Tablet puts Microsoft in competition with PC makers

Wednesday June 20, 2012

NEW YORK (AP) -- With the unveiling of the Surface tablet, Microsoft is heading into unusual territory: competing with its partners, the very same companies that make Windows PCs. But Microsoft has little to lose, since PC manufacturers have so far had very little success with their own tablets.

With the unveiling of its tablet this week Microsoft Corp. is taking up the competition with Apple Inc. and its iPad by borrowing a page from Apple’s playbook. It is keeping both software and hardware development under the same roof.

"If imitation is the sincerest form of flattery, the compliments from Microsoft poured down like a torrential storm on Apple last night," said analyst Brian White at Topeka Capital Markets.

Even Steve Ballmer, Microsoft’s famously tough-talking CEO sounded downright Zen and Apple-inspired as he introduced the Surface.

"We believe that any intersection between human and machine can be made better when all aspects of the experience -- hardware and software -- are considered and working together," he said at Monday’s launch event in Los Angeles.

That’s a new philosophy for Microsoft, a company accustomed to writing the software, charging loads of money for it, and letting others design the hardware.

Microsoft has sold hardware before, most notably the Xbox game console, which is essentially a PC. But when it ventured into the game console market, it wasn’t directly treading on the toes of the big PC makers who buy Windows from it. (The exception was Sony, which makes both PCs and PlayStation consoles.)

With Surface, Microsoft faces the challenge of selling the soon-to-be-launched Windows 8 to PC makers who want to make tablets, while at the same time selling tablets directly to consumers.

Rick Sherlund, an analyst at Nomura Securities said Microsoft’s hardware partners "are no doubt unhappy" about the prospect of competing with Microsoft’s tablets, particularly since Microsoft set a high bar with Surface.


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