Microsoft Unveils Windows 8, Surface Tablet as Stakes Rise in Mobile Market

Microsoft Corp. introduced the biggest overhaul of its flagship Windows software in two decades, reflecting the rising stakes in its competition with Apple Inc. and Google Inc. for the loyalty of customers who are shunning PCs and flocking to mobile devices.

Steven Sinofsky, the President of the Windows and Windows Live Division at Microsoft, speaks at the launch event of Windows 8 operating system in New York, October 25, 2012. Photo: Microsoft Corp.

Microsoft Corp. showed off its new Windows 8 operating system and its companion Surface tablet computer—the first computer for the company that has dominated PC software for a generation, according to Reuters.

“We have reimagined Windows and the result is a stunning lineup of new PCs,” said Microsoft CEO Steve Ballmer  at the New York debut. “Windows 8 brings together the best of the PC and the tablet. It works perfect for work and play and it is alive with your world. Every one of our customers will find a PC that they will absolutely love,” according to the official press release.

Pacing the stage beneath an outsized image of the tiles that make up the Windows 8 display, Mr. Ballmer said the software brings together Microsoft technology from its Bing search engine to Skype and integration with a social media, a cloud service to link content between devices.

“You log in once and see the device light up with your life, everything and everybody you care about,” Mr. Ballmer said.

Windows 8 also is a critical product for PC makers counting on the software to rekindle sales of PCs. Microsoft hopes to speed development of devices capitalizing on Windows 8 by urging chip makers to partner with mobile device makers to make best use of the software.

Microsoft recently said sales of Windows 8 for hardware makers to include in new computers was roughly 40% higher than sales to hardware makers at the same point before the 2009 launch of the most recent Windows software.

Microsoft also is struggling to get developers to create apps for Windows 8 and its new Windows Store, which is expected to have only 10,000 apps available when it opens this week. Competing app stores by Apple Inc. and Google Inc. contain several hundred thousand. “Developers are working fast and furiously to stock the shelves of our new store with Windows apps,” Mr. Ballmer said.

Microsoft’s Surface tablet played a dominate role in the software debut. The slender tablet adopts the model of Microsoft’s long-time rival Apple, with integrated hardware and software offered in a single product. The Surface and its 8-inch touch-screen operate a separate version of Windows called Windows RT.

Microsoft has given the tablet the ability to behave like the familiar Windows PC, and comes standard with Microsoft’s Word, Excel and PowerPoint software popular with business users.

Microsoft is attempting to distance Surface from competing tablets with two thin keyboards, both optional. They snap on magnetically and double as covers for the Surface. One keyboard uses molded keys smooth to the touch and the second has movable keys similar to traditional keyboards. The Surface also comes with a kickstand for desktop typing and a USB port to connect to peripheral devices.

The Surface starts at the same $499 base price as the large iPad but offers twice the storage. Unlike the iPad, the Surface is Wi-Fi only.

Windows 8 is Microsoft’s response to a wave of change in personal computing. Sales of PCs, for which Microsoft has long been the dominate software provider, are slowing. Consumers are shifting spending to smartphones and tablets, and businesses are following suit. Windows 8 is Microsoft’s bet that it can rewrite its dominate Windows PC software into a mobile-friendly software that will appeal to corporate customers and some consumers as well.

Apple’s shares have significantly outperformed Microsoft’s over the past 10 years, and its market value is now more than double Microsoft’s. Microsoft shares were up 0.3 percent at $27.99 on Thursday afternoon, while Apple shares were down 0.8 percent at $611.70.

“This really is about debunking the notion that Microsoft is a dinosaur and they are relevant in a new climate of tablets and mobile,” said Todd Lowenstein, portfolio manager at HighMark Capital Management, which holds Microsoft shares. “Extreme pessimism and almost utter failure is priced into the shares, so any kind of positive delivery on units, customer perception, would be really beneficial to the stock.”

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