Microsoft enters hardware business

By PETER SVENSSON Published: October 26, 2012

— Microsoft will release its own tablet computer for the first time when the new version of Windows comes out Friday, as the software company challenges Apple Inc. and its dominant iPad.

The initial version of Surface will run a modified version of Windows 8 called RT. That means Surface won't run standard Windows programs, only apps designed for it and obtained through Microsoft's new online store.

The device will start at $499, the same as the most recent, full-size iPads. The display is 10.6 inches diagonally, slightly larger than the iPad's.

The only place to get Surface at Microsoft's retail stores and its website.

A Surface with Windows 8 Pro and the ability to run regular Windows programs will come a few months later.

Thursday, Microsoft described Surface as an extension of Windows, though the company noted it's about extending other Microsoft products, too. Panos Panay, general manager of the Surface team, demonstrated watching movies and listening to music on the Surface. He also streamed audio and video from the Surface to a nearby Xbox.

To demonstrate the tablet's durability, Panay dropped the device from shoulder height to show how tough its glass and magnesium case was.