Microsoft (MSFT) Says Tablets May Not Have Future

Even though Microsoft (NASDAQ:MSFT) is developing a version of Windows 7 for tablets, Craig Mundie, Microsoft’s chief research and strategy officer, says he doesn't see much of a future for the devices.

“I think there’s an important distinction–and frankly one we didn’t jump on at Microsoft fast enough–between mobile and portable,” he said. “Mobile is something that you want to use while you’re moving, and portable is something that you move and then use. These are going to bump into one another a little bit and so today you can see tablets and pads and other things that are starting to live in the space in between. Personally I don’t know whether that space will be a persistent one or not.”

There is no doubt in the short-term tablets are and will be a hit, but once the initial newness wears off it'll be at that time we'll know whether or not Mundie is right.

As for the Microsoft tablet platform, it won't be released until the fall of 2012, suggesting they think it'll be around at least for awhile.

Microsoft was trading at $25.66, gaining $0.17, or 0.67 percent, as of 2:42 PM EDT.

Microsoft's (NASDAQ:MSFT) Tablet Threat Overblown? We Don't Know Yet

Bypassing all the usual media hype, the question of investors concerning Microsoft (NASDAQ:MSFT) is have they met a real PC market disruptor in the tablet, and is the tablet a fad or a trend.

With mobility being a strong part of technology focus at this time, it's apparent the tablet is more than just a fad, but a trend that should last for some time.

In the short term, it seems the threat to Microsoft if being dragged from future possibilities into an attempt to make it a present reality. That isn't the case.

with Microsoft having over 300 million Windows 7 licenses sold, the relatively paltry sales of 7 million tablets in the last quarter by Apple (NASDAQ:AAPL) doesn't seem so scary.

But, that doesn't mean the long-term threat isn't real, as it is, and Microsoft will have to respond to that threat before it gets too far out of hand.

I don't think they have the type of response this time that they've had in the past, where the have lumbered along in response to potential threats, as this one is outside their PC and Office strength, and bypasses them directly. In other words, tablets are legitimate disruptors which will change the computer landscape very quickly.

Microsoft has been expanding into cloud services, as well as still being able to release a hot product, as Kinect has proven in 2010.

But an assault upon their core business must be taken seriously, and quickly. Short term the threat has been overstated by hype, but in the long term it's real, and the longer Microsoft waits to respond, the more precarious the situation will become.

They have time, but not as much as they've had in the past, and the potential threat is much more dire.

Microsoft (Nasdaq:MSFT) Offers Compelling Risk/reward Profile

Citing the discount Microsoft (Nasdaq:MSFT) continues to trade at, Gleacher & Co. says they see a "compelling risk/reward profile" going forward, in light of a corporate refresh cycle.

Gleacher said, "We believe MSFT represents a compelling risk/reward profile as shares continue to trade at a significant discount to the company's nearest peers. In our view, MSFT's earnings have the potential for accelerated growth driven by a strong corporate PC refresh cycle and overall positive trends in the enterprise IT spending environment. With the company having provided fixed operating expense guidance for the current fiscal year, any upside in its business is likely to flow directly to the bottom line."

They also see Windows 7 being a strong catalyst for growth.

Microsoft closed Monday at $26.84, losing $0.18, or 0.67 percent. Gleacher has a price target of $35 on them.