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The Asus Vivo Tab RT tablet computer docked to a keyboard, right, sits next to a Toshiba U925t laptop-tablet computer.

Intel, Microsoft tablets sputtering

Associated Press photos
Hugo Barra, Android at Google director of product management, holds up the Nexus 10 tablet at a Google announcement in San Francisco in October. Tablets are at the top of many wish lists this holiday season.

A push by Microsoft and Intel to combat Apple’s iPad in the $63.2 billion tablet market is getting off to a slow start.

Of more than a dozen tablets Microsoft and Intel touted for the new version of Windows, only five can be purchased for immediate U.S. delivery.

Early demand for Microsoft’s first computer, the Surface tablet, seems “disappointing,” said Craig Berger, an analyst at FBR Capital Markets. And computer makers have been hampered in introducing tablets by limits Microsoft imposed on which manufacturers got a crack at prototypes, and by delays in Intel power-management software.

The holdup is making it harder for personal-computer makers, already beleaguered by plummeting demand, to challenge Apple and Google during the year-end holiday shopping season. While PC variants running Windows abound, tablets built on ARM technology-based chips or low-power processors from Intel are scarce.

“You can hardly even find one,” said Bob O’Donnell, an analyst at market researcher IDC in Framingham, Mass. “So even if you wanted to buy it, it would be difficult.”

The list of Windows tablets is short. In addition to Microsoft’s Surface, Asus’s Vivo Tab RT and Lenovo’s IdeaPad Yoga run the RT version of Windows and boast ARM-based chips. Samsung’s ATIV Smart PC and Acer’s Iconia run Windows 8, and rely on Intel chips.

Two of them, the Surface and the Acer device, are only available at Microsoft’s own stores, which number just more than 60 for the holidays. FBR’s Berger wrote in a note last week that Surface sales “have underwhelmed expectations.” Microsoft has declined to comment on Surface sales, which isn’t a positive sign, said Wes Miller, an analyst at Directions on Microsoft.

“When Microsoft is stealthy about numbers, that usually means something,” he said.

At a September event, Intel said nine PC makers, including Dell and Hewlett-Packard, would have devices with its newest low-power chip on sale when Windows was released in October. More than a month later, only four manufacturers do. Of those, only two have products in the U.S., Intel said.

Days before Windows went on sale, Microsoft provided a list of five Windows RT devices it said would be available at the software’s release. Only two made it out of the gate, and Microsoft later said the list contained errors.

In a note to clients, Rick Sherlund, an analyst at Nomura, termed Windows 8’s release an “awkward launch, with PC vendors slow to bring out” new tablets and Ultrabook touch devices.

For the PC industry, Windows 8 and RT tablets and touch-screen laptops that convert to handhelds are an attempt to build a beachhead in the mobile business. The PC market is forecast to shrink this year for the first time in more than a decade. Tablet shipments will pass notebooks in the second half of 2013, estimates Eve Jung, an analyst at Nomura. NPD DisplaySearch projects the tablet market will reach $162 billion in 2017, more than double its size this year.

Intel and Microsoft shares have suffered as concern rises about the future of the PC industry, exacerbated by the lack of Windows tablets on the market. Intel trades at a 42 percent discount to the Standard & Poor’s 500 Index on a price-to-earnings basis, according to data compiled by Bloomberg. Microsoft trades at a 29 percent discount on the same basis. Chipmaker Qualcomm, benefiting from the surge in sales of mobile devices, trades at a 24 percent premium.

The PC market’s lack of momentum contrasts with the 43 percent jump in tablet shipments in the third quarter, according to Strategy Analytics. Apple, before it introduced a new lineup of iPads, including the lower-cost iPad Mini, had 57 percent of the market in the period. Devices based on Google’s Android mobile operating system had 41 percent, and Microsoft Windows- based tablets had 1.6 percent of the global market.

“Windows doesn’t typically come screaming out of the gate, but it’s fair to say that Intel and Microsoft would have hoped for more,” said Alex Gauna, a San Francisco-based analyst at JMP Securities.

Microsoft Chief Executive Officer Steve Ballmer said at a shareholder meeting in Bellevue, Wash., last week that Microsoft is seeing “fantastic demand” for tablets and touch- screen PCs featuring Windows 8 and is working to get more into stores.

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