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Microsoft Prepares Windows 8 for Battle Against the iPad

Microsoft is set to unveil the next-generation of Windows tomorrow. The new operating system, currently known as Windows 8, is the tech giant’s attempt to regain ground that it has lost to Apple, which surpassed Microsoft last year as the world’s most valuable company.

It isn’t the MacBook or Mac OS X Lion that has Microsoft executives worried, though. It’s the sheer dominance of the iPad.

The iPad hasn’t skipped a beat since its debut last year. Thanks to Apple’s ingenuity, a shockingly low starting price and a strong marketing campaign, the device has sold more than 25 million units in less than a year-and-a-half. More importantly, it has defined a whole new category of consumer devices. And it dominates that category with an iron fist.

iPad competitors have come and gone, but none have been able to make a dent in the iPad’s rapid growth. HP has given up on the TouchPad, the RIM Playbook has underperformed and countless Android tablets have fallen by the wayside. Nothing has emerged as the alternative to the iPad.

This presents a dangerous problem and an opportunity for Microsoft. The tech giant cannot let Apple monopolize the tablet market like Microsoft did with the desktop OS. That would seal its fate as a technology power destined to diminish into a shell of its former self.

There is a need for a legitimate alternative to the iPad, though, and the company that gets it right will emerge in a strong position to take a big piece of the fast-growing tablet market. Success in tablets would boost Microsoft’s profits, ease investor concerns about the shrinking PC market and set it up for future growth.

That’s where Windows 8 comes in. The next-generation OS, which will be unveiled at the Microsoft Build conference on Tuesday, is not only designed for PCs, but it is also made to work on tablets as well. We got a taste of its touchscreen capabilities at the D9 conference earlier this year, but we expect Microsoft to unveil the first Windows 8 tablet during Tuesday’s keynote. Our sources tell us that the device will be manufactured by Samsung, but has been designed meticulously by Microsoft in an attempt to create the iPad alternative.

Will Microsoft’s gamble work? Can the company create an OS that works seamlessly on both tablets and PCs? And most of all, will it be useful enough, different enough and cheap enough to give the iPad a run for its money?

We’ll be closer to knowing the answers to those questions on Tuesday morning. The tablet wars are about to begin in earnest.

1 million copies of OS X Lion already sold

Apple is off to a roaring good start with sales of its newest operating system. On Thursday the company announced that it had already sold 1 million copies of Mac OS X 10.7 Lion since it went on sale Wednesday morning. Already the company is saying that “users are buying Lion faster than any other OS release in

Apple’s history.”

Now, Apple didn’t offer any numbers back when Mac OS X 10.6 Snow Leopard was released in August 2009 that can be looked to for a comparison. But the pace of Lion sales does indicate that the way it’s delivering the new OS is going over pretty well.

Apple has chosen a nontraditional way of distributing a major desktop OS release: through the Mac App Store, which officially opened for business in January. Of course, for most Apple customers, buying software that way isn’t all that new: For the past three years the iOS App Store has been hooked up to the iPhone, iPad and iPod touch.

Related research and analysis from GigaOM Pro:

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UPDATE 1-RIM nears 2-year low after recalling some Playbooks

* RIM recalls 1,000 PlayBook tablets on flawed OS

* Shares near lowest since March 2009

(Adds share move, RIM statement, analyst quote)

TORONTO, May 16 (Reuters) - Research In Motion

(RIM.TO)(RIMM.O) shares neared a two-year low on Monday after

the BlackBerry maker said it had recalled about 1,000 of its

Playbook tablet computers due to an operating system flaw.

The Canadian company has been dogged by troubles in recent

months, disappointing investors by slashing sales and earnings

forecasts soon after revealing a weak earnings outlook.

[ID:nL3E7FT284]

RIM said the batch of 16 GB devices were shipped with "an

OS build that may result in the devices being unable to

properly load software upon initial set-up."

The PlayBook runs a QNX platform RIM bought last year and

plans to migrate into its new smartphones starting in 2012.

"It probably doesn't move the needle financially but it's

just another blemish from an execution standpoint," Avian

Securities analyst Matthew Thornton said of the recall.

Most of the affected devices were still in distribution and

had not reached customers, RIM said in an emailed statement.

The faulty batch was sent to office supply chain Staples

Inc (SPLS.O), technology blog Engadget reported on Saturday.

Staples did not respond to requests for comment.

RIM's Nasdaq-listed shares fell as low as $42.61, just 9

cents above an August 2010 trough. A fall below $42.52 would be

the lowest price since March 2009 and give the company a market

capitalization of $22.2 billion.

The shares have lost a quarter of their value this year.

RIM hoped the launch of the long-awaited PlayBook tablet

could revive its fortunes, but the product garnered poor

reviews and complaints it had been rushed out before it was

ready. [ID:nN19146402]

Its aging BlackBerry smartphone lineup has steadily lost

market share, especially in the hyper-competitive U.S. market,

to snazzier devices such as Apple's (AAPL.O) iPhone and a slew

of devices running Google's (GOOG.O) Android software.

RIM is expected to ship some 3 million PlayBooks this year,

far fewer than the 15 million iPads rival Apple shipped in a

similar period last year to single-handedly create a market for

touchscreen devices halfway between a smartphone and a laptop.

In April, RIM cut its first-quarter earnings outlook citing

fewer smartphone shipments, particularly in the United States

and Latin America, formerly a strong growth market for RIM as

it expanded globally. [ID:nN28282063]

(Reporting by Alastair Sharp in Toronto and Renju Jose in

Bangalore; Editing by Frank McGurty)