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Apple and Samsung's New Devices Could Destroy the Demand for Windows 8 Tablets

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Despite receiving support from nearly all of its hardware partners, Microsoft's (NASDAQ: MSFT  ) Windows 8 has yet to catch on as a tablet operating system. Last July, Microsoft took a $900 million writedown on its Surface tablet. Though sales have improved, Windows tablets remain largely in the minority -- IDC's most recent data shows Microsoft's operating system with just 3.4% of the global tablet market.

But even that modest success could soon unravel. Both Apple (NASDAQ: AAPL  ) and Samsung (NASDAQOTH: SSNLF  ) appear poised to aggressively target the enterprise tablet market in 2014, perhaps the only market where Windows tablets have an advantage.

Samsung unveils the Galaxy Note Pro at CES
Samsung has been a longtime Microsoft partner, manufacturing and selling a number of Windows 8-powered tablets under the ATIV brand.Yet, its lineup of new devices could dampen demand for Windows tablets, particularly among business users.

At CES this week, Samsung unveiled its "Galaxy Pro" tablets -- a family of Android-powered tablets aimed at enterprise users. The flagship device sports a 12.2-inch screen, but Samsung is also selling Pro tablets in 8.4- and 10.1-inch variations. Regardless of the size, each Pro tablet comes loaded with a number of business-focused apps, as well as a special interface, and a number of productivity features (like the ability to have four app windows open at the same time).

Alongside its Pro tablets, Samsung has created a new business unit -- Samsung Enterprise Services -- a group centered around getting businesses to use Samsung-made mobile devices.

Will Apple roll out an iPad Pro for business users later this year?
Apple is expected to follow Samsung into the larger tablet arena later this year. For months now, various reports have suggested that Apple has a larger iPad in the works -- a variation of its popular tablet, likely to sport a 12- or 13-inch screen. Given Apple's propensity to use the "Pro" moniker with its Macs, Apple's new tablet could, like Samsung's, carry the Pro tag line.

It could also be intended for business use, at least according to analysts at Evercore Partners. They expect the device to ship late in 2014, and be aimed at the enterprise market. Many businesses already use the iPad in some capacity, and offering a larger, beefier version could reinvigorate iPad sales.

Will Windows tablets survive the onslaught?
If Evercore is right, Apple's new iPad could take a toll on Windows 8 tablet sales. Evercore believes Apple will pitch the tablet as sort of a middle ground between a tablet and traditional laptop -- a hybrid device in the mold of Microsoft's own Surface. Given the iPad's established mobile ecosystem, a hybrid device aimed at business users could be far more attractive than any competing device running Microsoft's operating system.

Still, there's one major factor working in Microsoft's favor: Its ownership of Office. Both Apple and Samsung's tablets will not be able to access the full version of Microsoft's dominant office software suite, at least not without streaming it from another PC. In the end, that could limit their adoption among business users.

Regardless, the trend toward larger, "Pro" tablets from both Apple and Samsung should be viewed as a major threat to Microsoft's Windows business, at least in terms of its success as a mobile operating system.

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Read/Post Comments (15) | Recommend This Article (6)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 08, 2014, at 10:30 AM, twolf2919 wrote:

    With respect to "Office" not being on either the Samsung or Apple tablets: why do you consider that such a major factor working in Microsoft's favor? While I readily concede the alternatives' (in Apple's case the free iWorks apps) inability to import the most complex MS word documents or excel spreadsheets, I doubt many folks who use the tablet form factor will need (or want) to edit such complex documents.

    One of the major advantages of MS Office that prevented users from using alternatives has always been familiarity. People didn't want to learn a whole new UI. But in going to tablets, I believe people will have to learn a new UI anyway (I haven't actually used MS Office on tablets - I'm assuming that MS Office for tablets has a different UI than on the desktop if for no other reason than to make accommodations for "touch").

  • Report this Comment On January 08, 2014, at 10:55 AM, Waldo wrote:

    There is a demand for Windows 8 tablets? Really.

  • Report this Comment On January 08, 2014, at 11:10 AM, melegross wrote:

    I'm not so sure that the enterprise is going to be a major market for Win 8 tablets either. I can give an example.

    My friend, who is an enterprise software sales executive for IBM, bought the Surface Pro last year. He thought it was great. But IBM hasn't really supported the device with Modern UI apps .

    Recently, we were talking about tablets for audio use, as a system controller, and he bemoaned the fact that there was nothing decent for a Win 8 tablet, so I suggested he look into the iPad, as that's one thing I use mine for.

    He then surprised me by saying that he might do that, because IBM just gave him an iPad Air.

    If that isn't a turnabout, I don't know what is!

  • Report this Comment On January 08, 2014, at 11:39 AM, fauxscot wrote:

    This just makes no sense to me. I/one use(s) a tablet PRIMARILY for portability. The tradeoff is just not compelling. Between the enormous incremental cost of a display (in both area, backlighting, and pixel management), I cannot imagine many scenarios where a much larger tablet would hold sway. Cash register? Perhaps. But does such a thing need a retina display? Medical? Data entry doesn't require it, and fixed-location displays seem more the rule if you need real estate. Business? Maybe some sales stuff, but a projector can hook to a phone, if you need large.

    Really, this almost sounds like "extra strength homeopathic medicines". If little is good, then non-little is even better?

  • Report this Comment On January 08, 2014, at 12:43 PM, jdmeck wrote:

    Will Apple roll out an iPad Pro for business? Hopefully not. Apple would be better to come out with a product like others are selling that is a tablet detachable from a keyboard computer base. The product would run both systems (or a new system combining both). A large tablet is not really very useful. A hybrid would be, and would appeal much more to business. Microsoft has the right idea., just a crappy system.

  • Report this Comment On January 08, 2014, at 1:04 PM, TTES wrote:

    @jdmeck: I think this is what Apple is ultimately going to come out with. You will be able to use the iPad as a standalone device (running iOS). Or you can attach (perhaps wirelessly) to a dock, mouse and keyboard and run it as a more full-fledged mid-range desktop-like machine (running OS X).

    With iOS and OS X starting to get more similar, I can easily see this being the direction Apple's going.

    I can also see this coming out later in the year...perhaps with Apple's new iPhone Air?

    Just in time for Christmas!

  • Report this Comment On January 08, 2014, at 1:13 PM, ChrisKash wrote:

    Competition for MS is to bring out lame products at 10 times the competitors price. They will sure capture the entire market with that strategy just as Blackberry did by introducing a 7 inch tablet costlier than Apple's 9.7 inch. We all know how well Blackberry is doing and how its superiorly expensive piece of junk has cut Apple's sales. The shortlist of CEO's MS is looking at to replace Ballboozled are in the late fifties and over, they will surely come out with another winning strategy.

  • Report this Comment On January 08, 2014, at 3:37 PM, dapperone wrote:

    "Apple and Samsung's New Devices Could Destroy the Demand for Windows 8 Tablets"

    The title indicates that the author is a little out of touch with what's been going on with Windows 8 tablets recently. Dell, Toshiba, Lenovo and others have recently introduced a slew of very favorably reviewed 8" tablets in the $300 and under price range that are intended to compete in the smaller, lower priced range now dominated by Nexus 7, Samsung, Kindle, and the iPad Mini. Samsung and Apple introducing high end enterprise tablets will obviously have no effect on the demand for these new, more affordable Windows 8 tablets,.

  • Report this Comment On January 08, 2014, at 6:44 PM, ADrolson wrote:

    don;t have windows 8 yet but wanted a new tablet and was deciding which one. thought about windows surface. but for one thing i got a Android tablet because windows don't have GPS i wanted one with GPS and Android GPS on any windows tablet. so to Microsoft sorry about that. why isn't there GPS in windows.

  • Report this Comment On January 08, 2014, at 8:29 PM, Carling wrote:

    I wish you would keep up to date with your technology news and stop the guessing game.

    Todays world wide technology report

    An open source offering called Tizen, based on the Linux operating system, is expected to be installed on telephones sold from the end of March, NTT Docomo spokesman Jun Otori told AFP.

    Tizen is the product of a tie-up among companies from Japan, China, South Korea, Europe and the United States The consortium that makes up Tizen Association include US giant Intel, Japan's Fujitsu, South Korea's Samsung and LG, China's Huawei, and European mobile carriers Vodafone and Orange.

    Let me report the world wide technology News

  • Report this Comment On January 09, 2014, at 12:48 AM, AsokAsus wrote:

    Windows 8 and RT are doomed to fail against Android and iOS. Windows, prior to Windows 8 is fundamentally an industrial product for industrial use, and it’s not really needed or wanted on consumer slabs or phones. Therefore Microsoft never be relevant in the mobile world if they persist with trying to foist Windows onto mobile devices for consumers.

    On the other hand, trying to foist a cell-phone GUI like Metro UI onto industrial :PC users is the absolute height of insanity.

    With Windows 8/Windows RT/Metro UI/Apps Store, Microsoft managed to produce the perfect lose-lose-lose situation. And it took a clueless bozo like Ballmer to pull off this hat trick. Ballmer managed to make the wrong decision 100% of the time. Heck, even flipping a penny would have produced better results than Ballmer, because it would have been right half the time. And a WHOLE bunch cheaper than Ballmer too!

    Which is why Microsoft is failing and will continue to fail with its mobile “strategy”, namely their notion of “consumerization of IT”, i.e., we’ll jam Windows onto “mobile” devices and call it good. Such an approach would be equivalent to Peterbilt, who makes the tractors for 18 wheelers, deciding they needed to suddenly and desperately get into the consumer automobile market, and the only way they could think to do that was to make tiny, passenger-sized 18-wheelers.

    The equivalent approach by Microsoft shows just how intellectually bankrupt they are when it comes to innovation. The fact of the matter is that the average consumer is desperately FLEEING from all the myriad of Windows problems that they’ve been forced to endure for decades, namely a balky, buggy, brittle, virus-prone OS that does little except get in their way.

    On the other hand, IOS and Android devices are successful precisely because they ARE NOT WINDOWS: they JUST WORK and they are SIMPLE devices for SIMPLE use! Consumers don’t need and don’t want an 18-wheeler to dash to the grocery store with to pick up a few groceries.

    Even worse, in addition to plastering the horrifically awful Metro UI GUI on top of Windows 8 so Microsoft could pretend an 18-wheeler is an automobile, Microsoft also made the completely insane decision to try to FORCE their entire installed enterprise and SMB base to embrace that same horrifically awful, productively killing, unintuitive, ergonomically destructive touch interface on ALL PCs! Continuing to use the 18-wheeler analogy, it would be like Peterbilt deciding to put automobile controls in their REAL 18-wheelers in addition to the mini 18-wheelers they were pretending were automobiles.

    As a consequence of this total ineptitude, Microsoft doesn’t have a snowball’s chance in Hades of becoming anything more than a niche player in consumer mobile, while at the same time totally alienating their bread and butter enterprise and SMB customers with an OS that tries to make all PCs look like cell phones.

    Right now, Microsoft is at the point with their disastrous Windows 8/Windows RT/Metro UI/Apps Store mobile strategy as Barnes and Noble is with their failed me-too NOOK strategy, and I predicted close to two years ago that, like CEO William Lynch, Ballmer would be forced to leave Microsoft within a year.

    If Microsoft is lucky, they can then woo back their POed enterprise and SMB customers with Windows 9. If Microsoft persists with the insanity of trying to foist Metro UI and touch on industrial customers, Microsoft will be in real trouble.

  • Report this Comment On January 09, 2014, at 10:12 AM, MIKE001 wrote:

    i'm not even going to give any credit to this report and read it. these fools think that windows is not good meanwhile windows is BACK and in a big way . I only use windows product and always will.

  • Report this Comment On January 09, 2014, at 10:26 AM, dapperone wrote:

    @ADrolson: Most of the new Windows tablets include stand-alone GPS.

  • Report this Comment On January 09, 2014, at 2:59 PM, CrazyDocAl wrote:

    I was going to get an Android tablet but ended up with a Surface Pro instead. Windows RT is too limited to be of much use to almost anyone (playing on the internet seams like it's limit). Once I had time to really play with them it became clear that having full windows is worth the extra weight and money. Everything I have running on my work PC I can have on my S Pro.

    As for Windows 8, I like it. I didn't at first but I realized that it's like 7 with an extra feature, Metro. If you don't like Metro then use the desktop. Metro has some features I like so I'm starting to switch from the desktop. I doubt I'll ever buy a Windows phone but who knows. Once you get use to Metro the phone should be easy to learn.

    What's going to kill tablets is people wanting more power and a real OS. I'm fine with only running apps on my smart phone. But I want real power once I step up to something that doesn't fit in my shirt pocket.

  • Report this Comment On January 10, 2014, at 10:21 AM, ronrfox wrote:

    I have used an iPad from the beginning. Lately I have been trying out a Windows 8 tablet. The ability to use PC compatible programs in general and Word in particular is the ONLY reason I use a Windows 8 tablet. There is not one Android or iOS app that is compatible enough with Word to do anything but the most simple edits. I use my tablet for non-work activities 98% of the time. For the 2% of the time I want to be able to work directly in the programs I use at work. I go back to why I wanted a tablet in the first place - because PCs sucked - battery life was ridiculously short, it took forever to boot up and get online, the size and weight was unbearable if I was toting it around the country in a shoulder bag. The iPad solved all of those problems with the small catch that there were some things that were difficult to do like edit Word files. Now the Windows 8 tablets solve that problem with the not so small catch that they are not quite as elegant, light, fast, have nearly as many useful apps, or as long a battery life as the iPad. Are they good enough. Yes, but only barely. PROs and CONs: The PRO is that it is a full blown Windows 8 PC in a tablet. The CON is that it is still a Windows PC. Microsoft has done an admirable job of hiding that fact, but even though it can do everything I want a tablet to do, it does everything not quite as well, and it takes at least 64GB to do it.

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Sam Mattera

Sam has a love of all things finance. He writes about tech stocks and consumer goods.

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