Microsoft declares war on the iPad

With good enough hardware, Windows could do some damage.

By InvestorPlace Jun 19, 2012 8:30AM

By Tom Taulli


Microsoft (MSFT) has made its name less so on being a technology pioneer and moreso on attacking existing markets, making its profits by leveraging its massive distribution network and powerful ecosystem. It has done this with software products like Office and Windows, as well as hardware like servers and the Xbox video game console.


So can Microsoft do the same with the rapidly growing market for tablets? Perhaps. At a surprise event in Los Angeles Monday, the company announced the Surface -- a tablet that will be the "ultimate stage for Windows."


It's ironic, as Microsoft actually has been a thought-leader in the tablet market. Back in late 2000, Bill Gates talked about the massive opportunity in tablets and launched several products into the market. However, they failed to get any traction as the technology still was too early with regard to issues such as mobile networks and battery life.


But the Surface is a huge leap for Microsoft. In terms of the hardware, the finish for the device has the feel of a luxury watch, and the tablet itself is about the same thickness and weight of Apple's (AAPL) iPad. The Surface also has a next-generation touchscreen that allows for typing at twice the typical rate. It also includes a standard HD screen and an integrated kickstand, which is helpful, and the back of the device includes a detachable keyboard.


Microsoft will launch two versions of the Surface. One will use an ARM Holdings (ARMH) chip (which will feature Windows RT), while the other use an Intel (INTC) chip (which will feature Windows 8 Pro). The pricing has not been disclosed, but it will be competitive with typical tablets.


But isn't the success of a tablet based on the software ecosystem? Absolutely. And this is why Microsoft is using Windows 8 (and the similar Windows RT, built specifically for the ARM processors) as the platform. The OS has a huge number of rich applications, though it still is unclear whether there will be limitations on what's available. But if the Surface includes the ability to use the Office suite, the tablet almost certainly will get plenty of uptake in the corporate market -- the sweet spot for Microsoft.


Over the past couple years, Apple's iPad has been eating away at PC share, and the momentum is showing no signs of letting up thanks to an ever-expanding tablet market. According to IDC, the global shipments of all tablets are expected go from 142.8 million in 2013 to 222.1 million in 2016. Microsoft needs to get in on that action.


Investors and users alike still should have some healthy skepticism about the Surface. After all, Microsoft's previous mobile efforts have been terrible, as seen with the partnership with Nokia (NOK). The duo's smartphones, which are based on the Windows operating system, have not caught the interest of consumers or businesses. Not to mention, Microsoft has failed with other devices such as the Kin and Zune.


In the tech world, it is extremely rare to show strength in both software and hardware. So far, Apple's cracking of the code has proven more exception and less rule. Microsoft has instead focused on its strengths -- that is, software -- and has partnered with hardware providers, like Intel, Dell (DELL) and Hewlett-Packard (HPQ).


However, you can't underestimate the power of the Windows platform. If Microsoft executes the Surface well -- as long as the user experience is prime and focused on the needs of mobile users -- the company might just have a game-changing tablet on its hands.


(Microsoft owns and publishes Top Stocks, an MSN Money site.)


Tom Taulli has written and published several investing books. He also runs the InvestorPlace blog IPO Playbook. Follow him on Twitter at @ttaulli. As of this writing, he did not own a position in any of the aforementioned securities.


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67Comments
Jun 19, 2012 9:08AM
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Game on. At least there'll be a viable choice now.
Jun 19, 2012 9:28AM
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MS has always had the better operating system with the exception of Vista.
Jun 19, 2012 1:07PM
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I've been waiting for microsoft to come out with a tablet.  Terribly tempted to get the ipad but I don't want to jump on the apple bandwagon.  Come on microsoft, make it gooooood!
Jun 19, 2012 2:52PM
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You people that think Apple is so great - don't forget that they have had plenty of flops.  You might recall the Newton, Pippen, TAM, Jonathan and Lisa.  All failures - all Apple products.  Oh - Is that iPad 3 overheating?  Just juggle it a little.
Jun 19, 2012 1:29PM
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Yeah, I never was an Apple guy anyway...  Apple continues to be a toy and that including the iphones...for me, too.
Jun 19, 2012 1:00PM
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Funny ppl didnt give Zune a try but like Apples crap iFumes! Would never buy a Apple pc so there for why would anyone buy a Apple phone.

 

 Doesnt make sense to buy a iFad from a company when i wouldnt buy their pc. Just becuz iFad sales are huge in the US doesnt make it the best product. I have been waitng for a WIN tablet for awhile now and i have turned down iFads left and right.

Zune, i have on my 360, my Focus and work pc as well as home pc.

 

 

Jun 19, 2012 2:51PM
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An interesting development which I will certainly keep an eye on.  Apple has shown they preform best when they are operating without competition and to give them credit they did hit the mobile market with the right products at the prefect moment.  But now that Jobs is gone and Android platforms have started to out sell iPhones I suspect axis of the world is shifting.  A tablet that runs Windows would be a real nice addition to the mix and would be a breath of fresh air from the Apple mentality of buy, watch, read, hear and play only what we tell you you can.

Jun 19, 2012 3:40PM
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Step 1: Get an Apple
Step 2: Get an eco-friendly gun
Step 3: Kill yourself
Jun 19, 2012 3:30PM
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OK, you know OSX is just a linux copy. They take all that is good from windows and other linux system and put in there updates 2 years later and people think apple did it first. Apple just copys other peoples great ideas and puts a apple logo on it and sells it for 3x the amount is worth. Windows Tab will be great.
Jun 19, 2012 1:58PM
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The way to jump right over apple is to improve the software. All these tablets do the same thing and have the same limitations. How about any of these tablets being able to use the full functionality of the Office suite including the use of macros and active x components? All these companies are just sending out the same old thing.

Jun 19, 2012 5:08PM
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Microsoft could completely dominate the smartphone market if they would do a single, simple thing: bring back ActiveSync.  The idea that you can't transfer between Outlook and your phone without exposing all your information to the "cloud" is the most bone-headed MS action since Windows Millenium.

Jun 19, 2012 6:31PM
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I base my purchases in life on functionality, performance, dependability, value, and cost. THat's why my new phone is a Nokia with the MS o/s. It's faster, easier to navigate, much better battery life, and much less expensive than the iphone 4 I sold. Believe me, iphones have their repair problems that are EXPENSIVE to fix. Same with laptops: MS/Windows rule and have 80% market share compared to Apple...but then you don't get to post the little Apple core sticker in your car window which portrays your "coolness".
Corporate giving?? Apple is at the BOTTOM of the list. How can a mega company, who has 90% of their products made in China, be so damn tight when it comes to socially responsible giving?? The culture of Jobs and Apple was and is GREED.
Compare what MS and the Bill Gates Foundation gives: hint..it's Billions!! THink about that the next time you need a new phone or tablet..Apple=greed!

Jun 19, 2012 3:57PM
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I had a Windows phone before my current iPhone.  The apps were so expensive I never bought any.  If the Surface is going to take on the iPad it needs to have comparable apps available right away or it will fail.    

Jun 19, 2012 1:58PM
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I look forward to another fine release by Microsoft.  With cutting-edge battery-life that I can count on to last through the WHOLE crash and reboot sequence.
Jun 19, 2012 6:01PM
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Im a Mac, but Im all game for open competition. It drives engineers to work harder to earn my money

Jun 19, 2012 5:34PM
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Microsoft accommodates so nobody can get sued as a monopoly.
Jun 20, 2012 1:29AM
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Unfortunately I need to use certain windows apps and want a tablet for the conveninece and windows tablets are either crippled or quite expensive.  So yes, I am curious if MS can pull it off.  Until then I am stuck with my windows desktop and laptop.  At least I get a little slice of app heaven with my iPhone.

 

MS needs to execute on their app content if they are to be successful with the general public.  There are app emulators out there that I have used -- so maybe they can have it on their home screen to satisfy the hunger of Apple devotees.  Gasp! maybe even partner with apple to get a cut of downloads! 

 

Running dual platforms is nothing new, I did it in the 90's.  Basically I want my pie and eat it too.

 

Jun 19, 2012 2:47PM
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Watch their keynote at 1410 and 1338 oh gosh trouble.
Jun 19, 2012 4:41PM
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Whether you like apple or microsoft it doesn't really matter.  Only one thing matters between these two products and that is the availability of Apps.  One has more than you can count and the other does not and if MS has anything to say about it they will never open their code for others to make apps for it.

 

 

Jun 19, 2012 1:38PM
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"Microsoft has made its name less so on being a technology pioneer and moreso on attacking existing markets"

"Microsoft actually has been a thought-leader in the tablet market"

 

Contradiction in the first three paragraphs? Great job, author.

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