Microsoft just unveiled the largest Surface Pro 3 with 12" screen. By now, everybody knows that Microsoft's Surface was a flop, but why?
Contrary to popular belief that trashes Microsoft products, Surface is actually a solid product. It is more innovative than most other tablets in the marketplace. It indeed received many great reviews and built a lot of hype, yet, consumers just don't buy them. The Surface Pro 3 appears to be a great product (check out the review at: http://www.engadget.com/2014/05/20/microsoft-surface-pro-3-hands-on/), but unless Microsoft learn from the past lesson, it probably won't be too successful as well.
The biggest problem is trying to profit from touch / type cover. One of the best selling points of Surface is it can dual function as a tablet and a laptop, which requires a type / touch cover. The actual cost of touch / type cover is probably less than $25, charging users $129 is ridiculous. Without a keyboard, as a tablet, Surface cannot compete with iPad. So overcharging type / touch cover did not bring more profits to Microsoft, in fact, it almost killed Surface.
If Microsoft is willing to aggressively gain market share like what Amazon and Google did with Kindle and Nexus tablets, Microsoft should be able to sell a lot more tablets, but it has a risk of angering all OEM partners. So Microsoft needs to keep the margin high for OEMs to compete. However, a Surface without a type/touch cover is an incomplete product, the same is true for other Windows 8 tablets - unfortunately, PC OEMs copied Microsoft's mistake in this case!