Schmidt: Microsoft's Surface could be a big deal -- if it works

NEW YORK--Google Executive Chairman Eric Schmidt said Microsoft's Surface tablet could have big implications for the mobile market -- if the product works.

Schmidt, speaking during an interview with All Things D's Walt Mossberg and Kara Swisher at New York's 92nd Street Y, said he isn't ready to include Microsoft in the "gang of four" companies that rule technology.

"Let's see what this new set of products does," Schmidt said. "There are well-funded, smart, well-run companies that have not been able to bring up state-of-the-art products."

Google, Microsoft, Apple, and many other companies are competing to dominate the smartphone and tablet markets. Google and Apple have so far taken the lead, but Microsoft is counting on the newest version of its Windows operating system, launching later this month, to help it gain traction.

Schmidt said Microsoft has built a "structural monopoly" around Windows for PCs, but he doesn't believe that's the right model for the mobile market. Instead, he expects the companies that integrate hardware and software the best to be the most successful.

Google's Android software is used by many companies that may not work closely with Google, but it also bought Motorola Mobility and it has also released products like its Nexus tablet. And Google has worked on developing PCs it calls Chromebooks.

"There's going to be an explosion of integrated hardware/software solutions that manage your car, life, music, refrigerator," Schmidt said.

Meanwhile, Schmidt said current patent battles are ultimately bad for innovation and eliminate choice.

"These patent wars are death," he said.