Microsoft makes 'radical' move by designing, selling own Surface tablets

'As bold a move as anyone has made in this industry,' says analyst about gamble to compete with longtime hardware partners

Microsoft introduced its own tablet line on Monday, dubbed "Surface," breaking with a 37-year tradition of never competing directly with the hardware partners that have helped make Windows the most successful operating system ever.

The company did not name prices for the two tablets it plans to launch or a definitive timeline, although it said the first would debut around the time Windows 8 and Windows RT go public. The second will go on sale about three months later.

At a Los Angeles event -- a hastily-called press conference whose invitations were sent out just days ago -- CEO Steve Ballmer, top Windows executive Steven Sinofsky and others took the stage to unveil the 10.6-in. Surface, which comes in two versions, one that runs Windows RT on ARM, another that runs Windows 8 Pro on an Intel-chip.

"It was always clear that what our software could do would require us to push hardware, sometimes where our partners hadn't envisioned," said Ballmer of the decision to design and build the Surface. "With Windows 8 we did not want to leave any stone uncovered."

Microsoft is gambling that the move won't alienate its OEM (original equipment manufacturers) partners.

"This is a pretty bold move by Microsoft," said Michael Gartenberg, an analyst with Gartner. "A really radical move, as bold a move as anyone has made in this industry."

Gartenberg was referring to Microsoft's decision to cut out the middleman -- its OEMs, from Asus and Dell to Hewlett-Packard and Lenovo -- and sell its own hardware direct to consumers and businesses.

It was a move of some desperation, said analysts.

"Microsoft realizes that they're getting into [tablets] awfully late, and that they're not going to have the 1-2-3 shots at it that they have in the past," said Tom Mainelli of IDC. "So Ballmer, pretty interestingly, said 'We love our partners," and although he didn't say 'But...' there was one there. They clearly don't feel like they can trust their partners to bring out a product that's competitive."

Gartenberg echoed Mainelli "It shows how little faith they have in their partners," to come up with compelling hardware that can take on, more than any other rival, Apple and its iPad, Gartenberg said.

"This is the first time that Microsoft has actually entered the personal computing business, the Intel PC business," Gartenberg said of the Windows 8 Pro Surface. "I didn't hear 'HP,' or 'Dell' or 'Lenovo' mentioned even once, not a word."

But Mainelli wasn't sure OEMs had anywhere else to turn, no matter how angry they might be at the sudden competition from Microsoft.

"Partners aren't going anywhere," argued Mainelli. "Most of them have tried Android tablets, but without any success. So although this might irritate them, Microsoft knows that [the OEMs] need them."

Although both Mainelli and Gartenberg used the word "beautiful" to describe the Surface tablets, too many questions remained unanswered for them to predict whether the line will be successful -- the next Xbox, in other words, in Microsoft's history of producing and selling hardware -- or a flop akin to the Zune music player.

"I looks damn nice," said Mainelli, "But we're left with the same question that we had leading into the press conference: How much are they going to cost?"

Microsoft's only comments related to pricing were that the Windows RT Surface would be "comparable" to other Windows RT-powered tablets, while the Windows 8 Pro model will sell for about the same as an Intel-powered "ultrabook," the thin-and-light laptop category whose average price is in the $650-$700 range.

By comparison, Apple's iPad starts at $499.

"We don't know pricing, we don't know battery life, we don't know what apps come with it, we don't know distribution or marketing, we don't know the user experience or the migration experience for the Windows 8 Pro [Surface]," said Gartenberg, ticking off the unknowns.

Some of those that Gartenberg mentioned Microsoft did, in fact answer: The Surface will be sold in some markets' versions of the company's online store, and in Microsoft's retail stores, which are in the U.S. only.

"With hardware, actually getting to see and touch it makes all the difference in the world," said Directions on Microsoft analyst Michael Cherry. "And they said nothing about battery life."

The Microsoft Surface tablet, unveiled late on Monday, comes with a built-in "kickstand."In pictures: Surface -- 'A PC, a tablet and new'

Gartenberg agreed that hands-on time was crucial to how he would think of the Surface.

"It may be beautiful, but it's all in the details," Gartenberg said. "The last version of the Zune was one of the most beautiful pieces of hardware, but Microsoft sold about 10 of them. Consumers are not buying devices, they're not even looking at platforms. They're buying an integrated ecosystem with a personal cloud experience. And we don't know what the Surface offers there."

The two configurations are slightly different in weight and thickness, with the Windows RT-powered Surface the lighter and thinner of the pair. According to Microsoft, it's a few millimeters thinner than the iPad and a few grams heavier.

Surface for Windows 8 Pro, however, is bulkier and heavier -- it weighs about a half pound more than its Windows RT sibling and is about two-tenths of an inch thicker.

Both tablets sport a 10.6-in. display, whose resolution was among the things Microsoft did not discuss; two built-in cameras; multiple USB ports -- USB 3.0 on the Windows 8 Pro model, the older USB 2.0 on the Windows RT tablet -- but only the latter comes with Office apps, identified as Office Home & Student 2013 RT.

Microsoft said previously that Windows RT would include versions of Word, Excel, PowerPoint and OneNote; the mention of "2013" associated with Office is confirmation of what others had reported earlier as the likely numerical designation of the upcoming suite.

An integrated kickstand props up the tablet for easier viewing, and Microsoft will offer a pair of keyboard accessories. The first, a touch keyboard-cum cover dubbed "Touch Cover," will apparently be similar to pressing the on-screen "keys" on other tablets. The second, called "Type Cover," is a physical keyboard with a trackpad.

Both look very much like the one Apple sells for its iPads, and attach the same way, with magnetic fasteners.

However, it was unclear to analysts whether the Surface will come with a choice of cover; whether only the Type Cover is an optional, after-market purchase; or whether, as Sinofsky seemed to say, the Type Cover is included with the Windows 8 Pro.

Microsoft declined to comment on how it will package the Surface and the covers, or even if the pair will cost extra.

Such details matter, said Mainelli. "A big selling point was the keyboards," said Mainelli of the amount of time Microsoft officials spent discussing their design and touting their productivity-enhancing qualities. "But do they come with the Surface, or are they $50 each? Or $150? If for $500 all the cool stuff comes with [the Surface] that's one thing, but if they add $150 to the price, then oooh, it's a tough sell all of a sudden."

Each Surface will come in two configurations -- 16GB or 32GB of flash memory-based storage space for the Windows RT model -- 64GB and 128GB for the Windows 8 Pro tablet.

"You gotta give them credit, they got people excited," said Mainelli.

Exactly, added Gartenberg. "A week ago 'Microsoft' and 'tablet' weren't even used in the same sentence," said Gartenberg. "Now they're definitely in the conversation."

But Cherry, who once worked at Microsoft, was taken aback by the dramatic departure from nearly four decades of history. "Microsoft has only done hardware in situations where it thought it had to do so to drive the market, when it believed partners were not taking things in the direction they needed, or when there was something deficient in the marketplace," said Cherry.

"For whatever reason, Microsoft thought they had to do this to succeed this time with tablets," Cherry said, referring to the stylus-based slate-like devices that then-CEO Bill Gates pitched nearly 12 years ago.

Microsoft has created a website with some information about the Surface, and also published a terse specification sheet ( download PDF).

The Microsoft Surface tablet.

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at @gkeizer, on Google+ or subscribe to Gregg's RSS feed. His email address is gkeizer@computerworld.com.

See more by Gregg Keizer on Computerworld.com.

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