Microsoft is the world’s largest PC software vendor, holding a dominant market share in both PC operating systems and office productivity software. However, as the computing market increasingly moves to mobile devices, Microsoft has found itself largely left out.

Microsoft was an early player in smartphones, but fell behind as Apple and Google redefined the market around finger-driven touchscreen devices with hundreds of thousands of apps, and RIM boxed out Microsoft for security-conscious enterprise accounts. Apple and Google have also used their mobile platforms to complement their content and cloud services initiatives (e.g., Google gives away Android, but the OS is profitable thanks to increased mobile search advertising). To compete, Microsoft started fresh with Windows Phone 7, borrowing heavily from its Zune HD “metro” user interface and application development tools designed partly for its Xbox game console. It is layering on Zune Marketplace for content and Bing for search. The jury is still out on whether Windows Phone 7 will be successful, though it certainly got a boost when Nokia committed to it earlier this year. However, Microsoft has been completely silent on the other hot mobile computing category, tablets, until now.

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