Microsoft's tablet strategy hasn't been much to get excited about, but there's a compelling case to be made that the software giant can play catch up---especially in the enterprise.
The company's challenges are clear: Microsoft has to match Apple's iPad and excel in other areas. That's a tough chore and other tablets---Android devices and RIM's PlayBook---have fallen short on features and price. In fact, the only unknown here is whether HP can deliver a compelling iPad competitor. Meanwhile, Microsoft doesn't have the tablet ecosystem locked down and big partners like HTC and Acer are using Android.
But despite Microsoft's best efforts to screw up its tablet prospects, the company can be a solid player in the market. Microsoft seems to be getting some lucky breaks as iPad challengers stumble.
In a widely publicized research report, Citi analyst Walter Pritchard made the case that Microsoft can make a go of tablets. Here's his case and my thoughts:
Microsoft's success will depend on how well Android fares in tablets. Should Android tablets surge Microsoft will be facing the same situation it does in smartphones---a nice product but too late to matter. My take: The tablet category will be huge and the Apple challengers will be a fragmented lot. Microsoft could make a play.
High prices give Microsoft some breathing room. The overall view is that a market of 50 million tablets is insurmountable to Microsoft, which needs a tablet soon. Pritchard, however, notes that price matters. The longer tablets sit in the $500 to $800 range the more time Microsoft has. As long as Microsoft enters the market before tablets fall to an average price of $250, the software giant has a shot. My take: There's something to Pritchard's argument, but can Microsoft really play the cheap tablet game?
Microsoft doesn't have to play the app game that much with tablets. Pritchard argues that the number of killer tablet apps is limited. A tablet optimized version of Office may be all Microsoft needs. Pritchard said "Office capability could differentiate the Windows tablet from the competition." My take: Office could be the killer tablet app. Gaming too. Microsoft has both categories covered.
There's always the enterprise. Microsoft's enterprise relationships could work nicely in the tablet market. Consumers may hold back, but corporations are going to be looking for integration with existing Microsoft infrastructure. Pritchard said:
We believe enterprise customers are accustomed to managing Windows devices. It is feasible to foresee Microsoft extending its Systems Center management framework to tablets. This would enable companies to update software, patch, back-up and trouble-shoot a Windows tablet. These functions would be necessary on a corporate-owned tablet, no matter which OS it uses. Thus we believe the advantage is heavily in favor of Windows here.
My take: Microsoft has the enterprise chop to extend its PC domination to tablets for business customers.
Bottom line: Microsoft has a decent shot at the tablet market, but it's going to need Office to pull businesses in. Consumers are likely to remain skeptical.