I'm not sure they can. They don't have the supply chain advantages that Apple has developed over the last five years, they won't have the volume to drive component prices down, and unless this is really a reference design that OEMs will be producing and distributing, they'll irritate the beejeezus out of their partners.

I don't blame them for trying to vertically integrate, especially after seeing what it has done for Apple. But I think they're too late to the party.

I came to the same thought about the supply chain at first, but Microsoft does sell hardware, the XBox (and I guess the Zune.) Certainly not the same as Apple, but they do have handle on it.

Given how a lot of OEMs are pumping Androids, Microsoft may just have to start hedging its bets.

(On a lighter note maybe we can start a red-ring of death meme).

Microsoft does ship a huge number of XBox, I think around 60+ million last year, but it's not really a cutting edge device since the console market is relatively sluggish when it comes to change. The Kinect is much more interesting from a technical standpoint.

I think based on the dreck that the OEMs have been delivering for the last 8-10 years, it's not surprising that Microsoft felt it had to jump into the hardware business directly.

Xbox 360 - 67.2 million sold since November 2005.

Ah thanks, I misread the CES announcement as 2011 sales, not cumulative sales. 9 million a year isn't much compared to Apple selling 315 million iOS devices since it all started. Not to mention all the notebooks, iPods and desktops shipped.

Plus, they don't even have a "retina" display for that RT tablet. And yes, best case scenario it will be $500, if they remove some other hardware features as well (cameras, etc). It will most likely be at least $600 for the entry model, again without retina display, or anything close to that.