Tablets won't steamroll Microsoft, top executive says

DAVOS, Switzerland Fri Jan 28, 2011 4:01pm EST

The Blackberry PlayBook tablet is displayed at the Research in Motion (RIM) booth during the 2011 International Consumer Electronics Show (CES) in Las Vegas, Nevada January 7, 2011. REUTERS/Steve Marcus

The Blackberry PlayBook tablet is displayed at the Research in Motion (RIM) booth during the 2011 International Consumer Electronics Show (CES) in Las Vegas, Nevada January 7, 2011.

Credit: Reuters/Steve Marcus

DAVOS, Switzerland (Reuters) - Concerns that roaring demand for tablets and smartphones like Apple's iPad and iPhone will leave Microsoft in the dust are simply overdone, Microsoft International's president told Reuters.

"Devices are going to go and come," Jean-Philippe Courtois, president of Microsoft International, told Reuters at the World Economic Forum, adding that the company was making progress developing products in the tablet arena.

In January, Microsoft said it would make a version of its Windows operating system compatible with chips designed by ARM Holdings to establish a major presence in smartphones and tablets.

Microsoft, whose Windows software powers 90 percent of the world's computers, on Thursday reported results that fell short of outsized expectations and failed to assuage investors that the rapid spread of devices made by Apple Inc and smartphones and tablets that run Google software would dominate the next phase of computing.

Its shares were flat after reporting results, despite reporting better-than-expected profit.

Even as big technology companies such as chipmaker Intel, which has been criticized for having a weaker mobile strategy showed little signs of impact from the popularity of tablets and smartphones, long term concerns over the small but growing sector of computing have driven other PC makers' stock lower.

Courtois said the more critical part of the information technology industry was cloud computing, in which Microsoft has established a major presence. Cloud computing refers to the practice of using Internet technology to move computers and information away from desktops and into remote data centers.

"This is a deep transformation of the scenario in IT over the last decade," he said.

More broadly, although Microsoft remained cautious about the future, it sees growth coming from all regions. "We see some growth across the world both in developed countries and in emerging countries and that helps the IT spending (outlook)," he said.

Still, investors have chosen to focus their attention on the explosive growth of sales of smartphones and tablets, which propelled boosted Apple to overtake Microsoft as the largest U.S. technology company by market value last May.

Microsoft shares, which have fallen 3 percent in the trailing 12 months, have sharply underperformed the Nasdaq, which rose 24 percent. Apple shares have risen 65 percent in the same period.

Some analysts agree with Microsoft's view, stressing that the tablet market, while robust, is nowhere near the girth of the PC industry. Apple sold about 15 million iPads last year, and 7 million in the quarter ending December 2010. Microsoft sold 300 million licenses for its Windows 7 operating system.

Looking ahead, Courtois talked up Microsoft's Kinect technology, which lets video game players control operations with a wave of their arms. Microsoft demonstrated Kinect to the world's power elite at the World Economic Forum.

Kinect could provide another avenue of growth as Microsoft explores broad applications of the technology in computing and business.

"We just did a survey in the BRIC countries showing that 80 percent of people finding value in natural user interface, basically opening up the IT world to many more people in the future," Courtois said.

(Reporting by Kenneth Li; Editing by Mike Peacock)

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Comments (2)
zenduane wrote:
In 1964, the President/CEO of Howard Johnson’s (then the largest restaurant chain in the history of the U.S. – over 3,000 restaurants) announced to employees and shareholders that they had thoroughly investigated the “McDonalds phenomena” and that it was going nowhere. Americans, he proclaimed, want to sit down when they eat. I hope that Gates, Balmer, etc. enjoy their celebration meal at their local Howard Johnsons. Follow @zenduane

Jan 28, 2011 5:37am EST  --  Report as abuse
Its comments like these that show why the world is leaving Microsoft behind, they have always been so arrogant they have felt they could drive the market. I guess they have just been a back seat driver all along and now they are being thrown under the bus.

Jan 28, 2011 7:08am EST  --  Report as abuse
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