* Windows head Sinofsky focuses on Surface tablet
* Customer, analyst reaction lukewarm
* CEO Ballmer sees Windows 8 recasting PC industry
* New York Times, Amazon launch new apps
By Nicola Leske and Bill Rigby
NEW YORK/SEATTLE, Oct 25 Microsoft Corp
put its Surface tablet center stage at its Windows 8 launch
event, hoping the sleek new device will spark a fightback
against Apple Inc and Google Inc in the
exploding mobile computing market.
With interest in traditional computers waning, the world's
largest software company is attempting to reinvent the Windows
PC in a new format and directly challenge Apple's all-conquering
"One person called it historic, unique," said Steven
Sinofsky, head of Microsoft's Windows unit and the driving force
behind Windows 8, who opened the launch event in New York in
front about 1,000 media and PC industry partners.
"It's twice the amount of storage as a competing tablet for
the same price," Sinofsky said, comparing the entry level 32 GB
Surface with the cheapest 16 GB model of Apple's latest
full-sized iPad, which both cost $499.
Sinofsky and his team showed off a range of devices running
Windows 8 from PC makers such as Lenovo Group Ltd and
Acer Inc, but devoted most of their energy to the
second half of the presentation and the Surface tablet, the
first computer Microsoft has made itself.
Panos Panay, head of the Surface project, demonstrated the
tablet's features, beaming video and music to other screens,
showing off the ultra-thin cover that doubles as a keyboard, and
hooking up a camera to the device's USB port. He even dropped
the device on the floor to demonstrate its durability.
Microsoft stressed that the Surface, featuring a
pre-installed version of Office, is not just for entertainment
but also for work.
The device has generated a lot of curiosity, but so far has
not garnered rave reviews and users seem unconvinced.
"It's really a new class of device that sees the tablet and
PC experiences merging into a single device instead of discrete
ones," said Michael Gartenberg, an analyst at tech research firm
Gartner, who attended the launch. "Microsoft's challenge now
will be to educate the market as to why different is also
Apple Chief Executive Tim Cook wasted no time shooting back
at Microsoft's challenge.
"I haven't personally played with the Surface yet, but what
we're reading about it is that it's a fairly compromised,
confusing product," Cook said on Apple's quarterly earnings
conference call with analysts. "I suppose you could design a car
that flies and floats, but I don't think it would do all of
those things very well."
Windows 7 was introduced three years ago, but Windows 8
represents the biggest change in Microsoft's user interface
since Windows 95 came out 17 years ago.
"We've reimagined Windows, and we've reimagined the whole PC
industry," Microsoft Chief Executive Steve Ballmer told Reuters
The radical redesign, which dispenses with the Start button
and features square tiles for apps, may surprise some users.
Sinofsky sought to quell fears by emphasizing that the new
system was built on the base of Windows 7, Microsoft's
best-selling software that recently passed 670 million license
"Enough consumers don't know where to go; they are still
confused by Windows 8," Envisioneering Group technology
consulting Richard Doherty said at the New York event. "There
were no developers here (at the event). I don't know if
developers will embrace it."
Initial demand for Windows 8 appeared solid, but customers
are wary of spending money on unnecessary technology in the
"We've seen steady pre-order sales on Windows 8 devices from
early adopters," said Merle McIntosh, senior vice president of
product management at online electronics retailer Newegg.
"However, we expect that most average consumers are waiting
until after launch to make a purchase decision."
Microsoft is offering several versions of the new system.
The basic Windows 8, the full Windows 8 Pro and Windows 8
Enterprise for large organizations will all run on the
traditional PCs, laptops and new tablets using Intel Corp
chips. Windows RT is a new version of Windows that will
be pre-installed on its Surface tablet and other devices using
low-power chips designed by ARM Holdings Plc.
Through the end of January, users running Windows XP,
Windows Vista or Windows 7 can download an upgrade to Windows 8
Pro for $40. Windows 8 devices go on sale at midnight.
Microsoft has not said how many apps Windows 8 will have at
the launch, but it is expected to be a fraction of the 275,000
available to iPad users. The New York Times Co announced
a reader app for Windows 8 on Thursday and Amazon.com Inc
launched a Kindle e-book app for the new system, but
some big names such as Facebook Inc are not expected to
Businesses are not expected to be early adopters of Windows
8, but some feel the new crop of tablets running Office
applications could counter the iPad.
"Enterprise IT will do anything to not have to deploy iPads.
There are development costs, new software they don't really
understand," said Patrick Moorhead, founder of technology
analysis firm Moor Insights and Strategy. "Enterprise will more
likely pick a Windows 8 tablet. (This) is going stop rollout of
iPads in its tracks."
Investors were uncertain about the prospects for Windows 8,
but many feel a solid launch could help Microsoft's stock, which
has languished between $20 and $30 for much of the last decade.
Apple's shares have outperformed Microsoft's over the past
10 years and its market value is more than double Microsoft's.
Microsoft shares closed at $27.88 on Thursday, while Apple
shares closed at $609.53.
"This really is about debunking the notion that Microsoft is
a dinosaur and (showing) they are relevant in a new climate of
tablets and mobile," said Todd Lowenstein, portfolio manager at
HighMark Capital Management, which holds Microsoft shares.
"Extreme pessimism and almost utter failure is priced into
the shares, so any kind of positive delivery on units, customer
perception, would be really beneficial to the stock."