Analysts Say Microsoft Tablet No Threat to iPad

Microsoft Corp's new tablet computers are no threat to Apple Inc's iPad, given the lack of enthusiasm among developers to create applications that run on the new Windows operating system, analysts said.

June 19, 2012

June 19 - Microsoft Corp's new tablet computers are no threat to Apple Inc's iPad, given the lack of enthusiasm among developers to create applications that run on the new Windows operating system, analysts said.

Microsoft introduced its own "Surface" line of tablets on Monday, taking on Apple as well as its own hardware partners including Samsung Electronics Co Ltd and Hewlett-Packard Co.

"Though pricing details are unclear ... Microsoft will need to significantly undercut the iPad to be competitive," Jefferies analyst Peter Misek said.

The Surface tablet will come in two versions, one running Windows RT, based on the same chip designs that power most tablets, and a higher-performance version running Windows 8 Pro.

"The most important factor in the success of a tablet is its ecosystem. Based on our discussions with developers, we find the lack of enthusiasm concerning," Misek said.

Misek said he expects Windows 8 tablets to struggle to compete with the iPad, which offers over 225,000 apps, and to a lesser extent with Google Inc's Android-based tablets, such as the Galaxy Tab.

Microsoft's lighter, thinner version of the Surface tablet would compete directly with the iPad, while the second, heavier tablet, aimed at the new generation of lightweight laptops, would compete with larger PC makers.

But selling two versions of the tablet in the same retail channels will confuse consumers, said analysts at Jefferies, Forrester Research and ThinkEquity.

"Choice is a key tenet of Windows, but too much choice is overwhelming for consumers," Forrester Research said. "Apple gets this, and limits iPad options to connectivity, storage, and black ... or white."

However, a keyboard that doubles up as the tablet cover and aggressive pricing could help Microsoft gain market share, some analysts said.

"The keyboard, a simple accessory, is what makes the device most compelling, as it preserves traditional interface that we believe many users appreciate (and will demand) with the subtlety of a cover, something most users will want anyway," said Citi analyst Walter Pritchard.

Morgan Stanley's Adam Holt said the cover keyboard, compatibility with Microsoft Office, integrated USB ports and features optimized for Skype would help Microsoft differentiate itself from other tablet makers.

Microsoft shares edged up 19 cents to $30.03 on Tuesday before the bell. They closed at $29.84 on Monday on the Nasdaq. (Reporting by Vidya P L Nathan in Bangalore; Editing by Tenzin Pema and Don Sebastian)