Microsoft’s New ‘Surface’: An iPad Killer?
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The Fiscal Times
June 18, 2012

Apple’s (AAPL) iPad may finally have some real competition – and it comes from Microsoft (MSFT), of all places.

After falling behind the likes of Apple and Google (GOOG) in keeping up with consumers’ shift to mobile devices, Microsoft on Monday unveiled its own tablet computer, the Surface.

Microsoft built up suspense for the unveiling by sending out invitations last Thursday to a mystery event in Los Angeles. “This will be a major Microsoft announcement — you will not want to miss it,” the invite read. With that kind of Apple-esque buildup, Microsoft was under pressure to deliver — and based on early reactions to the oddly timed announcement, it did.

The Surface, which will run the forthcoming Windows 8 version of Microsoft’s operating system software, has a 10.6” Gorilla Glass screen, slightly larger than the iPad’s. The basic version of the device weighs about 1.5 pounds, like the iPad, while a version running the Windows 8 Pro system and featuring an Intel processor will weigh closer to 2 pounds, but will be about as thick as Apple’s segment-leading gadget. The Surface will come with a built-in kickstand, useful when watching video. And like Apple’s iPad, it has a detachable cover, only the Microsoft version also serves as a keyboard.

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Whether or not the Surface tablet proves to be a game-changer in the world of mobile computing, it definitely changes the game for Microsoft, which has for years built its business around developing and licensing software. The company has made hardware before – most successfully with its Xbox gaming line, but also with products like Kin phones and the Zune digital music player, its answer to Apple’s iPods. (Remember that device, which was discontinued last year? Tech writers certainly do.

The hours leading up to Microsoft’s Monday announcement probably saw more mentions of the Zune than any other time since its launch nearly six years ago.) But it has most typically stuck to software like Windows and its best-selling Office suite while leaving the hardware side of things to partner companies like Hewlett-Packard, Dell or, in the smartphone business, Nokia. All that changes with the Surface.

“This is a total flip of MSFTs business model of software licensing,” Gartner research director Michael Gartenberg tweeted during Microsoft’s media presentation. “It will be interesting to see how Microsoft licensees react when they discover they are competing with Microsoft as well as Apple.”

It’s a risk Microsoft has to take if it wants to stay relevant and compete with Apple and Google. At Monday’s event, Microsoft CEO Steve Ballmer reportedly took a stab at differentiating the Surface from the iPad. He said that Microsoft’s tablets would involve "no compromises" for consumers – a swipe at the difficulty of using spreadsheets or word-processing programs on the iPad, or that device’s lack of support for Flash video. “Surface is designed to seamlessly transition between consumption and creation, without compromise,” the company’s official press release said.

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Despite those issues, the iPad has been making inroads in the business world – as have Apple’s computers and laptops – thereby posing a burgeoning threat in Microsoft’s traditional area of dominance. With the Surface, Microsoft is looking to return the favor and cut into Apple’s dominant market share while providing consumers with a reason to give Windows 8 a look. Others have tried to challenge the iPad, but high-profile efforts from the likes of Hewlett-Packard and Research in Motion fizzled quickly.

It’s too soon to say for certain that the Surface will fare differently; too many questions remain unanswered. Microsoft has yet to specify a release date – it said only that the Windows RT version would come out when Windows 8 hits the market this fall, and the Pro model would follow a few months later – or pricing, for example. And the success of the device will also depend on the software it runs – including Windows 8 and whatever third-party applications developers create.

But based on the initial presentation and early reaction, Microsoft’s new rollout may have the best chance yet of cutting into the iPad’s edge – and establishing Microsoft as a player in mobile.

Watch a preview of the Surface tablet:

Executive Editor Yuval Rosenberg oversees coverage of business, the economy, technology and Wall Street. A former web editor at WNYC, Fortune and Newsweek, he also writes on a wide range of subjects.