Despite the fact that it's well behind rivals Apple and Google, Microsoft still has a good shot at grabbing a significant share of the red-hot tablet market, analysts say.
Market watchers believe Windows 8-based tablets, which could be demonstrated as early as next week at the All Things D conference in Rancho Palos Verdes, Calif. or at Computex in Taiwan, will catch on with consumers who need to use their tablets for work as well as play.
"Microsoft can have a meaningful share of the market in 2013," analysts at Citigroup said, in a research report. "Of course, this is dependent upon the company's ability to deliver a competitive operating system on partner hardware that is priced competitively."
According to reports, Microsoft's tablet version of Windows 8 will run on Nvidia's Tegra chip, which incorporates ARM's system-on-a-chip design. Microsoft in January said the next version of Windows would include an edition for SoC chips.
Enterprises may be willing to wait for Microsoft's tablets to become available because it will cost them less to integrate those devices with their existing Windows infrastructures and applications. Tablets "can have a higher switching cost in favor of Microsoft," said Caris & Company's Sandeep Aggarwal, in a note Friday.
"We believe that the company has made big strides over the past six months and may end up launching a tablet soon," said Aggarwal. The analyst argued that Microsoft may have actually been late to the tablet market on purpose.
"Windows is perhaps the most expensive component in a PC's bill of materials (in addition to the CPU) and if PC prices were to go down drastically because of lighter computing devices such as tablets, the price sensitivity for Windows would have risen. We see no reason why Microsoft should have led the charge for lower ASP products and created pricing pressure for Windows," said Aggarwal. Ditto for smartphones, he added.
Microsoft shares were up .71%, to $24.84, in afternoon trading Friday.