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Microsoft could be alienating hardware partners with new tablets

Agam Shah | June 20, 2012
Microsoft's Surface tablet is a measured gamble to enter the cutthroat tablet business, but the company could be alienating longtime hardware partners that are also expected to announce Windows 8 devices starting later this year.

The Surface is crucial for Microsoft to establish a presence in the tablet market and to compete with Apple, said David Daoud, research director for personal computing at IDC. Microsoft's move to tablets came likely because PC makers failed to take the lead in making tablets good enough to compete with Apple, Daoud said.

"[Device makers] have been lagging in terms of creativity," Daoud said.

Apple's iPad dominates the market while competitors have stopped making certain tablet models or are trying to catch up. Hewlett-Packard last year discontinued the TouchPad, while Dell has discontinued Streak consumer tablets, and both companies are now planning to re-enter the consumer tablet market with devices based on Windows 8. Tablets with the Android OS offered by companies like Samsung, Asus, Acer and Lenovo have not sold as well as the iPad.

Microsoft had to take the lead in development as device makers were not willing to spend on research and development, Daoud said. Device makers are making razor-thin margins on consumer PCs and tablets, and have limited spending on innovation in tablets. Ultimately Microsoft's lead with the Surface tablets could inspire device makers to release the next-generation Windows hardware and get a better understanding of the software and hardware ecosystem, Daoud said.

"The move is somewhat predictable. What is unpredictable is Microsoft taking the lead on the hardware side," Daoud said.

At the start, Surface tablets will only be available through Microsoft Stores and online, which limits adoption potential, said Sarah Rotman Epps, an analyst at Forrester Research, in a blog entry. But a larger struggle for buyers revolves around distinguishing the Windows 8 and Windows RT tablets, she added.

"Selling x86-based tablets in the same retail channels as Windows RT tablets will confuse consumers and sow discontent if consumers buy x86 and think they're getting something like the iPad. Microsoft and its partners need to articulate a compelling strategy for how they will manage consumer expectations in the channel," Rotman Epps wrote.

But with or without the help of device makers, Microsoft is now gearing up to battle Apple.

"They have to do something, they can't just sit there and let Apple take over the world," IDC's Daoud said.


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