Friday, June 22, 2012

What Does Microsoft's New Tablet Mean for Investors?

It is not an iPad, nor is it one of the many iPad wannabes from competitors like Samsung and Motorola. It's a Microsoft tablet. Not a tablet built by Dell or HP or Lenovo running Microsoft Windows, but an actual device built and sold by Microsoft.

The device, dubbed "Surface," has no publicly disclosed release date nor an indication of its price, but it is already making waves because it marks the first time that Microsoft has decided to build its own computer. The apparent decision to jump into the fray and compete head-on with Apple in the tablet market has sparked all sorts of reactions.

On one side of the equation, you have those people who are quick to point to the Kin (a failed Microsoft-built phone for Verizon Wireless) and Zune (a failed portable music device meant to compete with the iPod) as proof that Microsoft doesn't have the internal chops to do hardware right. The design process is different. The supply chain is an entirely new animal for a company used to just packing up software. And the company's DNA just doesn't support it, they say. Plus, what about the current original equipment manufacturers (OEMs) that sell Windows machines? Isn't making tablets their territory?

On the other side seem to be boosters of the strategy.  The "ecosystem model" has failed, they say. Commodity hardware doesn't deliver. These pundits have been quick to point out that Apple is basically unrivaled in market with the iPhone, with the iPad, and with more traditional computers like the MacBook they make far more money than any other OEM. These people want alternatives to Apple without having to sacrifice quality and ending up with some flimsy, plastic HP notebook and a slow, buggy Agros tablet.

Some in the latter camp even argue that Apple has so decisively run away with both the media and market share that Microsoft is being compelled to change its business model from software-platform licenser. Essentially, it is said, Microsoft has no choice now but to copy Apple.

Read more: Casey Research

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