Microsoft takes aim at iPad, but questions loom large

Jan. 5, 2011: Microsoft chief executive officer Steve Ballmer gives his keynote speech at the 2011 Consumer Electronics Show in Las Vegas. (AP Photo/Julie Jacobson)

REDMOND, Wash. – Tired of losing ground to the iPad, Microsoft is poised to serve up its own entry in the suddenly booming tablet market.

After signaling for months that it would attack the market only through its traditional hardware partners, Microsoft has decided to enter the tablet business more directly.

The company is not talking about its effort, but Microsoft scheduled an event Monday in Los Angeles where it promised a "major" announcement. AllThingsDigital reported Thursday that the event would center around its tablet strategy.

Sources say that Microsoft concluded that it needs its own tablet, with the company designing both the hardware and software in an effort to better compete against Apple's strengths. Microsoft's tablets may include machines running ARM-based processors as well as models running on traditional PC processors, sources said.

The Wrap website reported early Friday that Microsoft will manufacture its own devices.

The move could allow Microsoft to better match Apple's tight integration but is also fraught with the potential for conflict. Microsoft makes most of its money from Windows and Office and depends on an ecosystem of PC makers like Dell, HP, Acer and Lenovo to make those Windows-based machines.

Many of those same computer makers, at Microsoft's urging, have been developing tablets running both Windows 8 and Windows RT -- the version of Windows 8 designed to run on the ARM processors used in today's phones and tablets.

It is unclear how Microsoft intends to differentiate its work from that being done by the PC makers and just how they will respond. That said, it is unclear where PC makers will go.

They could focus more energy around Android, but Google is also in the hardware business, both directly through its Motorola acquisition and indirectly through its Nexus efforts in which others manufacture devices largely designed and controlled by Google. The company is said to be working on a tablet, as well.

While Microsoft has always avoided making its own computers, it has experimented with a variety of approaches in other devices.

After failing to catch up to the iPod with a variety of hardware partners building products around Microsoft software, the company created the Zune. Although the Zune managed to grab the share once held by its partners, it never emerged as a serious threat to the iPod, and the hardware effort eventually fizzled.

Read more on the event at AllThingsD.com.