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Microsoft to reboot tablet effort with new Surface
by Staff Writers
Washington (AFP) Sept 22, 2013


Outgoing Microsoft CEO most regrets lapse in mobilephones
New York City (AFP) Sept 20, 2013 - Outgoing Microsoft CEO Steve Ballmer said Thursday his biggest regret is missing the boat on smartphones -- but he said the software giant should not admit defeat just yet.

"I regret that there was a period in the early 2000s when we were so focused on what we had to do around Windows that we weren't able to redeploy talent to the new device called the phone," Ballmer said in a conference with analysts.

"That is thing I regret the most," he repeated, adding "It would have been better for Windows and our success in other foreign factors."

The smartphone and tablet computer market is currently dominated by Apple's iPhone and iPad and by devices powered by Google's Android operating system.

Microsoft has "almost no share" in mobile devices, Ballmer conceded, but said that leaves the company with significant "upside opportunities."

In telephones, the company is counting on the recently announced acquisition of Finnish mobile telephone company Nokia, with which it is already collaborating to make a new smartphone, the Lumia, to popularise its Windows mobile software.

The company's Surface tablet failed to win over buyers last year and Microsoft was forced to lower the price of the device, which translated into a loss of nearly a billion dollars in its latest quarterly figures.

A new generation of the tablet is to be unveiled Monday.

Beyond mobile devices, Ballmer said, Microsoft must seize crucial opportunities in cloud computing services, in online subscriptions to its word processing suite Office, and with its search engine Bing.

Ballmer took over as CEO of Microsoft in 2000 from co-founder Bill Gates, a classmate and friend from their days at Harvard University in the 1970s. He announced in August that he would retire within 12 months.

A year after its flubbed tablet introduction, Microsoft is back with a new Surface.

The US tech giant, which has invited media to a launch in New York, is seeking to correct missteps from its first try and gain a foothold in the tablet market dominated by Apple's iPad and others using the Google Android operating system.

Details of the new device were not known, but many analysts expect a more powerful Surface tablet to help Microsoft build momentum in mobile computing.

Microsoft, which is trying to shift its focus to "devices and services" to better compete with Apple and Google, barely made a dent in the sizzling tablet market since introducing the first-generation Surface in October.

The company has not released sales figures, but reported tablet revenues of just $853 million in the fiscal year ended in June. Research firm IDC said Microsoft sold 900,000 in the first quarter of the year -- a market share of just 1.8 percent -- and even fewer in the second quarter. Apple by comparison sold some 34 million iPads in the first half of 2013.

Microsoft was forced to take an embarrassing $900 million writedown for "inventory adjustments" due to weak sales of the new tablet, which has a basic version and a more expensive "Pro" model.

Will things be different this time?

Rob Enderle, analyst and consultant with Enderle Group, said he expects the new tablets to be much improved.

"This new release should be massively better than the first one. The trick will be getting folks to look at the product fresh," he told AFP.

Enderle said the first version "was too heavy, too expensive and had poor battery life," and the upgraded Surface Pro lacked a key element, the Outlook email program.

Microsoft appears to have fixes these issues and now has a chance to gain some traction with a device that aims to serve as a tablet with some of the functionality of a laptop PC.

"Right now, people don't want to carry a large tablet and laptop," said Enderle.

"If you can consolidate into one product, it lightens your load and it's a lot cheaper."

Jack Gold, analyst at J. Gold Associates, said the first Surface "was not a complete device" and did not work with many Windows apps.

Gold said Microsoft can succeed with "a reasonably priced and performance-oriented Pro" to appeal to business users, but that the company "has to build momentum before Android makes it mostly irrelevant."

Others argue that Microsoft's strategy has become muddled as it tries to gain ground in the "high mobility" computing segment while still serving the hundreds of millions using conventional PCs on the Windows operating system.

Roger Kay at Endpoint Technologies Associates said Microsoft has been struggling to serve these sometimes conflicting goals.

"The ambiguity of Windows 8 is built into its architecture," Kay said.

"Microsoft has been doing nothing but looking over its shoulder. You need to have your own vision of what people need."

Kay said Microsoft still has a long road to become a meaningful player in mobile computing.

"High mobility and that form factor are up for grabs between Apple and Google and perhaps Microsoft, but Microsoft will be a distant third," he added.

Kay said Microsoft's best chance in the segment was to build momentum with its acquisition of Nokia's phone business, and extend that into tablets.

Kash Rangan, analyst at Bank of America/Merrill Lynch, said Microsoft is hurt by a "diffused focus" as it tries to reorganize, search for a new chief executive and reboot its mobile strategy with its Nokia acquisition.

"We worry about the tsunami of changes the company is currently undergoing," Rangan said in a note to clients with a "neutral" investment rating.

"The reorganization, CEO change, acquisition of Nokia, and financial reporting structure change are all occurring simultaneously, and only serve to increase the complexity of the investment story."

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