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Business Briefing

Microsoft Confirms It's Readying Smaller Windows Devices

Microsoft Confirms It
April 19, 2013 10:13AM

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"Smaller tablets have been taking off in popularity," including so-called "phablets," which are large smartphones that border on being small tablets, such as Samsung's Galaxy Note II, said analyst Avi Greengart. There's been "a long-standing expectation that smaller devices running some form of Windows" would be released from Barnes & Noble, Greengart said.

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Get ready for Windows mini-tablets. On Thursday, Microsoft confirmed that it was working with manufacturers to create smaller devices using its newest operating system.

CFO Peter Klein told investors and analysts on a conference call Thursday that the smaller Windows devices will be available within a few months. Most observers are interpreting this as indicating 7-inch tablets running Windows 8 and/or Windows RT, which would compete with Google's Nexus brand, Amazon Kindle Fire and Apple's iPad.

Microsoft is already a major investor in Barnes & Noble's digital unit, which sells a 7-inch Nook tablet running a heavily modified version of Google's Android operating system.

'Long-Standing Expectation'

Avi Greengart, an analyst with industry research firm Current Analysis, said there's been "a long-standing expectation that smaller devices running some form of Windows" would be released from Barnes & Noble, because of the Microsoft connection.

He also said that "smaller tablets have been taking off in popularity," including so-called "phablets," which are large smartphones that border on being small tablets, such as Samsung's Galaxy Note II.

Meanwhile, Microsoft's financial reports for the quarter ending March 31, released Thursday, indicated essentially no increase in Windows sales once past sales of upgrades were included. Klein indicated that a double-digit decrease in PC sales in the next year is a possibility.

The company and a variety of hardware manufacturers have been hoping that Windows 8 and/or RT would pick up their pace of sales since its release last October. IDC has reported recently that worldwide PC shipments have fallen about 14 percent during the first three months of 2013, marking a nearly 20-year low. Smaller Windows devices, and new Haswell and Atom processors from Intel, are among the stimuli Microsoft is hoping will change the trajectory.

Klein Leaving

Some observers are suggesting that Microsoft's quarterly report could have been worse, given that PC sales have dropped so much. Microsoft's head of investor relations, Chris Suh, told news media that sales of the Surface Pro and Surface RT tablets, along with volume licenses, have helped keep the Windows division from plummeting.

Overall, though, the company posted a 19 percent increase in earnings and an 18 percent increase in revenues, year-over-year. Microsoft also said that Klein, who has been with the company for 11 years, will be leaving at the end of this fiscal year. He has been CFO for three-and-a-half years, and no reason was given.

There have been a series of reports and rumors about a coming revision to Windows 8, code-named Windows Blue, that is expected to be released later this year. In Klein's investor call Thursday, he indicated that Blue will bring back the Start button, whose absence has been the source of many complaints.

Other observers have suggested that Blue could help unify Windows 8 on tablets and Windows Phone on smartphones, since developers now have to create their mobile apps to run on two different OSes. There have also been suggestions that Windows 8's new tile-based interface, which is designed primarily for touch-screen devices, may be modified in Blue to be more optimized for keyboards and mice.

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