Microsoft (Nasdaq: MSFT) is expected to announce new Surface tablet computers, including a version with a smaller screen to compete with Google’s Nexus 7 and Apple’s iPad Mini.
The company has an announcement event scheduled in New York on Monday.
The Surface is part of Microsoft Chief Executive Officer Steve Ballmer’s commitment to make sure that the personal computer remains relevant as “the device of choice.”
Ballmer made his comment Friday to analysts as Windows, which dominated computing for more than two decades, now makes up 25 percent of revenue. The operating system slipped to become Microsoft’s third-largest business after Office, which generated 32 percent of sales, and Server and Tools, which garnered 26 percent for the latest fiscal year through June.
Ballmer’s remarks were being closely watched as he shakes up the world’s largest software maker amid a shift by consumers toward smartphones and tablets and away from PCs running Windows. The CEO overhauled Microsoft’s management and strategy to accelerate development of hardware and services, agreeing this month to buy Nokia Oyj’s handset unit for $7.2 billion.
“We must do the work to ensure that the PC stays the device of choice when they’re trying to be productive in life,” Ballmer said at a meeting for analysts and institutional shareholders, the first in two years. The company will have to work hard to keep the industry “north of 300 million” units, he said.
The new Surface comes about a month before Microsoft releases an update to its Windows 8 operating system on Oct. 17. Among other things, Windows 8.1 will be usable on smaller touch screens, which have become popular because they are cheaper and easier to carry. The previous version of Windows 8 was limited to tablets with 10-inch to 12-inch screens.
The tablets could also get lighter and thinner thanks to a processing chip that uses less energy and doesn’t require a fan. Known as Haswell, the chip is already used in laptops from Apple, Samsung, Dell and other companies. Apple’s 13-inch MacBook Air with Haswell gets up to 12 hours of use, compared with seven hours before.
Microsoft began selling Surface tablets last October, but sales have been slow. The company shipped about a million tablets in the first three months of 2013, according to research firm IDC. That includes about 260,000 of the slimmed-down RT version of Surface and 750,000 of the Pro version, which is compatible with older Windows programs. The shipments gave Microsoft a meager 2 percent share of the tablet market in the first quarter. By the second quarter, Microsoft tablets dropped out of IDC’s Top 5.
Microsoft, which is based in Redmond, Wash., absorbed a $900 million charge in the April-June period to account for its expected losses from the Surface RT after it slashed prices to stimulate demand. The $150 cut brought the price of the Surface RT with 32 gigabytes of memory to $349. The Surface has a 10.1-inch screen measured diagonally. The RT version is 1.5 pounds. The Pro version is 2 pounds and starts at $799, $100 less than it was at launch.
Microsoft has manufactured devices before, such as its Xbox gaming console. In selling the Surface, the company became a competitor to its many manufacturing partners, which rely on its Windows operating system to power their machines. Microsoft is trying hard to succeed in tablets because personal computer sales are falling.
Ballmer recently announced plans to retire.