140 Million Reasons Why Bill Gates May Be Wrong About the iPad

It's now been more than three years since Apple (NASDAQ: AAPL  ) jump-started the tablet renaissance with the iPad. The Mac maker has set the standard in the tablet market and continues to lead the way, albeit as rivals jump in and chip away at its market share.

Microsoft's (NASDAQ: MSFT  ) big push into tablets over a decade ago fell flat, in part because the Windows value chain is highly segmented and all the players involved failed to coherently create a compelling product. All the while, Bill Gates has remained a staunch supporter of tablet form factors in general, even as Apple has run away with the iPad.

The software giant's approach to tablets is dramatically different to Apple's. Microsoft is embracing a "PC-Plus" mentality while Apple talks all the time about the "Post-PC" era. In a recent interview on CNBC, Gates outlines one weakness he sees in the iPad and how Microsoft is looking to fill that void:

With Windows 8, Microsoft is trying to gain market share in what has been dominated by the iPad-type device. But a lot those users are frustrated. They can't type. They can't create documents. They don't have [Microsoft] Office. So we're providing them something with the benefits they've seen that has made that a big category but without giving up what they expect in a PC.

How "frustrated" are iPad users? Apple has sold a cumulative total of 140.5 million iPads over the past three years, so they can't be overly vexed.

Source: SEC filings. Calendar quarters shown.

In fairness, Gates absolutely has a valid point with regards to typing and productivity. The Microsoft chairman calls out the iPad specifically, but his comments are applicable to most tablets in the market today. They simply can't offer the same level of productivity as a PC. As an owner of both a tablet and laptop, I'm the first to admit that I could never get a full day's work done on a tablet.

However, what's debatable is whether or not that feeling is affecting tablet sales. Even if though there is likely some level of frustration among tablet and iPad consumers regarding productivity, unit sales continue to skyrocket (49.2 million last quarter). It's also worth noting that the typing experience on Surface's Type Cover or Touch Cover is similar to what's available on the iPad through first-party and third-party keyboard accessories.

The mention of Microsoft Office is also interesting, since that's one crucial productivity advantage that Surface enjoys over the iPad. There are numerous alternative productivity apps on iOS, but Office is still the gold standard. There's been talk of Microsoft bringing Office to iOS for years, which would undermine one of Surface's advantages.

Gates knows how important tablets are for computing, and he's banking on frustrated iPad buyers switching to Surface.

It's been a frustrating path for Microsoft investors, who've watched the company fail to capitalize on the incredible growth in mobile over the past decade. However, with the release of its own tablet, along with the widely anticipated Windows 8 operating system, the company is looking to make a splash in this booming market. In a new premium report on Microsoft, a Motley Fool analyst explains that while the opportunity is huge, so are the challenges. The report includes regular updates as key events occur, so make sure to claim a copy of this report now by clicking here.


Read/Post Comments (18) | Recommend This Article (5)

Comments from our Foolish Readers

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  • Report this Comment On May 07, 2013, at 7:41 PM, twolf2919 wrote:

    Mr. Gates is either intentionally - because he has a vested interest - or ignorantly missing the point: nobody cares about typing efficiently on a tablet! We already have very powerful and light laptops and ultrabooks that fulfill the needs of those who need to create content "on the go". The rest of us are happy to simply surf the web, play movies or games, and occasionally reply to an email or add a facebook status. None of these things requires an efficient input mechanism like a physical keyboard.

    As Mr. Cooke said (paraphrased): "we could combine a refrigerator and a toaster into a single product - but nobody would want the result".

  • Report this Comment On May 07, 2013, at 7:57 PM, RadarTheKat wrote:

    I don;t need to be super-productive on my iPad. In fact, I don't need my iPad at all. If it weren't available on the market, I'd likely had simply continued to do everything on my MacBook Air. The introduction of the MS-Surface would not have changed that. Why would I need a PC-Plus product like the Surface. My MacBook Air is not so bulky that I couldn't just bring it along wherever I go as I always had. As I stated above, I don;t need my iPad. However, I use it almost exclusively for consuming content, monitoring and trading stocks, writing emails, checking Facebook, vegging out with a puzzle or a game, surfing the web, etc. My MacBook Air remains stationary at my desk. It no longer accompanies me to the living room or out at the pool. My iPad is my preferred device, by a wide margin, and for precisely the reasons that I would rather not cart along my laptop; I don't need, or want to interact with, a fold-out physical keyboard (which imposes a sit up posture versus laying on the sofa or lounging casually by the pool), I don;t want to extra heft of the heavier and bulkier Surface. My 3rd Gen iPad represents about the maximum size and weight with which I am comfortable. When the iPad mini is updated to include a retina display, I'll likely trade up to that. Microsoft is gong in the wrong direction from where society is moving; away from the formal interactions we have with our work machines and toward casual interactions that fit our desired lifestyles.

  • Report this Comment On May 07, 2013, at 9:10 PM, H3D wrote:

    I use iWork on my iPad all the time. It replaces Office just fine.

  • Report this Comment On May 07, 2013, at 9:37 PM, foolfollower22 wrote:

    If microsoft wants to sell product they need to change their ads. Watching people dance around holding the tablet tells me nothing about its capability. Not a single ad actually shows anyone working on the tablet. Certainly doesn't motivate me to look at the product amd I am a person who is looking at a tablet to get work done, not play games or surf the web.

  • Report this Comment On May 07, 2013, at 9:41 PM, gskorich wrote:

    further proof Gates and Balmer are too old school for the new age. they need step aside now and let the new leaders step forward.

    people aren't concerned with office for personal use, i'm sure they would love it on their iPads but its not a reason to buy a Surface. bring office to IOS and see what happens.

  • Report this Comment On May 07, 2013, at 9:42 PM, OhhReally wrote:

    Why type when you can use Siri?

  • Report this Comment On May 07, 2013, at 9:47 PM, commercenary wrote:

    One question: are we a consumer culture, or a producer culture?

    Bill Gates is being too smart for his own good. Millions of people will buy iPads because it makes Consuming easier. The relatively few people who actually move the world will find another solution for their productivity. (And still, what the heck, buy an IPad, too.)

  • Report this Comment On May 07, 2013, at 10:21 PM, Dvoraak wrote:

    Gates has obvious reasons for his bias but his argument doesn't hold up at any level. The mass market doesn't create, it consumes. It's entirely happy with the balance that tablets like the iPad, Kindle Fire and Nexus 7 give.

  • Report this Comment On May 07, 2013, at 10:26 PM, adarc wrote:

    Hate Kindles, hate i-pads.

    Why bother with these if you already have a laptop of any kind?

  • Report this Comment On May 07, 2013, at 10:41 PM, JimsMc wrote:

    Bill doesn't allow Apple products in his house and discourages MS employees too.

    So, how can you compare Apples and oranges if you never touched an Apple. He's missing half the picture here.

  • Report this Comment On May 07, 2013, at 10:46 PM, JimsMc wrote:

    Remember At Microsoft they had a 'funeral' for the iPhone. It included black robes and a mock ceremony just before they were announcing Zune.

    These 'antics' embarrass them.

  • Report this Comment On May 07, 2013, at 10:51 PM, butthead2u wrote:

    If you're an occupier and don't really do work an iPad is just fine for the iSheep,masses but people that work will love the Windows based tablets. This just the beginning folks, relax, it's nowhere close to being over.

    Microsoft will have many form factors to choose from and like the PC era will win once again. All this BS about the death of the PC is silly, everybodies going to own PC's and tablets, it's not one or the other, just as people no longer own 1 TV.

    I'm fine with Bill Gates and Ballmer running Microsoft too, they've got Billions invested I'm pretty sure they're not going to do anything stupid, how much you got invested? I take it you're skater than these two guys, eh?

  • Report this Comment On May 07, 2013, at 10:59 PM, doawithlife wrote:

    Ok, about 2% of PC users need more power from their PC for graphics and video editing. 2%, only 2%. The rest only need excess power to play games.

    Most computers are sold on the ability to play games. If it wasn't for games a 2 core AMD with a SSD would be enough for most users. The ability for the Surface Pro to play full games, is the true sale point. People may say they need power for other reasons, but the gaming is the true reason. Not to mention, video editing tests on the Surface Pro seem to run rather quickly.

    Articles by people who have never owned the device has killed it. MS screwed up by not giving out enough free units to writers (the way Apple gives out free units). I guess MS gets what they ask for.

  • Report this Comment On May 07, 2013, at 11:04 PM, Pilm wrote:

    Forget all the emotional hype on both sides and ask yourself one question, do iPad owners also own a PC, if so, then Bill Gates is right, people also want a PC. I don't know the numbers but I suspect the majority of iPadders have PC's!

  • Report this Comment On May 08, 2013, at 12:55 AM, herky46q wrote:

    My iPad is my only personal computer. It replaced my aged desktop. I considered a laptop, but when a tablet can do everything I want or need, why bother with the extra cost and complexity? The iPad is brilliant.

  • Report this Comment On May 08, 2013, at 4:05 AM, uchikowasu wrote:

    As many have pointed out, there is a fundamental difference in the use of the iPad and a laptop. An iPad, for 95% of the users, is a toy. It can be used in some work environments but by and large, it is used to play games, watch cat videos, etc.

    It is not truly competing with a laptop because if you type a lot, need a very large screen, you really have no choice. For many, it is not an either/or proposition but rather own one of each. Plus households that use a PC may own several iPads.

    Personally, since I write a lot, I purchased a netbook in late 2008 and it has served my purposes well. It is complemented with a $40 refurbished Kindle reader. That is all I need. If I want to game, I will either use a 3DS while traveling and at home, either the console or the PC. Everything else is on my smartphone. I have zero need for a tablet (if forced, I would go with a Nexus before an iPad) but fall into a small group.

    It is just unrealistic to think people will only buy one or the other.

  • Report this Comment On May 08, 2013, at 4:52 AM, cpljebecker wrote:

    Does nobody know that you can use iWork on an iPad. I think iWork is better then office anyways and you can even export your files to office format. if you need to send them to someone running windows.

  • Report this Comment On May 08, 2013, at 5:53 AM, SDL83 wrote:

    I think they call this "wishful thinking" :)

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