A New Tablet Puts Microsoft in a Delicate Position - New York Times

A New Tablet Puts Microsoft in a Delicate Position

Microsoft, the world’s best-known software company, is now in the business of making its own computers. That could get complicated.

Steve Ballmer, Microsoft’s chief executive, introduced Windows 8 and the company’s first hardware product, the Surface tablet.

Microsoft’s new Windows 8 operating system was displayed on a variety of devices made by Samsung, Dell and other partners.

The delicate balancing act Microsoft must perform was apparent at two events it held on Thursday in New York to introduce two major products. At the first event, it showcased devices made by Samsung, Dell and other hardware partners that run Windows 8, a version of Microsoft’s flagship operating system redesigned to accommodate touch-based devices like tablets.

An hour later, in a different area of the same location, a pier on the Hudson River, Microsoft focused entirely on Surface, a Windows tablet of its own design and the first computer the company has made in its 37-year history.

The separate events allowed Microsoft to spotlight devices made by others without awkwardly upstaging them with Surface. But executives left little doubt as to which computer was their favorite. At the Surface event, Steven Sinofsky, president of Microsoft’s Windows division, described the product as the best tablet and laptop he had ever used. (The company is selling a magnetically attached cover for Surface that doubles as a notebook-size keyboard.)

“We decided to do Surface because it’s the ultimate expression of Windows,” Mr. Sinofsky said. “It’s a stage.”

Microsoft saw a need for a major change in both the design of Windows and its strategy for delivering it to customers after the huge success of Apple in the tablet market. The iPad is already stealing sales from laptop computers, and Apple’s chief executive has predicted that the tablets will one day outsell PCs.

But Microsoft’s move into hardware has perturbed many of its traditional partners, with implications that are still unclear. The company was to start selling Surface at midnight on Friday at about 60 Microsoft-operated stores in North America, a move that has annoyed retailers who will be deprived of a high-profile electronics device backed by a big marketing campaign. Prices start at $500.

There is grumbling, too, a lot of it private, from Microsoft’s hardware partners about the company competing with them for sales. But there aren’t many compelling software alternatives to which these partners can turn.

Michael Gartenberg, an analyst at Gartner, said Windows 8 was too important for the company to leave to its partners, who often churn out uninspired designs. “This is Windows the way Microsoft wants you to see it,” he said of Surface, which has an eye-catching magnesium case. (The first version of Surface will run a variation of Windows 8 called Windows RT that cannot run older Windows applications.)

Things could get even trickier in the future. Steve Ballmer, Microsoft’s chief executive, has left open the possibility of making more hardware products, with analyst speculation focusing on a possible smartphone.

In a rare joint interview on Wednesday, Mr. Ballmer and Michael Dell, the chief executive of Dell, one of Microsoft’s oldest partners in the PC business, played down any fallout from Microsoft’s move into hardware. Mr. Ballmer said Mr. Dell was the first person he showed a Surface device to before announcing the product in June. He said he flew to Chicago with one of the devices to meet Mr. Dell, who was on his way to Lagos, Nigeria.

Mr. Ballmer said it was important for him to explain the device to Mr. Dell in person because he expected his initial reaction to be: “What the heck? This is different.”

Mr. Dell, for his part, said he did not have a problem with Microsoft making Surface. “As I’ve understood Steve’s plans here, if Surface helps Windows 8 succeed, that’s going to be good for Windows, good for Dell and good for our customers,” he said.

Of course, if Surface flops, Microsoft’s partners will probably find it easier to ignore. The company still has to convince customers, including businesses, that the product is as compelling and reliable as Apple’s iPad, which has had several years to develop.

Rich Adduci, chief information officer of Boston Scientific, a medical device company, has more than 20,000 PCs at his company using older Windows. But he has also deployed more than 5,500 iPads to sales representatives and other employees.

“Candidly, Surface is going to have a long, hard road ahead of it, given the marketplace and how it has matured with iPad and Android devices,” Mr. Adduci said. “There’s a very high bar for Surface that it’s going to have to hit initially for it to have a real chance.”