Google Vies With Microsoft to Undermine Apple’s Tablet Dominance

Google Inc. (GOOG) and Microsoft Corp. (MSFT)’s attempts to loosen Apple Inc. (AAPL)’s grip on the booming tablet-computer market will be put to the test this week as PC makers unveil new models at the Computex trade show in Taipei.

Microsoft is rushing to adapt Windows to better support devices that can compete with Apple Inc. ’s iPad, which dominates the tablet market. Photographer: Andrew Harrer/Bloomberg

Investors and analysts will be looking to see if Google’s Android operating system can match the popularity of the iPad, while Microsoft may preview its next Windows platform for tablets a year after Apple’s first offering hit store shelves.

“Investors want to know which tablet is better, which has the best price-performance, and when the non-iPad camp is going to get going,” said Angela Hsiang, an analyst at KGI Securities Co. in Taipei. “Previously, people couldn’t actually see the products. At Computex, we’ll be able to touch and use them.”

Acer Inc. (2353) and Asustek Computer Inc. (2357), which upended the computer market when they showed low-cost netbooks at Computex in 2007 and 2008, will demonstrate new tablets featuring Google’s Android operating system this week. The operator of the world’s most popular search engine and Microsoft will both send executives to the event to meet with reporters and update companies on their plans.

Intel Corp. (INTC), the world’s largest chipmaker, and ARM Holdings Plc. (ARM), whose chip designs are used by Qualcomm Inc. (QCOM) andNvidia Corp. (NVDA) to run tablets, will also be trying to convince manufacturers that their products are the best as the desktop and notebook markets slow.

Tablet Shipments

Global shipments of tablets will climb to 215 million units in 2015 from 17 million last year, Toni Sacconaghi, a New York-based analyst at Sanford C. Bernstein & Co., wrote in a May 26 report. Fifteen percent of all tablets will cannibalize the sale of consumer PCs, reducing computer sales growth by 2 percent annually between 2010 and 2015, Sacconaghi wrote.

Competition from new entrants will cut Apple’s share of the tablet market to 50 percent next year, iSuppli Corp. said on April 21, from almost 100 percent when the Cupertino, California-based company began selling the iPad in June.

Microsoft will preview its operating system designed for tablets this week, using hardware with ARM-based chips, three people with knowledge of the plans said this month. Windows 7, the current version of Microsoft’s computer platform, isn’t compatible with ARM chips, which are used in tablets from Samsung Electronics Co. and Motorola Mobility Holdings Inc.

Microsoft’s Operating System

Machines using Microsoft’s new operating system will be released next year, Chief Executive Officer Steve Ballmer said this month, referring to it as Windows 8. Microsoft, based in Redmond, Washington, later retracted the comments, saying they were a misstatement.

“ARM plus Microsoft will be a big development in the future, and if that’s a success then it’ll be big for the market,” said KGI’s Hsiang. “Windows 8 will also impact the market because many people can’t get used to Android while they’re familiar with Windows.”

Google’s early lead in the non-iPad tablet market and strong mobile-phone position has helped it expand its applications store, while being offset by the company’s relative lack of experience in software development, said Helen Chiang, an analyst at IDC Corp. in Taipei.

“Most vendors still worry about quality and stability,”Chiang said. “At this moment, they choose Google because its cost is lower as the operating system is free, while Windows adds to the price.”

To contact the reporter on this story: Tim Culpan in Taipei at tculpan1@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net

By Bloomberg