Analysts sceptical of Microsoft's latest bid to compete with Apple's iPad

Microsoft chief executive Steve Ballmer, said to unveil new software for tablets at the Consumer Electronics Show next week, will face sceptics who say his company won't narrow Apple iPad lead any time soon.

"By the time Microsoft gets it figured out everybody will already own an iPad," said Keith Goddard, chief executive of Capital Advisors, an investing firm in Tulsa, Oklahoma, that holds Apple shares. "That train has left the station."

Microsoft will announce a full version of the Windows computer operating system that runs on ARM Holdings technology at the show, which begins in Las Vegas on January 6.

Allying with ARM is Microsoft's way of stepping up rivalry with Apple, which has garnered the largest share of the tablet market with its iPad, a touch-screen device introduced in April that handles video, music and computing tasks. The effort may falter unless Ballmer can match the features consumers have come to expect from the iPad, Goddard said.

The new Windows version would be tailored for battery- powered devices, such as tablets and wireless handsets. Chips based on ARM technology are made by Qualcomm, Texas Instruments and Samsung Electronics.

Computer makers have unsuccessfully been trying to sell tablet-style computers based on Microsoft's Windows for about a decade. Before the iPad, tablets made up only about 2 per cent of the PC market. Apple has sold 7.46 million iPads through September. According to analysts at Goldman Sachs Group it may sell as many at 37.2 million iPads next year.

That indicates that the tablet computer's share of the PC market may rise to 9.2 per cent next year, based on a prediction by research firm IDC for 402.7 million PC shipments in 2011.

Microsoft dropped 23c to $28.07 yesterday in Nasdaq Stock Market trading. The shares have declined 7.9 per cent this year.

Apple has also redefined expectations for what a tablet computer should do, says Gartner analyst Michael Gartenberg. Instead of using a stylus pen to serve as a computer mouse, the iPad allows people to navigate using their fingers.

"Apple did this year what no one had done in the previous 10 - crack that space between the PC and the phone," said Gartenberg.

The technology show gives Microsoft a chance to win over some of the 100,000 people expected to attend, he said.

"It's a wonderful opportunity for Microsoft and Ballmer to put a stake in the ground," said Gartenberg. "Now that Apple cracked the market no one wants to get left behind."

By adapting its computer operating system for a tablet, Microsoft is taking a different approach from Apple, which used a mobile-phone operating system as the basis for the iPad. Apple's software enables instant startup, longer battery life, and access to the more than 300,000 applications developed for the iPhone.

Microsoft is taking software designed for use with a mouse and keyboard and adapting it which will require PC programs to be reworked to make them useful on a tablet.

Chips based on ARM technology are used in most smartphones, as well as Apple's iPad. Still, they don't crunch numbers and handle other computing tasks as quickly as Intel chips, which run most PCs.

Loading a full version of Windows on to a tablet powered by a chip designed for mobile phones may result in an unresponsive or slow-moving machine, said Michael Cherry, an analyst at Directions on Microsoft. Existing tablets based on Windows are difficult to use, he said.

"Windows tablets are what I call Frankentablets - part laptop and part tablet," he said. "They do neither role well."

Microsoft should leave Windows in the PC environment and focus on scaling up its mobile-phone software to work on the bigger screen of a tablet, Cherry said.

- BLOOMBERG

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