The major tech stocks are waging war for dominance in the tablet computer market. The Apple Inc. (NASDAQ: AAPL) iPad has enjoyed a largely uncontested 2010 — though Samsung’s Galaxy Tab has sold more than 1 million units in the past eight weeks. However, 2011 will bring an onslaught of new products from competitors with specialties reflecting the crossover technology found in most tablets. Microsoft (NASDAQ: MSFT) just announced it’s getting into the tablet PC act too, with a new Windows OS specifically for the new gadgets.
Microsoft isn’t alone, however. Mobile phone manufacturers Research in Motion (NASDAQ: RIMM) and Motorola (NYSE: MOT) will take on Apple at the same time as PC and notebook manufacturers like Hewlett-Packard (NYSE: HPQ) — and all of which will be making waves at the Consumer Electronics Show in Las Vegas during the second week of January.
The fiercest tablet competition though will come from the marriage of high-end hardware with proprietary software. HP and RIM’s tablets will run on brand new versions of those company’s respective WebOS and BlackBerry operating systems, and though multiple manufacturers will utilize Google Android in tablet PCs, Honeycomb, the 2.4 version of Android tailored for tablet implementation, will debut on Motorola’s unnamed tablet. Given the rush to tie software and hardware brands together to give a competitive edge in the tablet market, it’s intriguing to hear that what might be the most significant tablet operating system debut at CES 2011 won’t even be tied to a particular product.
Bloomberg reported on Tuesday evening that Microsoft (NASDAQ: MSFT) will reveal its plans for a brand new version of the Windows operating system built for tablets and mobile devices. Not only that, but the new Windows OS will be vailable on ARM Holdings (NASDAQ: ARMH) technology, a first for Microsoft software platforms. The OS will also run on Intel (NASDAQ: INTC) and Advanced Micro Devices (NYSE: AMD) chips as past versions of Windows.
To clarify for less tech-savvy investors, this means that the new Windows operating system for tablets will run on the chips made by companies like Qualcomm (NASDAQ: QCOM) and Texas Instruments Inc. (NYSE: TXN) that power the smartphones. This means the hardware that has been part of Apple and Google devices trouncing Microsoft in the mobile software market over recent years is now compatible with Windows. It also means that the new OS will not be a derivation of the recently launched Windows Phone 7 mobile operating system.
Even though Microsoft is staking its claim in the software sector of the emerging tablet market at CES 2011, the Windows tablet OS won’t be meeting with its competitors Apple and Google in the consumer market until much later. A Wall Street Journal report published Wednesday said that even though Microsoft will discuss the new operating system at CES, the software “isn’t expected to be available for two years.” This news came according to “people briefed on Microsoft’s plans.”
If Microsoft shareholders and other interested investors find this timeline to be cause for concern, they should reconsider. Microsoft may end up finding itself in the same position Google did when it entered the smartphone software market, bringing a quality and malleable platform benefits from competitors’ early failings to an established market. It’s unsurprising that the tablet market in 2011 is emerging as one populated by hardware with tailored software. Hewlett-Packard and Research in Motion both acquired companies (Palm and QNX respectively) specifically to have a hold on proprietary tablet operating systems, namely the new versions of Web OS and BlackBerry OS powering the PalmPad and PlayBook.
By playing the long game, Microsoft stands a good chance of a market of developers looking for software uniformity in 2013 when consumers turn to spending on apps rather than the shiniest tech. Whether Microsoft can beat Google to that punch, however, remains to be seen.
As of this writing, Anthony John Agnello did not own a position in any of the stocks named here.
