Can Microsoft take a bite out of Apple? - Financial Times

Ever since Apple’s iPod revolutionised the digital music industry, Microsoft executives have been drawn by the allure of producing their own consumer devices.

Enthusing about the iPod’s simple scroll wheel, the hardware interface that made it easy to sift through large libraries of music, Steve Ballmer, Microsoft chief executive, said at the time that his company might have to develop more of its own hardware if it wanted truly to compete with Apple.

Now, seven years later, the moment may finally have arrived.

The world’s biggest software company has been gearing up to introduce its own tablet computer, which would compete head-to-head with Apple’s iPad, according to people familiar with its deliberations. The move would mark a sea change in the 30-year history of the personal computing industry. But with Apple threatening to disrupt the way of doing business on which its fortune is founded, Microsoft may have little choice.

The wraps could be taken off such a device late on Monday in Los Angeles, where Microsoft has issued last-minute invitations to a media event whose subject remains a mystery. If matching Apple is the plan, then the fever of speculation and anticipation that has broken out in the tech world shows that, in the publicity department at least, Microsoft has at least learnt a few tricks from its nemesis.

One person familiar with the situation said that Microsoft is preparing to show off a tablet in an attempt to rival the iPad. Another person said that Microsoft had sounded out hardware makers about producing a tablet under the software company’s own brand, and other reports suggest that this is the device that will make its debut on Monday.

Microsoft has dallied with hardware before â€" with mixed results. While it has long been a successful maker of keyboards and mice, its attempt to rival the iPod with the Zune music player ended in abject failure. The company’s Xbox games consoles have fared better, though the machines at one stage suffered a wave of hardware failures that left a cloud over the brand.

That points to one of the biggest risks Microsoft faces in trying to sell the machines that run its own software, said Michael Cherry, an analyst at Directions on Microsoft, an independent research firm. “Windows is so important to them, they can’t risk a bad experience,” he said.

It may have little choice but to gamble. One version of the latest Windows, due later this year, will run on machines using the same low-power chips that are used in the mobile industry. Known as Windows RT, this marks Microsoft’s first break with Intel’s chip technology, on which it has long relied, and raises the possibility of devices that can rival the iPad’s extended battery life â€" though it has also left Microsoft with a problem.

Since it sits on new hardware, Windows RT will not run any programs written for earlier versions of Windows. That is a break with the “backwards compatibility” that has encouraged customers to upgrade to new machines and left computer makers wary about introducing their own models of the new tablet.

That explains Microsoft’s apparent readiness to jump into the tablet market with a device of its own, said Richard Doherty, an analyst at Envisioneering. Launching a Microsoft machine would demonstrate its commitment to the software while nudging other companies into producing their own devices, he said.

One risk of this approach is that it would anger the PC hardware partners on which Microsoft has always relied, said Al Hilwa, an analyst at IDC, a tech research company. This, though, may be the only way for the software group to goad them into action.

Even if a Microsoft tablet sees the light of day, meanwhile, it will still face a long climb to match the iPad, which is in its third iteration and has already seen off a wave of copycats. At birth, Windows RT machines will lack a wide range of software applications, particularly in comparison to the iPad â€" the very problem that Apple itself faced in the early years of its competition with Microsoft, when the greater availability of third-party applications drew buyers to PCs.

To overcome this weakness, Microsoft has already said that it will bundle its Office software with RT machines. By setting Monday’s event in a home of the entertainment industry, it has stirred anticipation that it will also announce plans to package content such as films or books with the devices â€" something that would do much to increase their appeal, according to Mr Hilwa.

Matching Apple’s runaway success with the iPad is a tall challenge. But as Microsoft’s dalliance with hardware suggests, it may be time to try some radical measures.

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