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Microsoft tablet computer a big bet on future: analysts
by Staff Writers
San Francisco (AFP) June 19, 2012

Microsoft's decision to make its own tablet computer is a sign of frustration with its longtime hardware partners and a big bet on the technology giant's future, according to analysts.

Microsoft's empire was believed be at stake in a gamble that it can dethrone Apple's iPad in the tablet market, and weather backlash from original equipment manufacturers (OEMs) that license its software.

"It's a bold move by Microsoft, and it shows just how concerned they are about Apple and the threat Apple is to their ecosystem right now," Gartner analyst Michael Gartenberg told AFP.

"This is (chief executive Steve) Ballmer pushing all the chips to the middle of the table and betting really heavily," he continued. "Microsoft is clearly all-in."

Microsoft on Monday unveiled its first tablet computer, the Surface, running on Windows software to take on iPads.

Chief executive Steve Ballmer described the iPad challenger -- complete with ultra thin covers-cum-keyboards in a range of colors -- as a tablet that "works and plays" as he presented it at a press event in Los Angeles.

"It looks like a really nice product; well designed and well thought out," said NPD Group analyst Stephen Baker.

Microsoft did not reveal when Surface would be available, or the prices for the various models. But it appeared the tablets would debut with Windows 8 operating software later this year and be priced on par with similar devices.

Analysts agreed that Microsoft had the components for success: impressive hardware, stunning screen quality, an online shop for "apps," and troves of films, music and other content at Zune and Xbox Live.

Microsoft recently announced SmartGlass applications that let tablets synch with its leading Xbox 360 videogame consoles and invested more than a half-billion dollars in Barnes & Noble's Nook e-book business.

Microsoft also owns Skype internet telephony service.

The Redmond, Washington-based company has an ample war chest to invest in promoting its tablet.

What remains to be seen is whether Microsoft can put those pieces into a winning formula or whether it will repeat the failure it had when it launched Zune MP3 player hardware to compete with Apple's iPod devices.

Independent analyst Rob Enderle of Silicon Valley hung blame for the flop on Microsoft's shoulders, contending that the company didn't give Zune the funding and resources it needed to be a market hit.

"This is Microsoft's chance to show they have learned the lesson from the Zune," Enderle said.

"This time Microsoft is really going to have to step up," Enderle continued. "With the right resources, this could work."

While Microsoft could shrug off losing the MP3 player market to longtime rival Apple, it can't afford to lose a tablet market with the promise of eclipsing and even replacing the desktop computers, according to analysts.

"This time, if they lose, it is the desktop computer and with that goes three-fifths of Microsoft," Enderle said.

"OEMs are saying that the PC doesn't matter any more and that the tablet really is the future; which is what Bill Gates said in the early 2000s," he added, referring to Microsoft's famous co-founder.

"It has just been unfortunate that Apple has been proving him right on their platform."

Forrester analyst Sarah Rotman Epps warned that Microsoft could be "its own worst enemy" if it overwhelms consumers with configuration options and chipset choices instead of focusing on keeping tablets easy to pick and simple to use.

Among the reasons that this change of strategy is dramatic is that it promised to make adversaries of partners that license Microsoft software to put into devices.

It appeared Microsoft was taking a page from Apple's playbook by taking control of the tablet "ecosystem" from the hardware to the software to the delivery of digital content.

"It felt like they were channeling Steve Jobs at some point," Gartenberg said of the Surface event.

"This whole thing had a very Apple-esque feel and the only company that has been good at being Apple is Apple."

To some extent the tablet move was pay back of a sort to Microsoft partners who have embraced making tablets on Android software provided free by Google, according to analysts.

While competing with companies that license its software will strain relationships, Microsoft would irk them further by undercutting them with low tablet prices to gain market share.

"So many details are missing that we will just have to wait and see," Gartenberg said.

"The payoff on the big bet is that Microsoft becomes a consumer brand and stays relevant in the consumer's digital life," he continued. "They have everyone's attention now let's see what they are going to do with it."


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