How Microsoft foresaw--and still missed--the iPad

In a little-remembered speech from 2005, Bill Gates showed a concept for a tablet much like the iPad. So how did Microsoft miss the boat?

Ina Fried Former Staff writer, CNET News
During her years at CNET News, Ina Fried changed beats several times, changed genders once, and covered both of the Pirates of Silicon Valley.
Ina Fried
7 min read

The technology icon stands before a crowd, holding in his hands a prototype that embodies his vision for the future of computing. It's a touch-screen tablet that is thinner than a magazine, has all-day battery life, and sells for less than $800.

But the icon wasn't Steve Jobs and the tablet wasn't the iPad. It was Bill Gates, speaking in 2005 to a crowd of Windows hardware makers in Seattle. The technology enabling such a device was still a few years off, Gates said, but it was time to start working toward that vision.

A year later, Microsoft detailed Project Origami, an effort to commercialize Gates' vision by adding a touch interface on top of Windows XP. Yet, the technology still hadn't caught up with the vision.

A Samsung representative shows off the Q1 at its 2006 launch. The minitablet eventually reached store shelves, but fell short of the battery life and price targets Microsoft had for the Origami devices. Andrea E. Reed/CNET

A few devices, like Samsung's Q1 eventually found their way to the market, but they were a bust, offering terrible battery life and costing more than $1,000. Within a year, Microsoft and the partners had largely abandoned the effort.

Fast forward four years and the Gates tablet vision is a reality, thanks to Apple. Despite a decade spent trying to sell Windows-based tablets and the prescience to see the hardware trends that would make it possible for a device like the iPad to exist, Microsoft has thus far missed the boat.

The iPad is perhaps the best-received new consumer gadget since the game-changing iPhone. The Origami effort, meanwhile, is a footnote, just one of many in a string of failures in the mobile market. And while the PC market is still fast growing and dominated by Microsoft, the company's failures in the mobile market threaten Windows' long-term future.

As Microsoft continues to struggle with new computing form factors such as smartphones and tablets, it might benefit from taking a look back at Origami. How exactly did Microsoft have such a keen grasp on the future and still let opportunity slip through its fingers?

For starters, Origami probably came too soon. Although Gates could see a time when computers had all-day battery life, small Windows machines were still lucky to get a couple hours of battery life. And it would be another couple of years before multitouch would arrive on both Apple's iPhone and Microsoft's Surface.

Microsoft also had a lot on its plate. It was in the process of developing Longhorn--a significant overhaul of Windows XP. Faced with challenges to create an all-new file system and other major changes, the company scaled back the project and created what became Vista. Vista, in addition its other well-documented shortcomings, had more intensive graphics that made Windows even less well suited to low-end hardware and more of a drain on battery life.

Redmond also chose to squeeze Windows onto the devices rather than come up with a slimmer operating system that, while perhaps incompatible with past efforts, could have booted up more quickly and run on more power-efficient chips.

The company also had to deal with a much more clear and present danger/opportunity: Netbooks. The arrival of the 7-inch, Linux-based EeePC in 2007 revealed a vulnerability in Microsoft's long history of dominating the PC market. Computer makers were finding ways to make PC hardware ever cheaper and smaller, but Windows remained designed for machines with large screens, big hard drive, and high price tags.

Steve Jobs shows off the iPad at its January 2010 introduction. James Martin/CNET

Microsoft responded effectively, offering lower priced versions of Windows and working to make XP run on machines with just a few gigabytes of flash memory storage. The company now boasts roughly the same 95 percent market share in Netbooks as it does for desktops and higher-end notebooks, according to IDC.

However, the fact that Microsoft was able to foresee the hardware that would enable the iPad and yet not build the right software to seize the opportunity highlights several challenges that Microsoft still needs to address if it hopes to catch-up.

Despite improvements to the Windows development process, Microsoft's flagship operating system still has relatively long product cycles. While Apple this week released the fourth version of its iPhone operating system in as many years, Microsoft has cranked out just three major versions of Windows in the past decade.

The company also struggles with internal factions. Just recently, Microsoft canceled a tablet project of its own, code-named Courier. Some company watchers say that cancellation was part of a debate within the company over whether projects like Courier belong with the Windows team or whether the task was better suited to the devices unit, which makes the Zune, Xbox, and Windows Phones. Some say the departures of Entertainment and Devices unit head Robbie Bach and key lieutenant J. Allard can also be traced to that debate, though both cited other reasons for leaving Microsoft.

Microsoft has also struggled to keep pace in the mobile phone market. Though it was making software to power cell phones long before Apple and Google, it now trails the iPhone and Android, along with Symbian and RIM's BlackBerry. That would be bad enough if the battle were confined to the phone business, but now both Apple's iOS and Android-based devices are moving up into the tablet business.

Now, it's not necessarily gloom and doom time for the Windows team. The iPad--despite early success--is a relatively niche product and likely to remain so for the near future. IDC forecasts that 16.8 million media tablets will ship next year, including the iPad and its rivals, compared with nearly three times that many Netbook-style computers (47 million). Overall. the researcher expects more than 400 million PCs to be sold next year, with more than 95 percent of those running Windows.

Nor has Microsoft given up on playing a role on consumer tablets. The company has talked about the suitability of Windows 7 and even Windows CE for such devices and showed some prototypes at this year's Computex trade show in Taiwan. Just this week, Toshiba unveiled a dual-screen Libretto tablet running Windows 7 that it says will ship in August.

But as mobile operating systems are starting to make incursions into the PC market, so far the signs for Microsoft are somewhat ominous. At one point Hewlett-Packard was heavily touting a planned Windows 7 tablet, though it has since decided to acquire Palm and its WebOS operating system. The company now says it plans to take WebOS beyond the smartphone, including it on tablets and printers. HP, which at one time was committed to both Windows and Windows Phone, now refuses to talk at all about the Windows 7-based slate and there is plenty of suggestion that device will never see the light of day.

Android is also gaining momentum and moving into the tablet arena. In Europe, Dell has started shipping the Streak, with plans to start selling the 5-inch minitablet in the U.S. by July.

And of course, there's Apple, which is unlikely to stand still. Jobs last month predicted that, within a few years there will be more people using devices like a grown-up iPad than will be using a traditional Mac or PC.

Jobs said the day is coming when only one out of every few people will need a traditional computer, saying that PCs are like trucks, while devices like the iPad are like passenger cars. "When we were an agrarian nation, all cars were trucks because that's what you needed on the farms." But, he said, as cities rose, and things like power steering and automatic transmission became a bigger draw than, say, hauling capacity. "PCs are going to be like trucks," Jobs said. "They are still going to be around." However, he said, only "one out of 'x' people will need them."

Assuming this vision is even partially correct, it suggests that Microsoft needs to do more than just persuade hardware makers to build some Windows 7 tablets in order to get back in the ultra-mobile game.

The addition of native multitouch support in Windows 7 was a good first step, but doesn't address the battery life challenges, or the complexity still inherent in Windows.

Although Windows 7-based consumer tablets have thus far proven more talk than reality, Toshiba said this week it plans in August to ship the dual-screen, Windows-based Libretto W100. Toshiba

Another option would be to approach the market with something other than full-blown Windows, but there too, Microsoft faces hurdles. Although Redmond has other products that are potentially suitable for a consumer tablet, each has significant drawbacks.

At Computex, Microsoft showed a prototype from Asus running a version of Windows CE. Although the next version of that slimmed-down operating system boasts a better browser and support for Adobe Flash, Windows CE is sold as a fully customizable OS. That means that device makers have a lot of flexibility, but also means that any tablet dreamed up by one device maker would likely not run software written for another make.

There's also Microsoft's forthcoming Windows Phone 7 operating system, but that effort is still very early and the company has a lot on its plate there just to get things working on phones in time for a holiday launch.

All of that leaves Microsoft in an interesting position as it looks to respond to the iPad. There's another interesting question as well. Will Microsoft continue to pursue a software-only approach with tablets or might it yet build its own device?