What can Microsoft do to carve out its own little niche in the tablet market?
At the moment, Apple's iPad dominates that market, with a growing number of Google Android tablets either fresh on store shelves or due to appear within the next few quarters. Both Research In Motion, with its 7-inch PlayBook tablet, and Hewlett-Packard, which is porting webOS onto a variety of devices, plan to release their own offerings by summer.
Within that context, Microsoft's absence is noticeable. During his keynote at this year's Consumer Electronics Show in Las Vegas, Microsoft CEO Steve Ballmer seemed to focus on virtually every market, except tablets. Meanwhile, the company's booth at the show had seemingly every single possible permutation of Windows-powered laptop, smartphone and gaming systems on display-and only a small number of touch-screens, primarily for the Asian market, locked in glass boxes.
Microsoft has a reputation as the archetypical "fast follower," or a company whose skill rests on recognizing emerging trends in the marketplace and putting a strategy in place to capitalize on them. That might have helped it dominate several market segments throughout the '90s, with products such as Internet Explorer.
But over the past five years, another narrative has emerged. It starts with another company creating a blockbuster product, whether Google with its search engine or Apple with the iPhone. Microsoft waits for a lengthy period of time, and then introduces a competitor-Bing in the former case, Windows Phone 7 in the latter-backed by hundreds of millions of dollars in marketing and development muscle. Thanks at least in part to that enormous tide of cash, Microsoft manages to keep the product alive in the marketplace until a certain subset of users discover its features, and begin to use it more and more. But those products fail to dominate their respective markets in the same way as Windows, Office or Internet Explorer.
Indeed, the jury is still very much out whether Microsoft's Windows Phone 7 can gain sufficient traction-even with the recently signed deal with Nokia-to survive amid the massive competitive pressures exerted by the Apple iPhone, Google Android and RIM's BlackBerry franchise.
All that being said, it seems as if Microsoft is determined to follow a similar strategy with tablets. Despite Ballmer's repeated assertions throughout much of 2010 that Windows-powered tablets will begin entering the consumer market in greater numbers this year, the rumor-mill remains dark and silent concerning such devices. When it comes to businesses, Hewlett-Packard has already released a Windows-powered tablet for the enterprise; however, with the company's attentions increasingly focused on webOS, it remains to be seen whether it will bother trying to repeat that feat, on a broader scale, for consumers. And while Dell also reportedly has plans for an enterprise Windows tablet, it seems much more intent on selling its Android-powered touch-screens.
Microsoft has previously announced that the next version of Windows will support system-on-a-chip architecture, in particular ARM-based systems from partners such as Qualcomm, Nvidia and Texas Instruments. Given ARM's presence on mobile devices, that heavily suggests Microsoft has tablet plans associated with "Windows 8."
Yet the current scuttlebutt suggests Windows 8 won't even hit the market until 2012, which leaves a substantial time gap. In the meantime, more and more Android-based tablets are due, and Apple-whose iPad franchise remains the segment leader, at least for the moment-will almost certainly continue to make its own tablet more advanced and feature-rich.
If Microsoft sticks to this timeframe, in other words, and its full-on consumer tablet push only begins in the context of Windows 8, it could become the surest test of its fast-follower strategy. By then, analysts predict the tablet market to be truly burgeoning, with tens of millions of units shipped; Microsoft's task will be to not only carve away market share from well-established competitors, but convince its own manufacturing partners to back a Windows tablet over Android and other proprietary operating systems.
By then, of course, the Dells, Samsungs and HPs of the world will have made untold millions in revenue and profits from their tablets and operating systems. Convincing them to devote resources to a competing Windows tablet will be no easy feat.
The other alternative is for Microsoft to develop a tablet-centric operating system, perhaps modified from Windows Phone 7. This could provide a shorter-term solution, and allow the company to elbow its way into the tablet market sooner than 2012. It would also lessen the time burden on the fast-follower strategy.
But there seem precious few rumblings that Microsoft will pursue such a strategy. Instead, the company seems content to wait on the sidelines, plotting its own consumer-tablet push behind closed doors. Something similar has worked in the past, with other products-but it's an open question whether it will work this time.