Image via CrunchBase
Once again we are about to witness a marketing disaster perpetrated by two market leaders that are letting ego get in the way of sound judgement. The laws of marketing physics describedt by Trout and Ries in the book Positioning: The Battle for Your Mind are at play and like any law of physics, they cannot be broken. To quote the law, "on average, the market leader gets 2x the market share of the #2 brand, and 2x again as much as the #3 brand.
Image via CrunchBase
Apple's share of tablets currently stands at roughly 72.1% followed by Samsung and the Kindle Fire. Also in the hunt are the Barne's & Noble Nook and a Leveno tabet. There are too many products selling undifferentiated features that are competing for the limited attention span of the consumer. What makes this category even more competitive is the iPad's leadership in both share and perception.
The problem that Google and Microsoft face is that the value proposition of each company is irrelevant to the sale of a competitive tablet. While Apple is selling art, design, fun and education, Google's Nexus 7 is selling ? and Microsoft is selling ? Both companies have little device credibility as they hope to go head to head with Apple. Unfortunately the Nexus 7 and Microsoft tablet products are largely undifferentiated and do little to demonstrate how they can win against existing competition. Even a weak effort where each company seeks to create a new category or reinvent the existing category would be a better strategic option than what we are seeing. Instead, each is competing based on criteria established by Apple, instead of playing the games along a new set of criteria. It's the difference between the excitement of Google Goggles, a product based on Google's search heritage vs. the lack of news associated with a a tablet based on a better operating system that might steal a sliver of share from the Kindle.
Corporate ego and size doesn't win the marketing race. Better features do not win. Positioning, smart marketing and an understanding of marketing physics does. There are ways for new products to compete with leaders, but it usually involves the equivalent of throwing a hand grenade into a market or by creating an entirely new market (think Tylenol and Advil vs. Aspirin).
My advice to Google and Microsoft would be to go back to basics, figure out what you stand for with consumers, and then launch a new breed of devices that deliver on this promise (Google Goggles anyone). Delivering poorly on the promises of others is a strategy doomed to fail, no matter how large you are, or how much money you have to spend.
Update: As of 9/24/13 the Surface is #10 in terms of consumer market share. Microsoft is making some headway in the professional market with the Pro model as a laptop/notebook productivity replacement.