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Microsoft Unwraps Its 'Surface' Tablet

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The company has opted to build its own box for Windows 8. What will all those "partner" companies do now?

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MINYANVILLE ORIGINAL Microsoft (MSFT) announced late yesterday that it is taking the plunge into the computer manufacturing business to create its own branded tablet device, designed to run on its new Windows 8 operating system. The move places Microsoft in direct competition with Apple (AAPL) and its popular iPad. It also places Microsoft in direct competition with its own "partners," the many computer makers it has persuaded to produce tablet devices and laptops using Windows 8.

The world's largest software company is not a newbie to the hardware business, but its record is spotty. It's the company that produced the wildly successful Xbox gaming machine. But it also made the Zune, a digital media player that hit the market with a dull splat.

Nevertheless, this is the first time in its 37-year history that Microsoft will actually build a computer, inside and out. It seems to have finally accepted the Apple truism that total control of hardware and software design is needed for a product concept to achieve its full potential. Or, as the company's statement puts it, the Microsoft Surface is intended to be "the ultimate stage for Windows."

The Microsoft Surface will come in two versions: a tablet with an ARM Holdings (ARM) processor and a touchpad keyboard, and a workhorse version with a conventional keyboard that uses an Intel (INTC) processor. The second can best be described as an "ultrabook," the term Intel trademarked to brand a laptop category that uses its latest chips.

Both Microsoft devices will come with Windows 8 pre-installed, in slightly different versions, RT for mobile-only devices and Windows 8 Pro for the ultrabook. It has a handy built-in kickstand, and the keyboard doubles as a cover. At 10.6 inches, it's a bit bigger than an iPad, but it's also a tad thinner.

One buzzworthy detail is the material that will be used for the shell of the device: It will be made of VaporMG. Don't bother Googling it. It seems to be a previously-unknown material, presumably cooked up in a lab, that contains magnesium and who knows what else. It's supposed to have an elegant feel, like a luxury watch case, and it can be made thinner than a credit card.

The Microsoft Surface was announced at a Hollywood media event late Monday that had more glitz than specifics. Here's what is known: Pricing will be "comparable" to other devices in its class. That suggests about $500 for the tablet and $900 for the ultrabook. It will be released later this year, in time for the holiday shopping season. It will be sold online and in Microsoft retail stores. (Did you know there are 20 Microsoft stores across the US, and four more "coming soon?" Fact.)

And that's all we know.

Here's what nobody knows: Why, after months of touting its partner companies' Windows 8 machines, did Microsoft decide to build its own? Doesn't this suggest that it is dissatisfied with some or all of those partners' products?

Windows 8 is a radically new operating system, designed to allow a user to move seamlessly between a new touchscreen interface and conventional typing-intensive tasks. The reviews have ranged from enthusiastic approval to abject disgust, depending on just how "seamless" the reviewer found the experience.

Microsoft may have felt that Windows 8 could not succeed without a device that was built around it. Which should make for some interesting conversations today between Redmond headquarters and the folks at Hewlett-Packard (HPQ), Acer, Samsung, et. al., who were banking on Windows 8 to sell their own tablets or ultrabook devices.

Microsoft has stressed that its licensing partners will have "cost and feature parity" for their own Windows 8 products. Small comfort there.

After a slightly down day on Monday, Microsoft stock traded up .84% after hours, as the announcement was in progress.
Position in MSFT.
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