* Market reaction lukewarm as Surface tablet takes centre stage *
Microsoft put its Surface tablet centre stage at its Windows 8 launch event, hoping the sleek new device will spark a fightback against Apple and Google in the exploding mobile computing market.
With interest in traditional computers waning, the world's largest software company is attempting to reinvent the Windows PC in a new format and directly challenge Apple's all-conquering iPad.
"One person called it historic, unique," said Steven Sinofsky, head of Microsoft's Windows unit and the driving force behind Windows 8, who opened the Thursday midnight launch event in New York in front about 1,000 media and PC industry partners.
"It's twice the amount of storage as a competing tablet for the same price," Sinofsky said, comparing the entry level 32 GB Surface with the cheapest 16 GB model of Apple's latest full-sized iPad, which both cost $499.
Sinofsky and his team showed off a range of devices running Windows 8 from PC makers such as Lenovo and Acer, but devoted most of their energy to the second half of the presentation and the Surface tablet, the first computer Microsoft has made itself.
Panos Panay, head of the Surface project, demonstrated the tablet's features, beaming video and music to other screens, showing off the ultra-thin cover that doubles as a keyboard, and hooking up a camera to the device's USB port. He even dropped the device on the floor to demonstrate its durability.
Microsoft stressed that the Surface, featuring a pre-installed version of Office, is not just for entertainment but also for work.
The device has generated a lot of curiosity, but so far has not garnered rave reviews and users seem unconvinced.
"It's really a new class of device that sees the tablet and PC experiences merging into a single device instead of discrete ones," said Michael Gartenberg, an analyst at tech research firm Gartner. "Microsoft's challenge now will be to educate the market as to why different is also better."
Apple Chief Executive Tim Cook wasted no time shooting back at Microsoft's challenge.
"I haven't personally played with the Surface yet, but what we're reading about it is that it's a fairly compromised, confusing product," Cook said on Apple's quarterly earnings conference call with analysts. "I suppose you could design a car that flies and floats, but I don't think it would do all of those things very well."
NEW DEPARTURE
Windows 7 was introduced three years ago, but Windows 8 represents the biggest change in Microsoft's user interface since Windows 95 came out 17 years ago.
"We've reimagined Windows, and we've reimagined the whole PC industry," Microsoft Chief Executive Steve Ballmer told Reuters Television.
The radical redesign, which dispenses with the Start button and features square tiles for apps, may surprise some users.
Sinofsky sought to quell fears by emphasising that the new system was built on the base of Windows 7, Microsoft's best-selling software that recently passed 670 mln license sales.
Initial demand for Windows 8 appeared solid, but customers are wary of spending money on unnecessary technology in the tight economy.
Microsoft is offering several versions of the new system. The basic Windows 8, the full Windows 8 Pro and Windows 8 Enterprise for large organizations will all run on the traditional PCs, laptops and new tablets using Intel chips. Windows RT is a new version of Windows that will be pre-installed on its Surface tablet and other devices using low-power chips designed by ARM Holdings.
Users running Windows XP, Windows Vista or Windows 7 can download an upgrade to Windows 8 Pro for $40 until the end of January. However, in Cyprus the upgrade carries a 25% mark-up and costs 40 euros ($51.71).
For Windows 7 pre-installed devices sold between June 2012 and end-January 2013, the upgrade until the end of January will cost 15 euros ($19.38) from http://windowsupgradeoffer.com/en-CY .
“With the launch of Windows 8, Microsoft is redefining the use of Windows,” said Microsoft Cyprus General Manager Constantinos Loucas.
Yiorgos Malekkos, CEO of local software developer Powersoft, added that “Windows 8 will change the definition of a device and how we use it. A phone, a PC, a tablet and new gadgets will come closer through a hybrid system that allows for the simultaneous use of a touch screen, a mouse or a keyboard.”
Microsoft has not said how many apps Windows 8 will have at the launch, but it is expected to be a fraction of the 275,000 available to iPad users. The New York Times announced a reader app for Windows 8 on Thursday and Amazon.com launched a Kindle e-book app for the new system, but some big names such as Facebook are not expected to feature.
Investors were uncertain about the prospects for Windows 8, but many feel a solid launch could help Microsoft's stock, which has languished between $20 and $30 for much of the last decade.
Apple's shares have outperformed Microsoft's over the past 10 years and its market value is more than double Microsoft's. Microsoft shares closed at $27.88 on Thursday, while Apple shares closed at $609.53.
