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Microsoft's Leap into the Tablet Realm is Admittedly Risky

Market Data on both Smart Phone and Paper

Microsoft's (NASDAQ: MSFT ) management is the first to admit it: there is risk in developing the upcoming Surface tablet. The company revealed this information in government documents filed with the Securities and Exchange Commission.

On page 14 of its annual report, Microsoft stated that its Surface tablet computers may weaken support for Windows among partners in the industry. At the risk of damaging important relationships, the company has decided to move forward with Surface distribution anyways.

Partnerships that could potentially be affected by the new tablet's sales could include original equipment manufacturers (OEMs) such as Dell (NASDAQ: DELL ) and Hewlett-Packard (NYSE: HPQ ). Individually, partners will have to choose whether or not to continue their relationship with Microsoft, who will now fill not only a supplier role but will also provide some competition at the same time.

Microsoft has laid down the gauntlet in its most recent admittance, as the company said specifically in the report, "[Our] Surface devices will compete with products made by our OEM partners, which may affect their commitment to our platform."

With such a gamble in place, questions have been drawn from Microsoft followers ranging from "Why would Microsoft choose to enter the tablet market with its own hardware? " to "Where will OEMs go if they back away from Windows?"

Only time will tell, as Microsoft's Surface has yet to find itself on store shelves. Attempting to keep Windows 8, its OEMs and the new tablet in good graces, Microsoft's management has remained tight-lipped on the situation, and will likely continue to do so.

According to The New York Times , the most direction the company has given in terms of partner relationships was when CEO Steve Ballmer was prodded for answers at a recent Microsoft sales event.

"The importance of the thousands of partners that we have that design and produce Windows computers will not diminish," Ballmer noted.

Fans of the software brand can only hope so, as the competition melting pot has risen to a dull boil pre-Surface release.

Microsoft was trading up almost one percent Friday morning near $29.39.

(c) 2012 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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