Update: Microsoft-branded tablet 'makes sense,' analyst says

Giving new tablet Xbox live functionality gives it some unique value

A Microsoft-branded tablet makes sense if the tablet is focused on the same market as the $200 Kindle Fire, analysts said Monday.

Microsoft is expected to divulge its tablet plans at an event in Los Angeles late Monday afternoon. Informed sources have offered some details in various reports. Among other things, it's been said that partner Barnes & Noble would make the Microsoft-branded device, possibly giving it Xbox-like capabilities.

But Barnes & Noble said earlier Monday it is not participating in the event, throwing weight on rumors of an Xbox device.

"If Microsoft concentrates on the same market as Kindle Fire and not a general-purpose tablet market, then this [tablet] makes sense," said Jack Gold, an analyst at J.Gold Associates.

With rumors pointing to an Xbox tablet, Gold added, "that makes some sense since Microsoft has a pretty good franchise going with Xbox and has some diehard gaming fans."

Microsoft could easily subsidize the cost of the tablet, making the money back with revenue from sales of services, e-books and apps, and with revenue from ads sold for Bing search results, analysts said.

"Add to this tablet an ability to play online games through the Xbox network, and you could have a very interesting play for a Windows 8 tablet running RT or an optimized version of RT, more likely," Gold said.

But will this tablet sell?

"It won't sell in huge volumes, but selling a few million devices when you are starting from zero isn't bad," Gold added. "And the continuing revenue stream for content is good as well."

Gold said he'd be interested to see what kind of ARM chip is inside the device. "It's likely that this device will have a more modest chip to keep battery life long, since you don't need all that horsepower for content consumption and even gaming, given that most of the gaming would be via the Web," he said.

Much of the focus on Windows RT tablets has been on devices that will feature higher-priced, quad-core ARM chips from Nvidia and Qualcomm. Nvidia has provided such a chip for the Asus Windows RT tablet shown recently at Computex.

If Microsoft modifies its branded Windows RT tablet, it's unclear that the expected device will be compatible with other tablets running Windows RT, analysts said. Could it be purpose-built, such as an e-reader or a gaming device, with restrictions on its use? That seems likely, three analysts said.

Tom Mainelli, an analyst at IDC, said that Microsoft has made it clear that Windows RT, as it is being sold to OEMs (original equipment manufacturers) "shouldn't be treated as a budget tablet ... Microsoft has been obsessed with the level of performance of the iPad at Apple, so Microsoft has tightly regulated its Windows RT tablets with OEMs."

Zeus Kerravala, an analyst at ZK Research, was less optimistic than others about the prospects of the yet-to-be announced Microsoft tablet. It will be hard for Microsoft to make much of a difference in the market, he said.

"The new tablet will have to offer something uniquely different to take a chunk of share," said Kerravala. But judging from early reports of what Microsoft is expected to unveil, he added, "I don't believe that's there."

Kerravala also said he doubts that some kind of Xbox experience would do much to help sales of the new tablet. "The Xbox audience is not a good group for tablets," he said. "Gamers want a 65-inch TV, not a mobile device."

Historically, gamers have "never been great for mobile devices," Kerravala added.

Mainelli said that whatever Microsoft announces, "I hope it doesn't disappoint because they had everybody in the industry running at full speed the last three days" since the launch event was first disclosed.

Matt Hamblen covers mobile and wireless, smartphones and other handhelds, and wireless networking for Computerworld. Follow Matt on Twitter at @matthamblen, or subscribe to Matt's RSS feed. His email address is mhamblen@computerworld.com.

See more by Matt Hamblen on Computerworld.com.

Copyright © 2012 IDG Communications, Inc.

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