Microsoft Corporation (MSFT), Apple Inc. (AAPL), And Why This Billionaire Might Be Mistaken About The iPad

Microsoft Corporation (MSFT)It’s now been more than three years since Apple Inc. (NASDAQ:AAPL) jump-started the tablet renaissance with the iPad. The Mac maker has set the standard in the tablet market and continues to lead the way, albeit as rivals jump in and chip away at its market share.

Microsoft Corporation (NASDAQ:MSFT)‘s big push into tablets over a decade ago fell flat, in part because the Windows value chain is highly segmented and all the players involved failed to coherently create a compelling product. All the while, Bill Gates has remained a staunch supporter of tablet form factors in general, even as Apple Inc. (NASDAQ:AAPL) has run away with the iPad.

The software giant’s approach to tablets is dramatically different to Apple’s. Microsoft Corporation (NASDAQ:MSFT) is embracing a “PC-Plus” mentality while Apple talks all the time about the “Post-PC” era. In a recent interview on CNBC, Gates outlines one weakness he sees in the iPad and how Microsoft Corporation (NASDAQ:MSFT) is looking to fill that void:

With Windows 8, Microsoft Corporation (NASDAQ:MSFT) is trying to gain market share in what has been dominated by the iPad-type device. But a lot those users are frustrated. They can’t type. They can’t create documents. They don’t have [Microsoft] Office. So we’re providing them something with the benefits they’ve seen that has made that a big category but without giving up what they expect in a PC.

How “frustrated” are iPad users? Apple Inc. (NASDAQ:AAPL) has sold a cumulative total of 140.5 million iPads over the past three years, so they can’t be overly vexed.

Source: SEC filings. Calendar quarters shown.

In fairness, Gates absolutely has a valid point with regards to typing and productivity. The Microsoft Corporation (NASDAQ:MSFT) chairman calls out the iPad specifically, but his comments are applicable to most tablets in the market today. They simply can’t offer the same level of productivity as a PC. As an owner of both a tablet and laptop, I’m the first to admit that I could never get a full day’s work done on a tablet.

However, what’s debatable is whether or not that feeling is affecting tablet sales. Even if though there is likely some level of frustration among tablet and iPad consumers regarding productivity, unit sales continue to skyrocket (49.2 million last quarter). It’s also worth noting that the typing experience on Surface’s Type Cover or Touch Cover is similar to what’s available on the iPad through first-party and third-party keyboard accessories.

The mention of Microsoft Office is also interesting, since that’s one crucial productivity advantage that Surface enjoys over the iPad. There are numerous alternative productivity apps on iOS, but Office is still the gold standard. There’s been talk of Microsoft Corporation (NASDAQ:MSFT) bringing Office to iOS for years, which would undermine one of Surface’s advantages.

Gates knows how important tablets are for computing, and he’s banking on frustrated iPad buyers switching to Surface.

The article 140 Million Reasons Why Bill Gates May Be Wrong About the iPad originally appeared on and is written by Evan Niu, CFA.

Fool contributor Evan Niu, CFA, owns shares of Apple. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple and Microsoft.

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