Is Microsoft Making Its Own Tablet?

On Monday, Microsoft (Nasdaq: MSFT  ) is hosting an event in Los Angeles and is being very hush-hush about what's on the agenda. The company is expected to talk tablets but isn't officially confirming anything at this point.

Specifically, the software giant is likely to focus on the flavor of Windows 8 that supports ARM Holdings (Nasdaq: ARMH  ) -based chips, Windows RT. Here's the real kicker of what's rumored to be unveiled: a Microsoft-branded tablet. We're not talking about showing off gadgets made by third-party OEMs, but rather that Mr. Softy is jumping into the tablet feet first with its own offering, taking an integration page out of Apple's (Nasdaq: AAPL  ) playbook.

Rumor has it
The Wrap broke an exclusive report, and All Things D has been hearing the same rumblings with its own sources. Microsoft supposedly figured that it needs to get its hands dirty if it wants to be able to meaningfully compete with the iPad, designing both hardware and software just as Apple has always done. That's a stark contrast to the strategy that the software giant has employed for the past three decades.

For the most part, Microsoft's PC hardware offerings over the years have never consisted of more than various accessories like keyboards, mice, and webcams, not including its Zune (which is now dead) or Xbox business. When it comes to PCs and smartphones, it's always left the touchy-feely stuff to third-party OEMs while it stayed on the softer side of things.

What not to do
Microsoft has probably taken stringent notes on the underwhelming performance of Google (Nasdaq: GOOG  ) Android devices in the tablet market, as Android tablets have undoubtedly failed to take off in the same way that Android dominates the smartphone landscape with 56.1% market share in the first quarter.

In fact, iOS and Android flip leadership positions when you compare the smartphone and tablet spaces.

Operating System

Q1 2012 Market Share

Android 56.1%
iOS 22.9%
Microsoft 1.9%

Worldwide smartphone market share. Source: Gartner.

Compare that with NPD DisplaySearch's first-quarter tablet estimates.

Vendor

Q1 2012 Market Share

Apple 62.8%
Samsung 7.5%
Amazon.com (Nasdaq: AMZN  ) 4%
ASUS 2.3%

Preliminary worldwide tablet market share. Source: NPD DisplaySearch.

When you combine those top three Android tablet makers, that comes out to 13.8% of the market. Amazon might even be more appropriate on its own, since it's gone rogue with its Android tablet that ties into its own services instead of Google's.

Follow the leader
By the looks of it, Google is looking to unveil a Nexus Tablet later this month, giving the Android tablet market some much0needed leadership to rally the troops. But the move may also backfire, since Google is expected to price the device very aggressively, which could also competitively undercut the very partners that Google is trying to lead.

Microsoft seems to want to jump the gun on Google and unveil its own first-party device before Big G. Microsoft is also aggressively courting developers to create tablet-optimized Metro-style apps for its platform, while the lack of tablet-optimized apps has proved to be a big weakness for Android tablets.

Microsoft copies Apple. Again.
In recent years, Microsoft's strategy has slowly moved a little closer to Apple's in its desire for more control. With phones, it was very selective about the hardware compatibility with Windows Phone Mango, only supporting Qualcomm Snapdragons, for example. With its upcoming tablet push, it's also being rather picky about which OEMs to let in on the ground floor, and has allegedly blocked HTC out of the first wave.

Apple is notorious for its controlling ways, and it's been paying off in spades. Maybe Cupertino is on to something.

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Fool contributor Evan Niu owns shares of Apple and Amazon.com, but he holds no other position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of Amazon.com, Microsoft, Google, Apple, and Qualcomm. Motley Fool newsletter services have recommended buying shares of Apple, Amazon.com, Microsoft, and Google and creating bull call spread positions in Microsoft and Apple. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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  • Report this Comment On June 16, 2012, at 11:02 PM, techy46 wrote:

    The best of all worlds is a Microsoft tablet made by Nokia and designed like the Lumia 900 but with high end specs for low cost tablets. Nokia made reference awhile back about a W8 tablet coming out in June. So get the bad news out last week and start new this week.

  • Report this Comment On June 17, 2012, at 10:01 AM, FreeRange1 wrote:

    The answer to the headline is who cares? Virtually nobody!

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