Is Apple Fearful of Microsoft’s New Tablet?

The feud between Microsoft Corp. (NASDAQ:MSFT) and Apple Inc. (NASDAQ:AAPL) dates back decades. The Windows maker won the operating system battle, but a Steve Jobs comeback tour in 1997 placed the near bankrupt Macintosh creator on path to become today’s largest publicly traded company. Innovative products such as the iPod, iPhone and iPad have other tech companies scrambling to duplicate iGadgets. On Monday, Microsoft became the latest company to challenge Apple, again.

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After failing to copy Apple’s success in the portable market with the Zune music player and Kin smartphone, Microsoft is now tapping into the industry with another late arrival. At a special Apple-wannabe event in Los Angeles last night, the company unveiled its own Windows-powered tablet computer called Surface, a name it first used years ago to demonstrate a tabletop computer. The Surface is the first computer the company has ever made and will come in two versions. The Windows RT tablet is 9.3 mm thick and weighs 1.5 pounds, but the Windows 8 version is 13.5 mm and weighs about 2 pounds. In comparison, the new iPad is 9.4 mm thick and weighs 1.44 pounds. Like the iPad, Surface will also have front and rear cameras.

The version running Windows 8 will be powered with chips from Intel Corp. (NASDAQ:INTC), while the version running Windows RT will contain chips from Nvidia Corp. (NASDAQ:NVDA), based on designs from ARM Holdings (NASDAQ:ARMH). Although Microsoft did not provide pricing details or an exact launch date, Windows Chief Steve Sinofsky said the Surface will “be priced like comparable tablets.” The statement was very telling to the company’s mindset over the past few years, lackluster. Why would Microsoft even say “comparable tablets?” If it is going to succeed, it will need to differentiate itself from the juggernaut known as the iPad.

The Surface will feature a 10.6-inch screen on both versions, compared to the iPad’s 9.7-inch. One of the most notable features from Microsoft’s tablet is the built-in kickstand and magnetic cover. On the inside cover, users will also find a full keyboard with pressure-sensitive keys. “The Surface is a PC, the Surface is a tablet and the Surface is something new that we think people will really love,” claimed Steve Ballmer, chief executive officer. During the special event, Ballmer used the phrase “no compromises” to sum of the Surface. Al Hilwa, an analyst at IDC, said the combination of PC and tablet features makes Surface a “true converged” device. “A Swiss Army knife of a tablet,” according to the WSJ.

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The world’s largest software maker will definitely have an uphill battle when it comes to stealing sales from the iPad. Apple’s high-in-demand tablet accounted for two-thirds of tablet shipments last year. Furthermore, Apple’s ecosystem is like none-other, as consumers are unable to say no to the iCloud. According to CNBC’s All-America Economic Survey in March, half of all households in the United States own at least one Apple product. Homes that own at least one Apple product own an average of three. One-in-10 homes that do not currently own an iGadget, plan on purchasing one next year.

While some may be quick to give Microsoft’s Surface the blue-screen of death kiss, the company has proved it is not impossible for it to be late to the party and be successful. The Xbox was the new kid to the video gaming block, but turned out to be a huge hit for the company. It was followed by the Xbox 360, which has sold 67 million units since its launch nearly seven years ago. The Kinect for the console was also very well-received, selling 19 million units to date.

On the surface, Microsoft’s new tablet appears to be a direct shot across the bow of Apple. However, it is far too early to tell if Microsoft can provide enough content to compete with Apple’s more than 600,000 apps. The Windows maker announced at its special event that Netflix Inc. (NASDAQ:NFLX) was making a version of its streaming app for Windows 8, but will other companies follow?

“What can I say? Hell froze over — this is totally antithetical to their core business,” said Michael Gartenberg, an analyst at Gartner Inc. “They’re taking their destiny into their own hands. It’s a bold move, but it’s a very risky one. This could turn into Microsoft’s next Zune or its next Xbox,” according to Bloomberg.

Shares of Apple (NASDAQ:AAPL) closed up .28% at $587.41, while shares of Microsoft (NASDAQ:MSFT) closed higher 2.88% at $30.70 on Tuesday.

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