Microsoft unveils Surface tablets

HOLLYWOOD -- Microsoft on Monday finally had its Apple moment.

The Redmond, Wash.-based software giant unveiled a family of home-brewed tablets to rival Apple's iPad at an extremely hush-hush event here in Los Angeles shrouded in mystery and speculation.

Microsoft is taking a huge leap with a mobile-friendly tablet, built on its new Window 8 operating system, which rolls out this fall. The Microsoft Surface Pro and RT tablets will be built in-house. The company is stepping into the tablet market at a critical juncture when growth in PC sales is slowing and consumer interest in iPads is soaring. Even some tablets built on Google's rival Android mobile operating system, such as the Amazon Kindle Fire, are selling strongly.

"We believe that any intersection between human and machine can be made better when all aspects of the experience — hardware and software — are considered and working together," Microsoft CEO Steve Ballmer said at the invitation-only event here. ""Today we want to add another bit of excitement" to the Windows 8 story.

Microsoft is no stranger to tablets. Back in 2001, Microsoft Co-founder Bill Gates predicted tablets would be the most popular form of PCs sold in America within five years. Tablets still haven't overtaken PCs, but they finally have the momentum—thanks to Apple, not Microsoft.

Indeed, Microsoft is very much the challenger as it steps into the ring for multi-touch slate-style computers. Gartner analyst Michael Gartenberg says that in a market so dominated by the iPad, Microsoft "better tell you not only why (its tablet is) different but why different is better in terms of value and in terms of price."

Adds IDC analyst Al Hilwa: "It raises the bar on how Microsoft executes on this because now Microsoft's name is on it. They've got to get it right — they've got to really hit it out of the ballpark."

The new Microsoft Surface will feature a 10.6-inch wide display with Gorilla Glass, its own stand, a full-size USB port, dual Wi-Fi antennae, a multitouch keyboard, a trackpad — and yet is only about a half-inch thick, says Windows chief Steven Sinofsky. Models will come with either 64 gigabytes or 128 GB of storage.

"With Windows 1.0, we needed the mouse to complete the experience," said Ballmer. "We wanted to give Windows 8 it's own hardware innovation. Something new, different, a whole new family of computing devices from Microsoft."

CEO Ballmer needs a big hit right now. Microsoft's stock has languished for nearly a decade as Samsung, Google and Apple have stolen the mobile spotlight and the software giant has even struggled to make Internet advances. Shares of Microsoft dipped 18 cents to close at $29.84 on Monday.

The new tablet comes at a watershed moment for Microsoft. The company is poised to bring out Windows 8, a touch-friendly operating system built around dynamic tiles that is supposed to work equally well on more traditional personal computers and tablets. "There's a lot of change coming in this version of Windows, some of it very exciting," says Michael Cherry, analyst with the independent Directions on Microsoft research firm. "I think it's going to take time to cope with the level of change that's occurring."

When it comes to operating systems, Microsoft is competing on several fronts. With devices built around Windows Phone mobile software, Microsoft is a distant rival in a smartphone space dominated by Google's Android and Apple's iOS software.