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Microsoft Stages a 'Major' Mystery Event Tonight -- What Might Be in Store?


Is it a tablet? A game console? An acquisition? This should be big.


You have to hand it to Microsoft (MSFT) today.

No matter what comes out of the "major event" that Microsoft is hosting tonight in Los Angeles, the company is finally starting to channel the "geek Christmas" vibe that Apple (AAPL) events used to have before Apple leaks became an entire industry in their own right.

The mystery really whet the press' appetite for hype. The tech blogs have been coming up with hypotheticals since Redmond summoned the tech press to this cryptic event. The announcement will come after market hours. Here are some possibilities.


Some fans are looking forward to a Microsoft tablet that could compete with the iPad. Since Microsoft took a $300 million stake in Barnes & Noble's (BKS) e-reader business, there has been speculation about the merging of technologies for a Microsoft tablet. Microsoft's model since the early days was to find partners like Hewlett-Packard (HPQ) to manufacture machines licensed to run MS software. Apple, almost uniquely, refused to license its software for use on any device not designed by Apple. Some call that control-freakery. Others would point out that the end users of Apple products are guaranteed to have a good experience, and that the hardware will be designed by someone who actually wants the machine to work well. Once the Windows machine's design and sale are in the hands of a third party, they control the pricing, and often load the thing with software demos and other useless software that Macs lack. If Microsoft goes it alone and takes a page from Apple's book for the tablet (or whatever is going to happen tonight), it could avoid all of those familiar trappings of Windows PCs and Android (GOOG) tablets.

There are a few problems with the "MS Nook" theory, however. First of all, it isn't true. A source from Barnes & Noble told Benzinga that the bookseller will not be a part of the mystery that will be unveiled this evening. Even if it weren't for that, the Microsoft/Barnes & Noble cooperation was not confirmed that long ago. Not enough time to stuff Windows into a Nook.

Microsoft has plenty of motivation to get into the tablet game. Even without Office, iPads are making inroads with enterprise customers. The meme that one needs Microsoft products to get work done at the office is being shattered. Especially with the Mac OSX Lion and Mountain Lion, it's getting easier for Windows users to transition to the Mac.

But coming out with a Windows 8 tablet has its risks. First, this will certainly annoy Redmond's numerous partners. Second, there have been numerous attempts to replicate the iPad's success. Research In Motion's (RIMM) PlayBook was mostly a victim of bad planning, but it joins other competitors such as Dell (DELL) and HP in failing to put a dent in Apple's supremacy over the tablet market. Last year, 58% of tablet sales went to iOS devices, while Android tablets, chiefly Amazon's (AMZN) Kindle Fire, took just 39%. The new iPad should help boost Apple's share to 62% this year.

With such a crowded tablet space, Windows 8 risks becoming yet another red-headed stepchild of the industry, destined to join the Kin on the pile of failed Microsoft hardware. Or... to join the Xbox as an unmitigated success?

Tablet-ready Windows, presumably Windows RT, will run on chips designed by ARM Holdings (ARMH) rather than the x86 chip architecture that Intel (INTC) and AMD (AMD) make. This is a first for Windows. There have only been glimpses of what this would be like. The Metro interface is undeniably attractive. If Microsoft can somehow include the massive Xbox universe of games into this mystery tablet, it might have an app ecosystem big enough to attract some customers, which will attract the developers, developers, developers, developers needed to attract more customers.

Buy Nokia?

Another option could be acquiring Nokia (NOK), Microsoft's mobile phone partner. The Finnish handset maker has seen better days. Nokia's ex-Microsoft CEO Stephen Elop failed to revive the company post-iPhone after personally killing the Symbian operating system and putting all of Nokia's chips on the Windows Phone operating system.

Here is Nokia's stock price since the debut of the iPhone, showing a decline of 90%.

With Nokia's market cap all the way down to $9.5 billion ($2.54/share), an acquisition isn't hard to imagine. Nokia's stock is up 2.22% today despite its debt being downgraded to junk status by Moody's, possibly on the rumors of an acquisition.

Whatever happens today in Los Angeles, let's hope Microsoft doesn't disappoint us with a lackluster announcement.

Twitter: @vincent_trivett
No positions in stocks mentioned.
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