taking a massive $7.6 billion write-down on its acquisition of Nokia's handset business -- and an accompanying licensing deal -- Microsoft recast its branded devices strategy, saying that it would pare its smartphone portfolio. At the time, analysts interpreted that change as a step toward an inevitable exit from that market, but not the tablet space.


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