Is Surface a Trojan Horse?

Joe Wilcox News Analysis. It is if more services providers or retailers than AT&T deploy the tabletop computer.

It's no coincidence that during CTIA Wireless 2008 Microsoft announced AT&T would deploy Surface Computing tabletops at stores in four cities. There's more going on than the wireless trade show. AT&T and Microsoft likely are prepping to sell a digital lifestyle, transcending multiple, overlapping products and services. If that's not the plan, then top AT&T and Microsoft executives should don makeup and take up new jobs as Bozo the Clown on local TV.

Surface is a huge retailing opportunity, perhaps bigger than Apple's company stores. I was there when Apple launched its first retail store, in McLean, Va., in May 2001. Gateway Country Stores were ailing, creating trepidation about Apple opening retail shops. From a marketing perspective, though, the stores made sense, because they touted a Mac lifestyle and increased consumer exposure to Apple's brand. Direct revenue prospects looked dismal then, but no one knew Windows XP would languish in the market for six years or that iPod would become one of the hottest consumer electronics devices ever.

Surface could be Microsoft's best marketing gimmick—pushing out the brand and benefits of Microsoft personal and professional digital lifestyles. The most successful companies, products and brands sell lifestyles. Microsoft should be no exception—and it's what the company has tried doing with its 2006-2008 products, but with limited success. Windows should be the lifestyle hub, but Vista hasn't delivered the goods.

But Windows Vista isn't Microsoft's only product, and there are increasing questions about the PC platform's longevity. Businesses and consumers crave smaller, more powerful computing devices. Earlier today, Intel announced its new Atom processors for MIDs (mobile Internet devices). The increasing power of cell phones and diminishing size of computing devices are further signs that the era of desktop computing is ending. The trees' leaves are changing colors, but they haven't yet fallen to the ground.

Every Surface tabletop should have a Microsoft label and "powered by Windows Vista" logo. Surface could be the one place where consumers have a good experience with Windows Vista. Microsoft should promote the brand wherever possible. But Surface can promote other products and services around a Microsoft lifestyle, such as Windows Live, Windows Mobile and even Zune. AT&T is a remarkably good partner for field testing and marketing the approach.

AT&T is uniquely suited to the task because it shares with Microsoft mutual connection to mobile and entertainment devices or services. For example, there is Windows Mobile; in my area, AT&T sells eight smartphones (including color variations) running the mobile operating system. AT&T also uses Microsoft's Mediaroom software for the U-Verse IPTV service.

In San Diego, AT&T offers packages for landline and wireless telephony, Internet access and television. Right now, Yahoo is the services provider partner for DSL and Internet content provider for TV. For example, consumers can watch Flickr slideshows over U-Verse. If Microsoft buys Yahoo, those services arrangements could go to MSN and Windows Live or continue under a Yahoo sub brand. Whichever way, Microsoft would likely extend its services relationship with AT&T.

In AT&T retail stores, Surface could be the place to bring together these products and services into a cohesive digital lifestyle approach. Presumably, AT&T's first deployments would be about selling phones. But there's no reason why Surface should stop short at sales.

For nearly a year, Microsoft has demoed Surface tabletop benefits around devices and content. Why not offer some of those benefits to users of Windows Mobile phones? Anything from music to recorded TV downloads. AT&T stores could be one digital hub for customers, generating additional in-shop traffic and promoting AT&T or Microsoft-branded services. Surface tabletops would deliver a level of service to anyone, but more to those using products or services powered by Microsoft software.

I call Surface a Trojan horse because the branding, marketing, product and services benefits are bigger than AT&T. First, there is basic brand and marketing benefits—getting Microsoft, Vista and even Live into stores where they otherwise wouldn't be. Microsoft could get some brand and marketing leverage in retail shops selling anything from skateboards to gourmet coffees.

Example: The airport Sheraton in San Diego is supposed to soon get a Surface tabletop for concierge services. From Surface, hotel guests could get local information and maps via Windows Live. Sheraton should do more. Make it easy to download the stuff to a Windows Mobile-powered phone. Suppose the hotel went further, by providing a conduit through which consumers could lay down their digital camera and upload pictures to Windows Live Spaces or SkyDrive using their Live ID.

There are huge benefits here, for which I see some irony. Typically, brands pay for retail market space. Here, retailers would pay Microsoft for a device that also would promote the company's products and services and a digital lifestyle around them.

Surface is a Trojan horse, unless Microsoft execs aren't clever enough to break the surface tension.

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