Microsoft went from having no Windows penetration on netbooks in the early days to seeing Windows become "the guiding piece of software" in a market subsegment that now accounts for 15 percent or so of all PCs shipped worldwide, Ballmer observed.

"Just like we had to make things happen on netbooks, we've got to make things happen with Windows 7 on slates" in cooperation with Microsoft's hardware partners, Ballmer said. "We are in the process of doing that as we speak."

Developing Unique Apps

It's clear that Microsoft understands both the threat and opportunity presented by Apple's iPad, but the company's consideration of all the outstanding issues still appears to be in the early stages, said Al Hilwa, director of applications development software at IDC.

"The idea of devices based on Windows is a good one, as we see a world of many form factors competing," Hilwa said. "But if the machine looks and smells too much like Windows, it will mostly cannibalize Windows PC sales and not necessarily affect the growth of phone-derived tablets."

From a competitive perspective, Microsoft has a lot of good software relevant to the emerging tablet market, and has already done a considerable amount of work on relevant technologies like touch, Ballmer said. "We've got the application base, we've got the user familiarity, we've got everything on our side if we do things really right," he added.

To hit the iPad market squarely, however, Microsoft will need a content-consumption strategy that is iTunes-like, an application development model that leverages the critical mass of apps for smartphones, and devices that are more like smartphones in their simplicity than PCs, Hilwa observed.

"They don't have a lot of time to finalize their strategy because of the OEM lead time to get devices out," Hilwa explained. He expects "developer momentum to be more centered on tablet devices six to 12 months from now than even smartphones."

Not Everyone Wants A Slate

Ballmer said Microsoft's partners are focused on delivering the kinds of systems and chips that will enable the company's software to continue moving forward in a wide variety of form factors. "I don't think there really is one size that fits all," Ballmer said. "I don't think everybody wants a slate." (continued...)

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