Late Windows 8 tablets botch consumer opportunity

When Microsoft launches Windows 8, its first touch-centric version of the flagship operating system, it may well be too late to seize meaningful market share in the booming tablet business, according to a new report from market analyst Forrester.

In the report, Forrester dubs Windows 8, expected to arrive late next year, as Microsoft's "fifth-mover product strategy." The operating system has already been beaten to the tablet market by Apple's iOS, Google's Android, as well as BlackBerry's fading PlayBook tablet and Hewlett-Packard's WebOS that's at death's door.

"Microsoft has missed the key peak opportunity," said JP Gownder, a Forrester analyst and co-author of the report. "Microsoft is in a really bad place."

Microsoft declined to comment on the report.

The software giant previewed Windows 8 at a conference in Anaheim, Calif., in September, giving developers their first look at the operating system built with tablet computers in mind. Windows 8 will let users toggle between a touch-centric interface, which Microsoft called Metro, and its traditional Windows view that's optimized for keyboards and mice. The company's leadership often refers to the approach as a "no compromise" way to give users the best of both worlds.

While Forrester believes that Windows 8 has significant opportunities for desktop and laptop computing, the firm is dubious about Microsoft's chances with tablets. Apple's iPad, which debuted in April 2010, and Amazon's new Kindle Fire, which launched this month, have set consumer expectations for the tablet marketplace that Windows 8 will have to overcome.

"By being late, Microsoft has disadvantaged itself," Gownder said.

CNET chronicled Microsoft's decision to abandon an earlier tablet effort in a two-part series earlier this month. It's dual-screened Courier tablet, a project that more than 130 employees worked on, ultimately was cancelled because it didn't align with Microsoft's Windows and Office franchises. But killing the project, which was in development before Apple launched the original iPad, left Microsoft to rely on Windows 8 as the cornerstone of its tablet strategy, even though it would come to market two-and-a-half years later.

The Forrester report shows a significant slide in consumers' appetite for tablets running Windows. In the first quarter of 2011, Forrester surveyed consumers, asking those who were not opposed to buying a tablet which operating system they would most prefer on a device. Back then, 46 percent of the respondents said they'd want a Windows-powered device, well above the 16 percent who preferred Apple's iOS. But by the third quarter, the preference changed, with 28 percent interested in iOS, compared to 25 percent wanting a Windows tablet.

"The pent-up demand for Windows tablets is dissipating," Gownder said.

Forrester isn't writing off Windows 8 tablets. But the report suggests that the company has put itself in a deep hole from which it must climb.

To do that, Gownder said Microsoft will need to create a meaningfully differentiated product, not something that can get lost amid the scads of tablets that line the shelves at consumer electronics stores. Microsoft's partners will also need to price their devices competitively, particularly now that the Kindle Fire can be had for $199. And Microsoft will have to work with retailers to promote the devices above their well-established rivals.