A report today from Information Week supposes that Microsoft will introduce its own slate-type tablet computer.  The key bit in the story had nothing to do with the quality of the product, but the lack of enthusiasm it has so far engendered.  “Microsoft has not officially confirmed the (New York) Times’ report, and investors largely shrugged at the news. Microsoft shares were up .16%, to $31.01, in early trading Wednesday on the NASDAQ.”

True, this is the company’s second bite at the tablet apple (pun intended) and so naturally would not create the “shock of the new.” But it is more likely a response rooted deeply in the minds of consumers who more comfortably categorize Microsoft within the four software walls of Office, than among untethered consumer-focused devices.  It is a matter of context.

We make sense of a noisy world by applying context created at the point we first encounter a company or product and is then reinforced by performance.  This makes it really hard to expand or pivot a company’s reputation.  If Apple is a design company, what isn’t it?  If Dell is a manufacturing company, what isn’t it?  If Microsoft is a desktop software company, what isn’t it?

Google, with its introduction of the Nexus One “smartphone” has demonstrated one way to break away.  Afterall, if Google is an advertising-driven search service, what isn’t it?  It is not so much advertising-driven as it is advertising-disruptive.  It has taken the market’s acknowledgment  of these qualities — shaking up the stodgy for the benefit of consumers — to add new services (like gMail), buy other companies (like YouTube) and enter new markets in need of disruption (like mobile phones).   Microsoft has no such market permission.

It can get it, though.  The early reports on its new operating system suggest the kind of exceptional performance in a core business that is required for acceptance in adjacent ones.  This is what helps the success of the company’s market leading Xbox game console.  Think of it as a desktop for the home.

Increasing market demand for wireless devices will earn Microsoft a second look for its software-driven smartphones and tablets.  Turning consideration into market leadership will depend on the company’s ability to reveal how it has been looking out for our interests all along.

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The landing of the Android-driven smart phone has fomented a frenzy of  “it will” and “it won’t” kill the iPhone commentary.  This persistent portrayal of the market as a zero-sum game distracts from the real benefit of the competition for share.  Computing devices are going to emulate more of our behavior.

The disconnect between they way computers have worked and the way we live was best captured in a snarky back-and-forth between Microsoft and General Motors about 10 years ago.  Bill Gates suggested that if the car company had kept up with technology, its vehicles would be more efficient and less costly.  The response from GM was along these lines:  yeah, but would you want to crash a couple times a day?

Both companies are a bit different today but GM has come further than Microsoft.  It is hard to imagine cars with more computing power and software applications than have today and as for Microsoft, well, let’s hope 7 really is a lucky number.  But now that devices have come untethered, it is the smart phone, e-book reader, tablet that are setting the pace for human-style computing.

Credit Motorola and its clam-shell cell phone, kudos to Palm and its hand-sized design and add a shout-out to companies like NCR who took touch screens from science fiction and added them to automatic teller machines.  The career achievement award for making computers more like us, though, has to go to Apple.  Which brings us to the iPhone.

Much like the ATM changed an industry and the way we interact with it, the iPhone is making ease-of-use and value — two relatively new concepts in computing — essential to success.  The new black.  Looked at in this way — from our perspective — the competition won’t be based so much on the number of applications, but the way the apps work, not so much on the power of the network, but if the connection is reliable.

There is early evidence of success, but what comes next will be the real test of how competition can shape a market to look more like the customers is says it serves.

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The Wall Street Journal recently noted that “Companies are using fewer advisers for mergers and acquisitions than at any point since 2001, as they look to cut costs amid the downturn…”   It saves money, sure, but it also is more likely to surface acquisition candidates that are better known to the company.

It makes sense to stick closer to home, taking a classic strategic acquisition approach.  No need to throw long passes when the price of failure is heightened by economic uncertainty.   Cynics can argue that this follows an historical 20-or-so-year cycle that moves between this view and a “buy what you can” ethos.  That’s OK.  But it is clear that even if strategic acquisition — to more deeply serve the existing customers or fill a gap in products and services — is back in vogue, it is different, too.

The difference can be seen in the way we measure the benefits of any combination.  More than building deeper relationships with existing customers (as is the likely intent of the Oracle acquisition of Sun) or improving “vendor” relationships (hoped for in the deal between Microsoft and Publicis for Razorfish) or adding a new feature to an already strong platform (said to be behind the IBM deal for SPSS), what will determine the ultimate value of the deals is whether the market first believes and then sees that the new company can deliver.

Right now customers don’t trust many companies.  The ones they do trust are those that have a reputation for persistently meeting customers’ expectations.  Acquisitions made by that kind of company have the best chance to succeed quickly and over time.

Next Fifteen, a UK-based communications holding company, is one such trusted company.  When it bought New York-based M Booth & Associates to “build a global consumer agency,” it was not the companies’ people or intellectual capital or relationships as much as it was the market credibility of Next Fifteen, the acquirer, that signaled its likely success.  The expectation will give Next Fifteen more time to make it work, too.

Consider this reaction against the likelihood that the Oracle/Sun deal will yield customer benefits.  Or whether Microsoft and Publicis will be able to share Razorfish.  And if IBM will be able to create the smart analytics system it desires.    The answers are tied tightly to the market credibility of the acquiring companies.

Right now, I have one “yes,” one “no” and one “maybe.”

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