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Skeptics abound as Microsoft prepares to unveil tablet software

Microsoft Corp. Chief Executive Officer Steve Ballmer, reportedly set to unveil new software for tablets at the Consumer Electronics Show next week, will face skeptics who say his company won't soon narrow Apple Inc.'s iPad lead.

"By the time Microsoft gets it figured out, everybody will already own an iPad," said Keith Goddard, CEO of Capital Advisors Inc., an investing firm in Tulsa, Okla., that holds Apple shares. "That train has left the station."

Microsoft will announce a full version of the Windows computer operating system that runs on ARM Holdings Plc technology at the show, which begins in Las Vegas on Jan. 6, two people familiar with Microsoft's plans said last week.

Allying with ARM is Microsoft's way of stepping up rivalry with Apple, which has garnered the largest share of the tablet market with its iPad, a touch-screen device introduced in April that handles video, music and computing tasks. The effort may falter unless Ballmer can match the features consumers have come to expect from the iPad, Goddard said.

The new Windows version would be tailored for battery- powered devices, such as tablets and wireless handsets, the people said. Chips based on ARM technology are made by Qualcomm Inc., Texas Instruments Inc. and Samsung Electronics Co. Frank Shaw, a Microsoft spokesman, declined to comment.

"We're tuning Windows 7 to new slate hardware designs," Ballmer told analysts in July. He also said, Apple has "sold certainly more than I'd like them to sell."

Computer makers have unsuccessfully been trying to sell tablet-style computers based on Microsoft's Windows for about a decade. Before the iPad, tablets made up only about 2 percent of the PC market. Apple has sold 7.46 million iPads through September. According to analysts at Goldman Sachs Group Inc., it may sell as many at 37.2 million iPads next year.

That indicates that the tablet computer's share of the PC market may rise to 9.2 percent next year, based on a prediction by research firm IDC for 402.7 million PC shipments in 2011.

Microsoft dropped 23 cents to $28.07 Monday. The shares have declined 7.9 percent this year. Besides gaining share, Apple has also redefined consumer expectations for what a tablet computer should do, says Michael Gartenberg, an analyst at Gartner Inc. Instead of requiring the use of a stylus pen to serve as a computer mouse, the iPad allows people to navigate using their fingers.

"Apple did this year what no one had done in the previous 10 crack that space between the PC and the phone," said Gartenberg. "Microsoft has been working very hard at putting a square peg in a round hole."

Still, an introduction at CES gives Microsoft a chance to win over some of the more than 100,000 people expected to attend the premier technology trade show, he said.

"It's a wonderful opportunity for Microsoft and Ballmer to put a stake in the ground," said Gartenberg. "Now that Apple cracked the market no one wants to get left behind."

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