4th UPDATE: Microsoft Announces Surface Family of Tablets

Date : 06/18/2012 @ 10:44PM
Source : Dow Jones News
Stock : Arm Holdings Plc ADS Each Representing 3 Ordinary Shares (MM) (ARMH)
Quote : 67.77  0.0 (0.00%) @ 2:05AM
Arm Holdings Plc ADS Each Representing 3 Ordinary Shares (MM) share price Chart

4th UPDATE: Microsoft Announces Surface Family of Tablets

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Microsoft Corp. (MSFT) unveiled on Monday a family of tablets that run the upcoming version of its Windows operating system, a move that comes as the software company races to catch up with Apple Inc. (AAPL) and Google Inc. (GOOG) in mobile computing.

At an event in Los Angeles, Microsoft Chief Executive Steve Ballmer introduced the company's Surface family of tablets. The devices, which feature magnesium bodies and built-in stands, run versions of Microsoft's Windows 8 operating system.

Mr. Ballmer said the Redmond, Wash., company recognized the importance of integrating software and hardware, a strategy that is the hallmark of rival Apple.

"With Windows 8, we didn't want to leave any seam uncovered," Mr. Ballmer said. "We wanted to give Windows 8 its own hardware companion.

"The surface is a PC. And the Surface is a tablet. The Surface is something new." Mr. Ballmer later said.

The Surface family comes with a magnetically attachable cover that has a built-in accelerometer. The inside of the cover is a full keyboard that recognizes the device when it is attached. The Surface's stand, called the Kickstand, snaps into place with an audible click. It has connection for charging and linking the tablet to peripherals and it will come with a Netflix (NFLX) application.

The Surface "works great for entertainment," said Steven Sinofsky, head of Microsoft's Windows division.

Microsoft has built a software business with $70 billion in annual revenue and left the computer hardware to allies such as Hewlett-Packard Co. (HPQ), Dell Inc. (DELL) and others. Now Microsoft will be going after tablet customers too.

A Dell spokesman said the company "remains a committed partner of Microsoft" and is continuing to develop a "full slate" of Windows 8 products.

H-P declined to comment.

"Don't focus too much on Microsoft competing with other PC vendors," said retail analyst Ross Rubin of NPD Group in a Tweet. "They all have the same main competitor in Apple."

The Surface is a compact 9.3 millimeters thin and weighs 1.5 pounds, very similar to Apple's iPad at 9.4 millimeters and 1.44 pounds for the model with WiFi. Besides the kickstand and detachable keyboard cover, the cover also has a trackpad.

Apple didn't immediately respond for comment on the Microsoft device.

Microsoft said the Surface would be priced comparably to other tablet computers and available simultaneously with release of Windows 8. It will appear first in the Microsoft Store online and through company retail locations.

Gartner analyst Carolina Milanesi said Surface will go on sale to capture the maximum benefit of the holiday gift season. Doing a prominent press event so far in advance is aimed at rallying applications developers behind the new platform.

"They now have a six month window to get developers they have on the PC side to join them on Windows 8 and this tablet," she said.

The Surface and other tablet versions of Windows will run on low-power chips designed by ARM Holdings PLC (ARMH). Windows 8 Pro versions of the Surface are aimed at enterprise computing customers and will run on chips made by Intel Corp. (INTC).

Microsoft made the announcement at the center of the music, film and television world, which Microsoft has already embraced to deliver content to its popular Xbox 360 game console. The Microsoft tablet will run the tablet version of Windows 8, called Windows RT. Windows 8 is the next edition of the company's flagship computer-operating system, which will for the first time run on both desktop computers and tablet devices.

Windows 8 is Microsoft's best hope for competing with devices running Google's (GOOG) Android operating system and with Apple's iPad and iPhone products. Microsoft has almost no presence in the tablet market, which is expected to double in size, with sales of 118.9 million units this year, according to research firm Gartner Inc. Apple's iPad is expected to account for a little less than two-thirds of those sales and Android machines for nearly a third.

Microsoft has spent the past two years developing Windows 8. The company is putting the finishing touches on the software before shipping it to manufacturers, which will load it on devices slated to hit stores in October or November, in time for the holiday-sales season.

Many companies have tried to compete with Apple's iPad with tablets based on the Google Android operating system, but few products have sold well. In smartphones, Android phones collectively have a majority of the market, but Apple's iPhone remains a dominant hit.

Microsoft has long manufactured keyboards, mice and other accessories, but hasn't always succeeded with consumer devices. Xbox has become the best selling gaming station, but its Zune music player, designed to compete with Apple's iPod, never caught on with music buffs. Its KIN mobile phone died a quick death shortly after it appeared in 2010. Handset maker Nokia Corp. (NOK) is now is leading phone partner.

Write to Steven D. Jones at steve-d.jones@dowjones.com and Andrew Morse at andrew.morse@dowjones.com

-Ian Sherr contributed to this story.

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