“I am excited about this product, but it felt like Microsoft was pulling punches with this announcement,” Epps said. “Hardware is only part of the dynamic. They need to explain how Microsoft manufacturing this device will change people’s experience with a tablet.”
Microsoft also might be limiting the Surface’s impact by limiting the initial sales to its own stores and online channels.
The foray into hardware is unusual for Microsoft, which relies on manufacturers like Hewlett-Packard and Dell, and could cause friction. Ballmer said the company, at times, needs to push hardware makers “in ways even that the makers of the hardware had yet to envision.”
He said the tablet was as essential to the upcoming Windows 8 operating system as the mouse was for the first version of Windows.
“Much like Windows 1.0 needed the mouse to complete the experience, we wanted to give Windows 8 its own companion hardware innovation,” he said.
The more hands-on approach might upset some manufacturers. Nomura analyst Rick Sherlund said Microsoft will have to assure longtime manufacturing partners that it is competing fairly with them.
“Microsoft will need to assure them it’s a level playing field,” he said. “I think this sets a high bar for their partners.”
Microsoft has been making software for tablets since 2002, when it shipped the Windows XP Tablet PC Edition. Many big PC makers produced tablets that ran the software, but they were never big sellers. The tablets were based on PC technology and were heavy, with short battery lives.
Microsoft didn’t say how long the Surface would last on battery power.
It won’t be the first time Microsoft has ventured into hardware. And the Surface won’t be its first computer, in the broad sense. The successful Xbox game console is essentially a PC designed to connect to a TV and play video games.
Microsoft also has made its own music player, the Zune, and a line of phones, the Kin. In both cases, it produced these products after hardware partners had failed to produce competitive products with Microsoft’s software.
Both products were failures. The Zune gained favorable reviews when it launched in 2006, but still couldn’t hold its own against the iPod, and was discontinued last year. The Kin phones were panned and pulled from shelves within two months of their launch in 2010.
The Xbox, on the other hand, didn’t tread on the toes of any Microsoft partners. Launched in 2001, it has made Microsoft a major player in console gaming, alongside Sony and Nintendo. But it was a money-loser for many years, and while it’s been profitable more recently, it’s only marginally so, especially when compared to Microsoft’s lucrative software business.