Windows Phone 7, Tablets and Cloud: Microsoft's Push in 2010

Microsoft’s 2010 was one of transitions—and make-or-break decisions.

Although Windows 7’s strong sales indicate the company still has a lock on the traditional desktop-bound software market, the tech industry as a whole has shifted its interest and efforts increasingly toward mobile devices and the cloud. To its credit, Microsoft seems to have recognized that transition, and devoted resources to embrace it. However, it very much remains to be seen whether those multimillion dollar bets will pay off or break the house.

On January 6, Microsoft CEO Steve Ballmer used his keynote address at the International Consumer Electronics Show in Las Vegas to detail the company’s initiatives in 2010. He had reason for cautious optimism: Despite some damage to Microsoft’s bottom line during the recession, people seemed to be purchasing Windows 7, and Bing, its search engine, had made incremental but noticeable market gains against Google.

Near the end of his presentation, Ballmer unveiled three tablet PCs, including one from Hewlett-Packard. “Almost as portable as a phone, but powerful as a PC running Windows 7,” he said, holding an HP device toward the audience. “The emerging category of PCs should take advantage of the touch and portability capabilities.”

Ballmer indicated that the tablet would be “available later this year” and include the ability to display e-books, access the Web and play “entertainment on the go.”

Tablets

Within weeks, though, Apple had unveiled the iPad, which reinvigorated the previously moribund consumer tablet market. By the last quarter of 2010, that device had become a massive sales success, while Microsoft’s presence in the tablet market was limited to the HP Slate 500, an enterprise-centric device that reportedly had a limited manufacturing run.

Why did Microsoft end up falling behind in tablets, despite having devices in development before the iPad’s launch? In the case of HP, its April acquisition of Palm for $1.2 billion may have disrupted plans to produce a Windows-powered tablet, as the manufacturer shifted focus to porting the Palm webOS onto tablets and smartphones. Meanwhile, a November posting on tech blog Engadget, quoting a “trusted tipster with a contact inside HP,” indicated that the company had planned an initial run of 5,000 HP Slate 500s.

Microsoft executives have been reluctant to discuss the inability to produce a viable iPad competitor, often deflecting conversation onto the company’s long history of researching tablet technology. Instead, the new story is that Intel’s upcoming line of Oak Trail processors will open the door to a new family of Windows tablets in 2011.

“We think that’s going to offer a lot of new capabilities,” Bill Koefoed, Microsoft’s general manager of investor relations, told the audience during an Aug. 10 talk at the Oppenheimer Annual Technology, Media & Telecommunications Conference in Boston. “Whether it’s better usage of battery life and the like, it’s going to really help move the category forward.”

Microsoft is reportedly planning to reveal a new line of Windows 7 tablets during this January’s Consumer Electronics Show, according to unnamed sources speaking to The New York Times.