Microsoft introduces larger Surface tablet

Microsoft Corp. introduced a larger- screen Surface tablet that is thinner and faster than the previous Surface Pro model, its latest attempt to gain share in the market dominated by Google Inc. and Apple Inc.

"This is the tablet that can replace your laptop," Panos Panay, Surface vice president, said at an event in New York to unveil the new device. The product has a 12-inch screen, up from the previous version's 10.6 inches, and runs an Intel Corp. processor.

The Surface had 1.3 percent of the tablet market in the first quarter, according to researcher IDC. The device hasn't made significant inroads in the 20 months since Microsoft introduced its first computer-hardware product, as consumers opt for Apple's iPad and tablets based on Google's Android software. Another challenge facing Microsoft is slowing growth in the touchscreen-device market, which IDC predicts will grow 19 percent this year, compared with 52 percent in 2013.

"They need to clear up their messaging, they need to unify their apps so you can have the same apps run across multiple devices and form factors," said Jitesh Ubrani, an analyst at Framingham, Massachusetts-based IDC. "These are all things they are working on but not fast enough. There's also a certain level of beauty and polish on the iPad and the Surface isn't quite there yet."

Google's Android, which powers tablets such as Samsung Electronics Co.'s Galaxy and Amazon.com Inc.'s Kindle Fire, ran 63 percent of the tablets sold in the first quarter, according to IDC. Apple's iOS had 33 percent share. Windows, which includes Surface and tablets from companies like Dell Inc., had 4.5 percent. Dell, Toshiba Corp. and others have already released smaller tablets running Windows.

Mobile, Cloud

Since taking the helm as chief executive officer in February, Satya Nadella has said he wants to turn the Redmond, Washington-based company into one that focuses on "mobile first, cloud first." His initial efforts have included rolling out its Office productivity software for Apple's iPad and updating Windows Phone mobile software.

Fewer consumer purchases in developed markets are behind slowing growth in the tablet market, according to IDC. The slowdown is already being seen - Apple said iPad sales fell 16 percent, the largest drop on record, in the quarter that ended in March.

Still, Microsoft is counting on tablets and mobile computing for growth amid a persistent decline in the personal- computer market, where about 90 percent of machines run on the company's software. In April, IDC said first-quarter PC shipments fell 4.4 percent worldwide.

Microsoft still has room to gain ground in tablets, Ubrani said, though the company will need to connect with customers soon.

"It's tough to say how many chances they will have," he said. "But they are certainly running out of time."

To contact the reporters on this story: Dina Bass in Seattle at dbass2bloomberg.net; Serena Saitto in New York at ssaittobloomberg.net To contact the editors responsible for this story: Pui-Wing Tam at ptam13bloomberg.net Reed Stevenson