Microsoft Corporation Likely to Introduce This Key Feature to the Surface Pro 4

By Markets Fool.com

In the comments section of a recently published article on Fool.com, Foolish reader, tonyseuck, offered the following sentiment with respect to Microsoft and its next Surface Pro device:

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Finally, I REALLY hope that the next generation includes native LTE support as this is the feature I hear about most in our office.

That is an interesting point. PC-chip goliath Intel has been very bullish on cellular data connectivity as a key element of the PC platform in the long run, predicting that 15% of PCs will feature cellular data connections by 2018.

To that end, I would be very surprised if the Surface Pro 4 is released without LTE capability.

Digging a bit deeper
Microsoft launched a variant of its Windows RT-based Surface 2 tablet with LTE capability, though it has yet to launch an LTE-capable version of its higher-end Surface Pro tablets, even as other mainstream tablets, such as the iPad, have come in LTE-capable configurations.

Some of the issues associated with cellular-enabled tablets and PCs are the following:

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  • The cost of the components required to enable cellular capability is non-trivial, which means prices of the devices would need to go up
  • By including cellular capability, Microsoft would need to pay royalty fees to Qualcomm, leading to an even bigger price increase
  • These two factors would make cellular-capable Surface Pro models even more expensive than the already premium-priced WiFi-only models

That said, given that the Surface Pro 3 is reportedly faring far better than prior Surface tablets in the marketplace, even with their high-end PC-like price points, the increased costs may not be such a big deal to a sizable portion of Surface Pro buyers. It may be worth it to Microsoft to build a separate LTE-capable model at this point.

Intel would probably be willing to sell LTE modems to Microsoft on the cheap -- plenty of other options, too
When Microsoft introduced the Surface Pro 2, Intel -- which supplies Microsoft with the main processor for the Surface Pro products -- had just gotten its first LTE modem out: the XMM 7160. Since then though, Intel has launched the XMM 7260 and is on track to launch the XMM 7360 later this year.

It may not have made sense in earlier Surface Pro designs for Microsoft to go with a "new" LTE platform from Intel -- although options from other vendorssuch asQualcommwere certainly viable.

I'd imagine that by now, the 7160 -- which is quite a mature platform -- would be well suited for the task of powering a next-generation LTE-capable Surface. It's not only a proven solution, but it's also probably quite inexpensive at this point. From what I can tell, phones are more suited to bleeding-edge cellular modems than tablets are.

Furthermore, Microsoft now benefits from what is now a relatively robust competitive environment for LTE modems. Intel, Qualcomm, and several others all seem to have viable solutions, which could mean the cost of adopting LTE in a 2015 Surface Pro is far cheaper than it would have cost in late 2013 or mid-2014, when prior models launched.

An LTE Surface Pro 4 could lead the way
Perhaps the most exciting part of having an LTE-capable Surface Pro 4 potentially coming to market is that competitors in the PC and convertible space would probably roll out LTE-capable versions of their own products in response. This action could strengthen the value proposition of portable Windows systems as a whole, particularly convertibles, and it would drive revenue growth for chip vendors exposed to this proliferation of cellular modems into tablets and PCs.

The article Microsoft Corporation Likely to Introduce This Key Feature to the Surface Pro 4 originally appeared on Fool.com.

Ashraf Eassa owns shares of Intel and Qualcomm. The Motley Fool recommends Intel and owns shares of Intel, Microsoft, and Qualcomm. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.