Microsoft tablet tests PC partners

2012-10-17 12:00
Microsoft CEO Steve Ballmer unveils the Surface, a tablet computer aiming compete with Apple's iPad, at Hollywood's Milk Studios in Los Angeles. (Damian Dovarganes, AP)

Microsoft CEO Steve Ballmer unveils the Surface, a tablet computer aiming compete with Apple's iPad, at Hollywood's Milk Studios in Los Angeles. (Damian Dovarganes, AP)

Multimedia   ·   User Galleries   ·   News in Pictures Send us your pictures  ·  Send us your stories

kalahari.com

  • The Google Story
    Read and find out all about Inside the hottest business, media and technology success of our time Now R157.00
    buy now
Los Angeles - With the launch of its Surface tablet computer, Microsoft is becoming a genuine "frenemy" - part friend, part enemy - to its long-time manufacturing partners.

Since its founding 37 years ago, the Redmond, Washington state, company has had a mutual understanding with makers of computer hardware: Microsoft creates software.

Companies such as Dell, HP, Acer and Lenovo pay Microsoft a licensing fee to place the Windows operating system on the desktop PCs, notebooks and other gadgets they market to consumers.

Now, Microsoft is complicating the cozy relationship by making and marketing its own tablet computer.

The company announced on Tuesday that the Surface will start at $499 when it goes on sale on 26 October. The new tablet is set to invigorate an already hotly contested market for touch screen computers. But for the first time, Microsoft will be in head-to-head competition with partners that help generate sales for its $14bn-a-year Windows software business.

Manufacturing

Microsoft is no stranger to manufacturing hardware, but it usually does so in businesses that are sideshows to its mainstay computer software. It has made the Xbox game console since 2001, for instance. It also made the Zune music player and Kin line of phones, although both were short-lived.

CEO Steve Ballmer insists Microsoft must move into manufacturing to bring consumers "delightful, seamless experiences" that they can enjoy "right out of the box", according to a letter he wrote to shareholders recently.

Of course, it's not just for the sake of consumers. The strategy of making both gadgets and software could pay off for Microsoft, too.

The company is coming out with a new version of Windows next week, one that is optimised for touch screen devices and will run on tablets and PCs.

Every time it sells a Surface, analysts say, Microsoft will record some revenue for the Windows 8 operating system. Manufacturers that build competing Windows 8 tablets will pay Microsoft a fee, estimated between $30 and $80 per device.

That's a big expense, especially considering that manufacturers are allowed to use Google's Android operating system for tablets and smartphones for free. The extra cost of making Windows 8 tablets could put Microsoft's partners at a disadvantage in a cut-throat tablet market.

"It's always tough when you're competing with your partners," said Shaw Wu, an analyst with Sterne Agee. "That's what Microsoft has decided to do."

Expensive


The expense also comes at a time when tablet prices are dropping.

In the past few months, Google and Amazon.com have undermined tablet leader Apple with 18cm screen tablets using Android. The cheapest goes for $159, which barely covers manufacturing costs.

Apple, too, is expected to downsize its iPads with a mini version that might also give consumers a less expensive tablet option ahead of the holidays.

Having a product that is priced well above these smaller offerings will give Microsoft's partners a better chance to make a profit. The downside? Windows tablets may be too expensive to become a popular stocking stuffer this Christmas.

Microsoft's Surface has a 26.9cm screen, slightly bigger than the iPad's 24.6cm. Unlike the iPad, Surface also has the ability to run Office and other Windows applications. That, plus its optional touch keyboard cover for $100 more, may enable the devices to cross the productivity gap between tablets and PCs.

Several of Microsoft partners are trying - at least publicly - to remain upbeat about their coming competition with the Surface. At a recent event showcasing Windows 8 tablets in San Francisco, a Lenovo executive said Surface highlights the advantages of Windows 8 and encourages the development of more applications for the system.

"Surface is about Microsoft standing up and saying, 'We want to make sure the market understands the importance of Windows 8,'" said Tom Butler, director of ThinkPad marketing for Lenovo. "All the Microsoft Surface announcement does is help validate the ecosystem that we all want to see develop around the new interface."

Powerful tool


Dell, the second largest PC maker in the US, also believes Surface will spur more interest in Windows 8, says Bill Gordon, the company's executive director for end user computing.

"We think Microsoft is trying to build the market, so we think it's great," Gordon said. "They are just trying to generate more excitement. Google did its own devices for Android, so I think it's kind of the same thing."

To warrant prices on par with the latest iPad, which also starts at $499, Microsoft needs to prove that the Surface is a more powerful tool.

Early demonstrations suggest that Surface and other Windows tablets could be of interest to large corporations, many of which have created internal software that operates on the Windows platform, said Rhoda Alexander, an analyst with market research company IHS iSuppli.

"They're looking for a secure tablet solution that will support legacy operations," she said.

IHS sees worldwide tablet sales exploding in the next few years from 19.9 million units sold in 2010 to 386 million in 2016.

This year, Apple's iPad is the dominant player, with 62% of the market, compared with 34% for tablets using Android and 3% for tablets that run on an older Windows operating system.

But Windows' share is expected to blossom. According to IHS, by 2016, its tablets will have nearly caught Android, with a 24% share compared with Android's 29%. It predicts Apple will still command nearly half, or 47%, of the tablet market.

Whatever the potential downsides to Microsoft, its entry into tablets is seen as crucial because the PC market is expected to decline this year for the first time since 2001.

"The worst thing that can happen is stagnation in the market," said Nomura analyst Rick Sherlund. "At least [Microsoft is] getting in the game now."
- AP
Read more on:    google  |  dell  |  apple  |  microsoft  |  mobile
NEXT ON NEWS24X
SHARE:

Read News24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
3 comments
Add your comment
Comment 0 characters remaining
 

Inside News24

 
/News
 

New GIF keyboard on iOS for added fun!

Soon sending an LOL! or facepalm will be so much more fun!

 
 

For chic geeks...

Puppy goes crazy over iPad game
Printable solar panels will bring exciting new opportunities!
Now there’s a special lane for texting while walking
LOL! 7 brutally honest texts from parents

Jobs in Cape Town [change area]

Property [change area]

Travel - Look, Book, Go!

Magical Massinga

Spend 5 nights at the gorgeous Massinga Beach Lodge in Mozambique and only pay for 4 from R13 220 per person sharing. Includes return flights, accommodation, transfers and romantic turndown. Book now!

Kalahari.com - shop online today

Pre-order your iPhone 6 at kalahari.com

Hurry and pre-order your own iPhone 6 now at SA’s favourite online store!

Bargain box – 60% off

Reduced prices, very limited stock. While stocks last. Hurry and shop now!

Mind blow low prices on electronics

Get either the Prestigio multiphone or Proline tablet 7” tablet for only R699. Offers valid while stocks last. Shop now!

30% off Barbie toys

Save 30% on all Barbie toys and accessories. Offer valid while stocks last. Shop now!

Baby extravanganza month at kalahari.com

Celebrate baby month with a wide range of awesome baby products. Offers valid while stocks last. Shop now.

OLX Free Classifieds [change area]

Samsung Galaxy s4

Mobile, Cell Phones in South Africa, Western Cape, Cape Town. Date October 24

Best bargain in big bay

Real Estate, Houses - Apartments for Sale in South Africa, Western Cape, Cape Town. Date October 25

VW Golf 6, 1.6 Trendline (Excellent condition)

Vehicles, Cars in South Africa, Western Cape, Cape Town. Date October 25

Horoscopes
Aquarius
Aquarius

As the Moon moves out of restless Gemini into sensitive Cancer today you are able to relax your active mind and be more receptive...read more

There are new stories on the homepage. Click here to see them.
 
English
Afrikaans
isiZulu

Hello 

Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.


Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire 24.com network.

Settings

Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.








Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.