Microsoft Is "Closer To Competitive" On Tablets "Than Some realise"

Steve Ballmer Microsoft CEO

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Microsoft is a lot closer than people think to delivering a viable tablet, says Morgan Stanley analyst Adam Holt in a research note this morning.After speaking with Microsoft executives, Holt says Windows 8 running on ARM chip designs could be ready as soon as the end of 2011, or early 2012.

While we’ve hammered Microsoft repeatedly over missing the tablet boom, we were recently informed by a source at Microsoft that the company has around 1,000 engineers working on making Windows run smoothly on ARM chip designs. And it is in fact taking the tablet market very seriously.

Yes, 2011/2012 is still another year away, but Morgan Stanley is bullish about the tablet market expanding. (It thinks 100 million tablets could be shipped in 2012.)

iPads are being tested or deployed in 80% of Fortune 100 companies, but that doesn’t mean Apple will own the enterprise market. Microsoft has a lot of room to catch up, even it comes late to the game.

“Enterprises are showing early demand for tablets, and will likely consolidate around two platforms – Apple & MSFT – with the former the early leader and MSFT having the ecosystem that greatly simplifies corporate management,” writes Holt.

Even if Apple owns the tablet market, Holt says Microsoft is picking up $100 per unit in revenue from enterprises using iPads. How? Holt says, “Where iPads are being deployed, corporates are often leveraging virtual desktops to provision Windows and Windows apps. MSFT generally gets $100/device in this scenario.”

Now, all of that optimism aside, we’re still sceptical Microsoft can produce a great tablet with nice interface at a good pricepoint.

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