Back in January at the opening keynote of the Consumer Electronics Show (CES), Steve Ballmer talked a lot about Windows tablets and even showed a very early prototype device. This makes sense because January was right at the apex of the iPad hype when pretty much every technology company was looking for ways to catch up.
A lot has happened since then, however, and this past week when Microsoft unveiled its new Windows 7 Phone software, Ballmer didn't talk at all about tablets, choosing to focus on going after the iPhone market, rather than the iPad. Add to that the fact that in its earnings announcement yesterday, Apple's iPad sales drastically disappointed analysts' estimates, and it becomes interesting to step back and see how this is all going to play out.
Ballmer is still promising tablets based on Windows 7 in time for the holidays. In fact, Hewlett-Packard seems to be close to releasing one. The question is what Microsoft's long-term strategy is. There had initially been two schools of thought. First that Microsoft would take dead-aim at the iPad and build a dedicated hardware platform to compete on even ground. Basically an oversized version of the Zune, much like Apple did with its hardware. Second, that Microsoft would at least build an optimized mobile operating system to run on its hardware partners' platforms that could deliver similar functionality to an iPad with more 'business' features and functions. Well, as of now, neither seems to be the case.
I think it's good news that Microsoft is choosing (for now at least) to not build its own hardware platform. I think the Zune is a fantastic MP3 player, but it took three or four iterations to get it right, and it was so late to the game that it has become more of a distraction for Microsoft than anything else. I'm a little disappointed that Microsoft doesn't seem to see the need for a dedicated tablet operating system. Ballmer seems to think Windows 7 in its current form is perfectly good for the job. Maybe he's right. I guess time will tell.
Why this choice of direction? Well, first, it's kind of clear from Apple's recent earnings that these tablets have not become the end-all of personal computing. I think it's very telling that Apple missed sales projections in just the third quarter that included the iPad. I'm sure some of it has to do with manufacturing delays and product constraint, but it's still a bit of a financial hit. I also think Microsoft is starting to get some pushback from the hardware manufacturers. I'm sure they are concerned that a scaled-down tablet would cut into sales of their netbooks and notebooks, which have been incredibly strong across the industry this year. A full-featured tablet that still runs Windows 7 becomes just another product in their line that they can target to appropriate market segments.
One thing is certain so far. Microsoft is taking the right approach from its end. It has long been very successful making the software platforms and letting partners figure out the hardware. Keeping tablets 'business as usual' makes me more confident that all parties will get it right in the fastest possible way. In the meantime, I guess we'll have to wait and see what we get when the first products hit the market. The holidays are just around the corner so it shouldn't be a very long wait.