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Microsoft Corporation (MSFT) Can Still Dominate the Tablet Market

Microsoft Corporation (NASDAQ:MSFT) has finally released an Office app for Apple Inc. (NASDAQ:AAPL)’s iPhone. Interestingly enough, this app isn’t available on the iPad.

That shouldn’t be too surprising. At this point, Microsoft Corporation (NASDAQ:MSFT) still has a chance to become a major player in the tablet market. The smartphone market? Not so much. If Microsoft acts quickly, it can still popularize Windows tablets — and thereby halt Window’s seemingly inevitable decline.

Microsoft Corporation (MSFT)

Smartphone and tablet saturation

On a relative basis, the tablet market is far less saturated than the smartphone market. In the US, the smartphone market surpassed the 50% saturation point last year; on the other hand, only about one-third of adults have a tablet.

Moreover, there still appears to be room for innovation in the tablet space. As I’ve written previously, smartphones have more or less stalled since mid-2010. Meanwhile, tablet makers have continued to offer new form factors and devices — the iPad Mini went on sale in November, Google Inc (NASDAQ:GOOG)’s Nexus 7 is just turning one.

Apple Inc. (NASDAQ:AAPL)’s management has continued to emphasize that tablets remain in their infancy. CEO Tim Cook has predicted that the tablet market will eventually become larger than the PC market. That could happen as early as 2015, but at least for now, PCs are still outselling tablets by a couple hundred million.

In short, there’s still time for Microsoft Corporation (NASDAQ:MSFT) to become a major player in the tablet space.

Microsoft’s campaign against Apple

In addition to excluding the iPad from Office, Microsoft has released a series of ads mocking Apple’s iPad, while at the same time emphasizing the superior features of Windows tablets.

Among other things, the iPad is incapable of handling SD cards and lacks split-screen functionality. Given the small size of tablet screens, and the increasing prevalence of cloud-based storage, the importance of these features is debatable. Nevertheless, Microsoft Corporation (NASDAQ:MSFT)’s latest ads do have a certain brilliance to them, reminiscent of Apple’s old Mac vs PC ads.

Of course, Microsoft has quite an uphill battle to fight in terms of catching up to Apple. In the first quarter, Microsoft sold about 1 million Surface RTs — in the same quarter, Apple Inc. (NASDAQ:AAPL) sold over 19 million iPads.

As for Microsoft Corporation (NASDAQ:MSFT)’s hardware partners, the situation is even worse. Microsoft’s Surface accounted for about half of all Windows tablets sold in the first quarter. This may be why Hewlett-Packard Company (NYSE:HPQ) has opted to start making Android tablets.

HP’s latest tablet, Slate 7, runs stock Android, and carries one of the lowest price tags on the market. The company will launch a higher-end Android tablet, the SlateBook X2, in August.