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Reportedly, Microsoft Corp. (MSFT - Analyst Report) plans to ship 25 million Windows tablets by the end of this year. Additionally, the company expects its own Surface tablets shipments to increase to 6 million from 3 million in 2013.

In order to achieve this target, Microsoft plans to provide incentives to vendors manufacturing Windows tablets. Reportedly, companies including ASUStek, Acer, Hewlett-Packard (HPQ - Analyst Report), Dell and Toshiba plan to ship Windows-based tablets in the near future.

Despite the drastic measures taken to counter competition in the industry, Microsoft is battling the slump in the PC market just like all the other PC makers. The company launched its first touch-based operating system — Windows 8 — in 2012. However, to add to its woes, the launch could not provide the much needed boost to the PC market.

Therefore, to bridge the gap between tablets and PCs, Microsoft upgraded its Windows operating system to Windows 8.1. The new and improved version is believed to address user complaints regarding the earlier version, Windows 8.

Despite all its efforts, Microsoft is unable to cope with the stiff competition from android and iOS tablets. As per reports from market research firm IDC, Android tablets secured the top spot with 120 million units shipped in 2013, while only 5 million Windows tablets were shipped during the same time.

In the process, Google’s Android tablets captured 61.9% share of the tablet market. Apple’s (AAPL - Analyst Report) iOS tablets with a 36.0% share were next in line, followed by Microsoft’s Windows tablets with 2.1% and others making up the rest. Microsoft is way behind competitors and scaling up its market share substantially is going to be an uphill task.

Microsoft Corporation develops, manufactures, licenses, sells and supports software products. The company operates in five segments — Windows & Windows Live Division, Server and Tools, Online Services Division, Microsoft Business Division, and Entertainment and Devices Division.

We believe Microsoft is one of the best positioned software vendors but it will have to explore ways to recover from the current situation.

Currently, Microsoft has a Zacks Rank #3 (Hold).

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