Bloomberg News

Microsoft Said to Use Qualcomm Chips in Smaller Surface Tablet

May 07, 2014

Microsoft Corp. (MSFT:US) is planning to introduce a new, smaller version of its Surface that will use Qualcomm Inc. (QCOM:US) processors for the first time, according to people with knowledge of the companies’ plans, a move that ends Nvidia (NVDA:US) Corp.’s run as a chip supplier to the tablet.

Microsoft will unveil the new device at an event in New York on May 20, said the people, who asked not to be identified because the plans aren’t public. Microsoft will also take the wraps off other new Surface models at the event, including ones powered by Intel Corp. processors, the people said. Microsoft previously had a version of Surface with Nvidia chips that use ARM Holdings Plc technology.

The world’s largest software maker is working to stoke sales of its tablets, which have so far failed to dent Apple Inc.’s dominance of the market. Microsoft’s new Chief Executive Officer Satya Nadella has repeatedly said he wants to turn the Redmond, Washington-based company into one that focuses on “mobile first, cloud first.” Since becoming CEO in February, Nadella has unveiled Office software for Apple’s iPad and updated Windows Phone mobile software.

Qualcomm’s Snapdragon processors and modems are the basis for almost all of the top-selling smartphones, including Samsung Electronics Co.’s Galaxy line. Qualcomm has struggled to replicate its dominance in phones in the tablet market where Apple’s iPad -- based on that company’s own chips -- and cheaper tablets built on low-cost Chinese-made processors have kept it out.

Mobile Customers

The switch is a blow to Nvidia, which has been attempting to find phone and tablet customers for its Tegra mobile processors. The Santa Clara, California-based chipmaker is trying to repurpose the product for use in cars as the center of information and entertainment systems.

Emily Kilpatrick, a spokeswoman for San Diego-based Qualcomm, declined to comment yesterday, as did Jill Bailey, a spokeswoman for Microsoft, and Ken Brown, a spokesman at Nvidia.

Bloomberg News reported last June that Microsoft had started working on a Qualcomm-based Surface.

Microsoft last month reported that its fiscal third-quarter sales from devices and consumer hardware, including Xbox and Surface devices, rose to $1.97 billion, compared with an average analyst prediction of $1.95 billion, according to data compiled by Bloomberg First Word.

Yet Microsoft’s market share in tablets remains tiny. Microsoft’s Windows had 3.4 percent of the tablet software market in 2013, researcher IDC has said. For the Surface tablet, the share was 1 percent.

To contact the reporters on this story: Ian King in San Francisco at ianking@bloomberg.net; Dina Bass in Seattle at dbass2@bloomberg.net

To contact the editors responsible for this story: Pui-Wing Tam at ptam13@bloomberg.net Reed Stevenson


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Companies Mentioned

  • MSFT
    (Microsoft Corp)
    • $47.52 USD
    • 1.78
    • 3.75%
  • QCOM
    (QUALCOMM Inc)
    • $73.36 USD
    • 1.15
    • 1.57%
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