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Microsoft Pri0

Welcome to Microsoft Pri0: That's Microspeak for top priority, and that's the news and observations you'll find here from Seattle Times technology reporter Matt Day.

June 16, 2012 at 10:02 AM

Microsoft may be set to make its own tablet

(This story is running in the print edition of The Seattle Times June 16, 2012. – Janet I. Tu)

Speculation has coalesced around the idea that Microsoft is making a major shift and unveiling its own branded and designed tablet to compete with the iPad.

That’s following an invitation the company sent out earlier this week to media to attend a mysterious event Monday afternoon in Los Angeles.

The invitation, which touted a “major Microsoft announcement,” provided no details of what the announcement will be about nor even where in Los Angeles the event would be held. (That latter detail will be sent to media Monday morning, the company said.)

In the meantime, reports have surfaced, including in The New York Times, The Wall Street Journal’s AllThingsD, and The Wrap website, that Microsoft is expected to unveil its own tablet Monday running either Windows 8 — the next version of its flagship operating system designed to run on Intel and AMD processors, or Windows RT, the version of Windows designed to run on ARM-based processors.

Microsoft spokespeople declined to comment.

If those reports are accurate, it would be the first time Microsoft has created its own computer hardware running Windows.

Microsoft has always relied on its hardware partners — HP, Dell, Samsung, for example — to create the PCs, laptops and tablets running its Windows software.

That’s a markedly different strategy than the one chosen by its longtime rival, Apple, which produces both its own hardware and the software running on it.

Though Microsoft has its own hardware business, that group focuses mainly on peripherals, such as keyboards, mice and webcams. It also produced the Zune player, designed to compete with Apple’s iPod, which Microsoft pulled the plug on last year.

The closest Microsoft has gotten to creating its own hardware device running Windows is with the Xbox, which is reportedly based on a version of Windows 2000, said Rob Helm, an analyst with the independent research firm Directions on Microsoft.

“It would be surprising” if Microsoft got into the tablet hardware business, but it would be understandable if the company felt it was something it had to do, Helm said.

Microsoft might be feeling pressure to keep the price down, and could use its huge amount of capital to negotiate lower rates for parts in the supply chain.

Or Microsoft’s aim might be to ensure quality. That, though, is a double-edged sword, Helm said, citing the Xbox’s “red ring of death.”

When the Xbox 360 first came out, many customers experienced three red blinking lights on the console, indicating a general hardware failure.

The problem was so extensive that Microsoft eventually issued an extended warranty program that cost it at least $1 billion.

On the other hand, the Xbox 360 is now one of Microsoft’s biggest successes, leading the current generation of game consoles in sales for over a year and making the Xbox brand a hot commodity even as it’s being broadened to encompass movies, music and other general entertainment.

Microsoft might also be taking a lesson from its experiences with Windows Phone. Despite its desperation to succeed in the smartphone market, Microsoft didn’t get into the hardware business.

Instead it relied on its traditional manufacturing partners, such as Samsung and HTC, and formed a special relationship with Nokia with the idea of producing smartphones where the software and hardware worked especially well together.

The problem with that is Nokia is now in such dire straits that “it may not be able to deliver what Microsoft had hoped for,” Helm said.

“But Microsoft has the capital to prop up what might be an extended campaign to win in the tablet market,” he said.

Microsoft might have given an indication that it was thinking about producing its own ARM-based devices two years ago when it signed a licensing agreement enabling it to build processors based on ARM architecture.

“We assumed at the time that that was because Microsoft might want to be able to contribute to its partners, to build technologies to go into the products that its partners roll out,” Helm said. “But it’s conceivable that it might have decided to do so itself.”



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