Microsoft may lose up to $1.28bn in tablet wars

In case you haven’t noticed yet, tablets are pretty popular these days.

Even since Apple unleashed its iPad, the “post-PC” phenomenon has taken the world by storm. Manufacturers are producing tablets that not only complement the idea of a PC, but ideally improve on it. As more companies join the fray, features are improved at every iteration, and the idea of truly portable tablet “PC” is becoming increasingly real.

However, one company is noticeably behind the times. Microsoft, who has also been blamed for being late to the mobile smartphone game, is being decidedly blasé when it comes to the tablet wars. We have yet to see a competitive Windows 7 tablet, and Windows Phone 7 has no plans to become tablet-worthy. According to The Guardian, this attitude could translate into a $1.28bn loss for the company. Microsoft CEO Steve Ballmer, who has already come under pressure from the board of directors (in the form of a halved bonus payout) for underperforming in the mobile sector, looks set to fail once again in the post-PC world unless he can pull something out of an increasingly shallow consumer hat.

The number comes from an analysis of how the tablet market is eating traditional PC sales, the market where Windows makes a significant portion of its revenue. If Microsoft can’t offset that loss with innovation in the space that is eating up those profits, it could mean bad financial news for stakeholders.

Report a problem with article
Previous Story

T-Mobile and Sprint in merger talks

Next Story

Real-time traffic re-routing added to Google Maps Navigation

51 Comments

Commenting is disabled on this article.

Someone removed the lid from a netbook and made the keyboard on-screen. Wow! I'm amazed! I can type on an enlarged digital keyboard like a nearly blind person does on a cell phone. Honestly, I don't understand the hype about mobile devices. They look cool at first, but when you start using them, you quickly realize how limited they are.

Oh, and about Microsoft losing more money in the mobile market: Another big surprise. Microsoft is almost always "late to the party". "Microsoft: We don't innovate, we emulate!"

I only have one tablet and that is the iPad. I did not it myself, and I never had any interest in it but a gift is a gift and a very generous one at that.

I also own an iPod Touch, and essentially iPad is that on steroids (and 3G). Tablets are useful, they are decent sized for reading and ultra portable. Being able to boot something in a second trumps a netbook or notebook. But as a student, it doesn't do enough. You cannot type with it unless you bring a keyboard with you, defeating the very purpose of an iPad, as for handwriting notes, I find paper and pen beats out a screen but that is just a personal taste I guess.

Then there is the saving of documents. While yes, viewing on the iPad is great, but actually saving them onto iBooks or any PDF application is long winded. I can mass download the documents in one convinient folder on my netbook quite easily and tidily.

Tablets to me is just as above, a quick access to computer without needing much functionalities. Tablets in the end, is merely a piece to the bigger puzzle. Tablets does not do something good enough, is a jack of all trades with no speciality. It does not have mobility of a phone, the raw power of a desktop while Notebooks match its versatility and portability while giving extra oomph.

Having said all that, I like my iPad. But I just have no "use" for it. I use it when im mucking around, play some games, check the web. To me, is more like a PSP/DS with more functions than a PC replacement, or a Netbook replacement for that matter.

Tablet hype will eventually die just as pda, pocket pc, origami, etc. hype died. In addition, I don't believe about the lie about "post-PC" era at all. If people are conscious and stay awake, they will see all tablets nowadays are just super-size versions of the smart phones. Companies restrict user into their app store. You can't install something by yourself. You want to sell App? You have to please them in order to put it to the app store. You have to share profit with them. The world will not be free without PCs. IBM, Intel, Microsoft made a choice about computer for everyone. It is a right choice. This is the reason that we have the current advanced computer industry today.

Sure, Tablet or iPad looks high-tech and sexy. You can surf the web etc. But at the end of the day, you will need a laptop or desktop to do the work. You will go to workplace and sit down and type on the PC. At school, you will go to the lab and do school work. At home, after holding tablet in the toilet for hours, you will put it down and use your PC. The tablet is just limited in functionality and specs right now. You can't just simply copy a movie to the ipad and watch it. You need app. You have to pay more and more. But with a PC, you use open source, like VLC.

The thing is, a majority of people just sit and surf the web when they are at home. Checking there favourite websites. Chatting on WLM, FB, Yahoo. Looking at social networking sites. Checking there bank balance. eBay and so on. Tablets aren't meant to replace desktop computers/laptops. They are merely meant for sitting around the house and quickly using it to check a few sites. I could probably do with having one, might destress me a lot more. I spend a bit of time on my laptop surfing the web. But then I find myself doing work, if I had a tablet I'd probably do less work at home and more relaxing. It just happens apple made a tablet that is super friendly and simple to use, the same thing happened with touchscreen phones. Regardless if you hate apple or love them. The things they do are great at what they are meant to be used for. Its not about the features and things apple do. With apple its always been about how its done, iOS was the first finger friendly OS that everyone loved to use and it forced the competition to match it and/or beat it.

Were would the touch friendly market be right now if it hadn't been for iOS? Would Andriod be out & would google be pushing the phone and tablet market as much as it has been? Would WP7 exist in the form it is in & would M$ be interested in creating tablets now? I don't care who started it, all I care about is were it's going and the competition between the big 3 is great. You never know whats coming next, what features, who is going to redesign something and make it so simple to use, the entire world loves it. What new features will my phone have next year? Competition is fantastic in the tech world at the minute. long may it continue.

I believe tablet market is just a small percentage of the mobile market as of now - which itself is growing at an unprecedented percentage - which begs to think that microsoft hasn't still lost much and can still play catchup - and be ahead too!

Also wanted to note this quote: "Microsoft CEO Steve Ballmer, who has already come under pressure from the board of directors (in the form of a halved bonus payout) for underperforming in the mobile sector"

When I hear people who support "democratic" styles of government ranting about the unfairness of CEO salaries, it kind of makes me wonder if they realize that board members are elected by shareholders, and they do hold CEO's accountable. Ballmer could very well screw things up and lose the patience of MS investors like myself, and he could be fired.

Anyway, the point is that folks seem to act like CEO's never face any repricussions for poor performance. The reality is that they do. If you think the boardmembers are treating him with kid-gloves, then buy some stock and elect boardmembers who will take him to task.

I've had a Tablet PC since 2003. Still use it every day. The main reason I don't use it's tablet-esque features more is that my use shifted (no longer a student, so I don't take notes as much and the ones I do take I can do in OneNote without a stylus) and the lack of support for things like Ink (support has been removed from Live Messenger, it's not supported by the online version of OneNote, and people on other platforms seem to lack adequate viewers).

I think the idea of Ink was great, but so many people didn't *get it*. They focused on text recognition and other irrelevant things. So I guess the idea is a wash - on to what's next. I think that's MS's job going forward (speaking as an MS shareholder) to define the space in a marketplace where consumer expectations aren't very imaginative and the hardware/OS manufacturers are accomodating with a confusingly similar array of devices that pretty much all do the same things poorly.

Wish more people had experience with Tablet PC's, then they might have a little more structure to their vision of what a tablet could be. That and the price needs to come down - I'm still not sold on the idea that I need a portable screen in-between the size of my mobile and my Tablet PC. If I had $300-$600 burning a hole in my pocket, I'd have other priorities.

Lets see worst prediction for PC sales in 2011 are 380million, which is up like 9% over last year. Best prediction for tablet sales is 45-60million up a lot (not sure how much).

Wake me with a real blog post when tablets hit 50% of PC sales AND (not or) tablets sold that REPLACE pc's hits 10%.

I know a half a dozen or so people that have an iPad, NONE of them have used it to replace their computer, and most have purchased new computers since their iPad purchase.

iPad 1.1 is not going to change any of that. The tech blogging world needs to get over the iPad already and write about something else for a change.

rrode74 said,
iPad 1.1 is not going to change any of that. The tech blogging world needs to get over the iPad already and write about something else for a change.

To be fair, the iPad solves the problem of not having enough finger smudge between you and the applications you're trying to use.

Touch screen smartphones similarly ensure that plenty of face grease (or makeup for women) stands between you and your favorite software.

If only there were some way to get iPad users to rub their screens on their faces more... maybe add phone capabilities?

heroinsmoker said,
1 billion in tablets, 1 billion in smartphones.... Let's hope people keep buying Microsoft Word!

Tell you what, you seem really keen on urging people to buy iPads, you may have been able to toss all your desktop Macs and MBP, but in all honesty, I can't. I still need my laptops, and my desktops. Why? Because well, quite frankly the iPad won't work on my school's campus, nor do I find it worth the money to buy one for home. iOS is a lousy OS if you ask me, and deliberately gimped. I'm not playing into Apple's "magic", and I don't really care for their "garden" either.

Frylock86 said,

Tell you what, you seem really keen on urging people to buy iPads, you may have been able to toss all your desktop Macs and MBP, but in all honesty, I can't. I still need my laptops, and my desktops. Why? Because well, quite frankly the iPad won't work on my school's campus, nor do I find it worth the money to buy one for home. iOS is a lousy OS if you ask me, and deliberately gimped. I'm not playing into Apple's "magic", and I don't really care for their "garden" either.


the install android on the ipad and you can escape the garden. there, that wasn't complicated at all.

ILikeTobacco said,

the install android on the ipad and you can escape the garden. there, that wasn't complicated at all.

Instead, Why not buy an android based tablet?

Microsoft needs to make a light weight OS for such a tablet, oh wait, its WP7. Putting a full blown Windows OS such as 7 is a terrible idea given the current specs. These shouldn't be replacement PC's, but more consumption devices. iPad and Android have a good grasp of this. One day maybe, not to mention, who wants to use a tablet to write a 10+ page document or essay for work. Quick edits, sure, but thats all they'd be good for. MS needs to realize 7, at least in it's current form just doesn't work on tablets. It's too clunky, and you can't use it without a stylus or if you do, the resolution is way to big to be of any real use. Hoping 8 has a "tablet edition", with a UI designed for touch (like the rumors/concepts we've seen). They should still however, be looking at WP7 to power tablets.

Blasius said,
Microsoft needs to make a light weight OS for such a tablet, oh wait, its WP7. Putting a full blown Windows OS such as 7 is a terrible idea given the current specs. These shouldn't be replacement PC's, but more consumption devices. iPad and Android have a good grasp of this. One day maybe, not to mention, who wants to use a tablet to write a 10+ page document or essay for work. Quick edits, sure, but thats all they'd be good for. MS needs to realize 7, at least in it's current form just doesn't work on tablets. It's too clunky, and you can't use it without a stylus or if you do, the resolution is way to big to be of any real use. Hoping 8 has a "tablet edition", with a UI designed for touch (like the rumors/concepts we've seen). They should still however, be looking at WP7 to power tablets.

There's no reason you can't have a docking station at your desk to set your tablet on. Then you have everything even wirelessly connect to have the same access as a desktop. It's completely possible and slowly happening. It's too soon to look at it as feasible at the moment but give it a few years and there'll be no reason to have that desktop when you can have the exact same thing with a docking station. It ends up costing same or cheaper too.

Might as well keep that laptop if you need to buy a dock + accessories.

You missed the point of my post, basically saying that Windows 7 is unusable from a tablet perspective.

lol everyone is always saying there late. Microsoft started the tablet pc (xp tablet edition), but it was at a different time in the industry. tablets are just a bubble fad right now; just like netbooks, the only reason "tablets" are taking off is because of apple hype. i swear they could put their logo on a damn brick and ppl would rush out to buy it.

i have had three people ask me if they should buy an ipad this week, and each one i ask why? there response is always just apple marketing points: "well its small and thin, sleek and it looks really nice." ok but what do you need it for exactly? i mean you don't travel, and your current laptop basically just stays on the desk there? "yeah but this has a built in antenna and can connect to wifi and 3g." after this point i usually just tell them to do w/e the **** they want.

jorel009 said,
lol everyone is always saying there late. Microsoft started the tablet pc (xp tablet edition), but it was at a different time in the industry. tablets are just a bubble fad right now; just like netbooks, the only reason "tablets" are taking off is because of apple hype. i swear they could put their logo on a damn brick and ppl would rush out to buy it.

i have had three people ask me if they should buy an ipad this week, and each one i ask why? there response is always just apple marketing points: "well its small and thin, sleek and it looks really nice." ok but what do you need it for exactly? i mean you don't travel, and your current laptop basically just stays on the desk there? "yeah but this has a built in antenna and can connect to wifi and 3g." after this point i usually just tell them to do w/e the **** they want.

Check back in 10 years and see how much of a fad it was. Your hatred for Apple (really, your hatred for having picked the wrong 'team') blinds you my boy. Your friends will eventually ignore your advice, buy an iPad, and then three of their friends will do so and so on... and then you'll be all alone with your laptop. At least you will have Neowin.

heroinsmoker said,

Check back in 10 years and see how much of a fad it was. Your hatred for Apple (really, your hatred for having picked the wrong 'team') blinds you my boy. Your friends will eventually ignore your advice, buy an iPad, and then three of their friends will do so and so on... and then you'll be all alone with your laptop. At least you will have Neowin.


Steve Jobs called, he wants his douchbaggery back.

heroinsmoker said,

Your hatred for Apple (really, your hatred for having picked the wrong 'team') blinds you my boy.

It's easy to pick the right "team", simply shell out 1/3 more for "one-size-fits-all" than for comparable hardware and a diverse device ecosystem from other manufacturers. Oh, and you must to be lead around on a choke-chain by king Jobs.

And for what? A toy.

To me the beauty of humankind lies in it's diversity and independence, not it's conformity and subservience. This is why for me, Apple isn't "the right team" for me.

Neb Okla said,

It's easy to pick the right "team", simply shell out 1/3 more for "one-size-fits-all" than for comparable hardware and a diverse device ecosystem from other manufacturers. Oh, and you must to be lead around on a choke-chain by king Jobs.

And for what? A toy.

To me the beauty of humankind lies in it's diversity and independence, not it's conformity and subservience. This is why for me, Apple isn't "the right team" for me.

You can be subservient to Google, Microsoft, Apple or none of the above. Apple was always the underdog -- the choice for the small subset of people who didn't want to be subservient to Microsoft -- until a large number people recently started realizing that hardware-software integration might actually be a good thing. Keep calling Apple products toys, people like you did it when you were using DOS and called the mouse a toy. Eventually you'll catch up to the toys we're using.

heroinsmoker said,

You can be subservient to Google, Microsoft, Apple or none of the above. Apple was always the underdog -- the choice for the small subset of people who didn't want to be subservient to Microsoft -- until a large number people recently started realizing that hardware-software integration might actually be a good thing. Keep calling Apple products toys, people like you did it when you were using DOS and called the mouse a toy. Eventually you'll catch up to the toys we're using.

stanford invented the mouse..and xerox the gui...and almost everything else that the first apple had. plus find me a quote from that time period (or close to it) that states the "mouse was a toy".

jorel009 said,

stanford invented the mouse..and xerox the gui...and almost everything else that the first apple had. plus find me a quote from that time period (or close to it) that states the "mouse was a toy".


There's inventing it and then there's putting it into a product. Rewrite history all you want, I was there, Apple had the mouse first, and IBM/DOS nerds said it wasn't for serious work like a command line was. I had countless conversations for about along those lines for about a decade there, 1984-1992 or so.

heroinsmoker said,

There's inventing it and then there's putting it into a product. Rewrite history all you want, I was there, Apple had the mouse first, and IBM/DOS nerds said it wasn't for serious work like a command line was. I had countless conversations for about along those lines for about a decade there, 1984-1992 or so.

You had? I know enough Unix/Linux-users who still work faster with the keyboard than anyone can with a mouse…

heroinsmoker said,

There's inventing it and then there's putting it into a product. Rewrite history all you want, I was there, Apple had the mouse first, and IBM/DOS nerds said it wasn't for serious work like a command line was. I had countless conversations for about along those lines for about a decade there, 1984-1992 or so.


...sigh apple love to rewrite history, apparently you are no different. the mouse was first created in the 50's for military use, xerox developed a mouse and was using it before the Lisa one (lisa was based of off the xerox designs). but it was relatively obscure until apple popularized it.

http://en.wikipedia.org/wiki/Mouse_%28computing%29

I think this is a marathon rather than a sprint. We saw with Android that a ridiculously large platform can be beaten and it can happen again.

In the grand scheme of things, if these devices really are "post-pc" they have many a year (if not decades!) to compete - Microsoft, or any other company including RIM and HP taking their time to release to market doesn't really matter if they make the impact in the years following launch.

I expect the mobile and tablet market space to be incredibly different 5 years from now; I don't agree with the opinion that they're "too late", they're later... but not *late* (unless of course this form factor does a netbook and fall flat on its face after a few years, of course).

They have done it before with Windows, Office and Xbox - and they can do it again. Granted, being late has hurt them in the past with the Zune hardware.

Flawed said,
I say they'll lose far more than 1.28 in the long run.

sure they will... hey i've got a bridge i want to sell you, it would be perfect. every troll needs a bridge right?

tablets are not going anywhere, they will have something "super sexy" out next year.

jorel009 said,

sure they will... hey i've got a bridge i want to sell you, it would be perfect. every troll needs a bridge right?

tablets are not going anywhere, they will have something "super sexy" out next year.

LOL I know hey!? I dont know how people say can say things like "Microsoft missed their chance with tablets" like the market is saturated. The business sector are dying for tablets to put in business's. You think when Windows 8 Tablets come out and people compare the two they will choose the Ipad 5? Having an open platform that is compatible with everything and can be put on all different types of tablets will destroy a closed platform in the business sector.. the consumer sector is a different story because they just want what other people want.

In a documentary by the BBC in 2008 about Bill Gates there was a mention that Microsoft spends among the highest level of investment in R&D the industry, yet Microsoft frequently has to play catchup whether it be in online search, mobiles or tablets. Why is this?

thealexweb said,
In a documentary by the BBC in 2008 about Bill Gates there was a mention that Microsoft spends among the highest level of investment in R&D the industry, yet Microsoft frequently has to play catchup whether it be in online search, mobiles or tablets. Why is this?

most of their R&D projects never see light or are cancelled... take the Courier tablet for example

thealexweb said,
In a documentary by the BBC in 2008 about Bill Gates there was a mention that Microsoft spends among the highest level of investment in R&D the industry, yet Microsoft frequently has to play catchup whether it be in online search, mobiles or tablets. Why is this?

Lack of vision from those higher up

neufuse said,

most of their R&D projects never see light or are cancelled... take the Courier tablet for example

Just because the project is canceled doesn't mean everything is scrapped. A lot of the technologies make their way into other MS software.

thealexweb said,
In a documentary by the BBC in 2008 about Bill Gates there was a mention that Microsoft spends among the highest level of investment in R&D the industry, yet Microsoft frequently has to play catchup whether it be in online search, mobiles or tablets. Why is this?

the biggest the company then the slowest and Apple is not a exception.

It is the reason behind most companies purchase a small one just for acquired a single license, or purchase a license grant to a second company, it is used as a shortcut instead to do a long-and-expensive in-house s&r.

For example, Microsoft manufacture Kinect but they didn't invented the technology but a small company.

neufuse said,

most of their R&D projects never see light or are cancelled... take the Courier tablet for example

Courier was not an R&D project, or at least I doubt it was. A special-effects mockup from a UI team doesn't count as "research" or "development" since there was no underlying technology that would have made it possible. It was a pipe dream of pure vapor.

heroinsmoker said,

Courier was not an R&D project, or at least I doubt it was. A special-effects mockup from a UI team doesn't count as "research" or "development" since there was no underlying technology that would have made it possible. It was a pipe dream of pure vapor.

I remember there was a prototype, so yes that counts as R&D

thealexweb said,
In a documentary by the BBC in 2008 about Bill Gates there was a mention that Microsoft spends among the highest level of investment in R&D the industry, yet Microsoft frequently has to play catchup whether it be in online search, mobiles or tablets. Why is this?

Because they lack a visionary leader/dictator like Jobs

ahhell said,
Yeah ok. Great reporting as always from The Guardian.
You have to admit that at one point MS did lose a lot of money from "tablets". All the money they sank in WinXP Tablet edition etc etc

ahhell said,
Yeah ok. Great reporting as always from The Guardian.

The Guardian is one of the best newspapers in U.K.

I have to agree:

However, one company is noticeably behind the times. Microsoft, who has also been blamed for being late to the mobile smartphone game

Hello? Windows Mobile has been around for YEARS. Does that not qualify as a smartphone? Perhaps "modern mobile smartphone game" would be a better choice of words. Right now it is completely ignorant which discredits the article.

Shadrack said,
Hello? Windows Mobile has been around for YEARS. Does that not qualify as a smartphone? Perhaps "modern mobile smartphone game" would be a better choice of words. Right now it is completely ignorant which discredits the article.

Hardly...

Shadrack said,
I have to agree:

Hello? Windows Mobile has been around for YEARS. Does that not qualify as a smartphone? Perhaps "modern mobile smartphone game" would be a better choice of words. Right now it is completely ignorant which discredits the article.


No...