Can Microsoft Trip Up Apple in China?

Can Microsoft (NASDAQ:MSFT) trip Apple (NASDAQ:AAPL) up in one the world’s biggest growing tech markets? The first-ever Surface tablet was sold in Beijing, a situation unheard of with Apple products, which often take months to reach the Chinese mainland. Apple’s third-generation iPad reached the country four months after its launch in the U.S. earlier this year.

Markets such as the U.S., Australia, Canada, France, Germany, Hong Kong, and the United Kingdom will follow the Surface sales launch in China. With four other cities — Shanghai, Shenzhen, Guangzhou, and Nanjing — forming part of Microsoft’s launch drive aside from the capital, consumers in the country are impressed by the company’s aggressive strategy.

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“Having it here in China is addressing the capability of the China market, the fact that we produce these devices here and can bring it to a big, big addressable consumer market,” Ralph Haupter, Microsoft’s chief executive officer for China, told Bloomberg in an interview. “We all recognize China is a great market to have devices. The pure number of people using devices in China is giving us a huge opportunity.”

Hundreds of people gathered at the retail store where the first Surface was sold, with several expressing frustration that Apple did not give the market as much respect. Then there is the aspect of the iPhone maker losing business because of the potential of spurious or smuggled products. According to IDC analyst Bryan Ma, consumers often pay more for smugglers to bring in devices from Hong Kong. “For most Apple products, people have to pay a premium to get products on the gray market in the months it takes Apple to launch officially in China,” Ma said.

While Microsoft can make an impact in the market with its China-first strategy, it will have to do more to chip at Apple’s domination in the global tablet arena. Apple’s market share is expected to rise to 61 percent next year, with Google (NASDAQ:GOOG) Android tablets dropping to 33 percent, and tablets running Windows notching up 6 percent.

“I would agree that launching in China makes sense but Apple is already there with the third-generation iPad,” Sterne Agee analyst Shaw Wu told Bloomberg. “At the end of the day, the product has to appeal with its usability and ecosystem and it isn’t clear that Microsoft can deliver.”

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