Any fair evaluation of the numbers says that Apple's (NASDAQ:AAPL) iPad is the tablet to beat. But Microsoft (NASDAQ:MSFT) may have already found a winner in the new Surface tablet. According to Mr. Softy's retail website, the $499 edition of the new Surface, due on Oct. 26, is already on a three-week back order.
To be fair, the appearance of a backlog isn't the same as an actual backlog. Microsoft could be keeping inventory precious in order to artificially stoke demand.
But that's also a cynical take. The other possibility is that businesses are generally interested in the Surface. After all, Microsoft is selling the device with a choice of keyboard-embedded covers that, for about $100 more, transform Surface into a lightweight laptop that runs Windows.
Therein lies the potential advantage -- and danger. Whereas the iPad has done nothing to cannibalize Apple's sales of laptop Macs, Surface could very well threaten Ultrabook sales in which Intel (NASDAQ:INTC) has placed so much faith, yet which have failed to bear any meaningful earnings gains.
Microsoft isn't the only one exploring ways to profit from offering a convertible PC-tablet experience. China's Lenovo -- one of only two global PC manufacturers to ship more units during the third quarter -- is making a line of convertibles in time for the holiday season.
Surface is more of a de facto convertible, since the only PC part that ships with the device is a keyboard, and even that's an option. Nevertheless, in offering it, Mr. Softy appears to be addressing a potential need that Apple has refused to even explore.
My colleagues aren't as sold on Surface as I am. Fellow Fool Evan Niu sees Microsoft taking a hefty writedown due to its inexperience managing inventories. Senior technology analyst Eric Bleeker says Microsoft has already bungled the launch with its pricing plan, hurting chip partner NVIDIA (NASDAQ: NVDA) in the process.
Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of Apple at the time of publication. Check out Tim's web home, portfolio holdings and Foolish writings, or connect with him on Google+ or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.
The Motley Fool owns shares of Apple, Intel, and Microsoft. Motley Fool newsletter services recommend Apple and Intel. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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