Microsoft, to give Apple a taste of their own tablet

Microsoft, Inc. Seattle, WA.

With all the attention and praise surrounding Apple these days, it was inevitable that Microsoft would launch a new tech product to compete with its rival. This Monday, Microsoft will introduce plans for its very own tablet computer that runs Windows 8, the newest version of its operating system. Best known for generating computer software, this announcement marks the first time in Microsoft’s 37 year history that the company will offer a computer of its own. 

Microsoft plans to unveil details of the
personal tablet Monday June 18, 2012.

Microsoft dominated the PC market in the 1980s and 1990s by licensing its software to PC manufacturers. In an effort to compete with the iPod, Microsoft replied with the Zune that made the company’s attempt with MP3 music a joke. Microsoft launched the Xbox in    November 2001, which was updated with the Xbox 360 in 2005. However, the Xbox received a lot of criticism because of manufacturing issues and the time required to reach profitability for the company. Today, the Xbox 360 has positioned itself with respect among the video game console world. The recent success of the Kinect is planned to someday become a vital asset used for consumers to virtually try on clothes and accessories.

The Apple iPad has reached almost 12 million iPads in the March quarter of 2012 in sales this year. Not to mention, 2011 sales of tablets just recently surpassed the amount of PCs being sold in the market. Microsoft is aware that in order to stay dominate in the tech world, the company needs to develop a tablet to capture market share. Google’s $12.5 billion acquisition of Motorola Mobility indicated that search engine guru will be designing its own smartphones and tablets with the Android iOS platform.

In order for a business to thrive, the strategy must be able to quickly respond to the demands of the market. Gordon Moore, co-founder of Intel, is famed with Moore’s Law for explaining that technology exhibits an 18-month cycle in which the computing/processing power doubles. If Microsoft plans to compete with Google and Apple, the software giant needs to produce an impressive product. Hopefully, the Microsoft tablet will experience better success than the Windows phone, which is struggling to catch on with consumers. Nokia, the exclusive cell phone supplier for the Windows phone, has not helped Microsoft with the cell phone market as the Finnish company is shedding 10,000 jobs and closing 3 research facilities.

Nokia is the manufacturer for the Microsoft tablet.

For Microsoft, launching a tablet is a necessary step towards competing with Google and Apple. However, making a tablet is an especially risky venture because of the enormous profits the PC business produces for Microsoft. Even with the impressive growth from the iPad, Windows remains one of the greatest franchises the technology industry has ever experienced, accounting for $4.6 billion in sales during its most recently reported quarter.

Apple is currently the largest business in the world with a market cap of $534B and a P/E ratio of 14 to prove that a $574 price for one share of stock is justified. Microsoft is valued at $30 per share with a market cap of $252B and a P/E of 11, suggesting that the market is undervaluing the company currently. The market and the consumers will determine how well Microsoft succeeds with its tablet venture.

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