Microsoft Paying for Apple's Next Product Cycle

NEW YORK (TheStreet) -- Microsoft (MSFT) recently announced that it will pay at least $200 in in-store credit for an iPad trade-in. While the stipulations vary, it just goes to show that Apple (AAPL) has such a tight grip on the tablet market, competitors are willing to pay for its customers, instead of winning them over the old-fashioned way.

By offering $200, many consumers that have the older iPad models, may be willing to give Microsoft's Surface tablet a shot.

However, it may be easy to forget that the Surface has not exactly been a successful tablet thus far. In July it was revealed that Microsoft would be taking a $900 million write-off on its Surface RT inventory. In other words, the consumers aren't really fans.

Now, those same consumers that weren't buying the Surface -- and were instead buying iPads -- can get paid to give Microsoft a second chance. But is that really a good idea, ahead of Apple's impending iPad refresh?

Of course not.

While there was plenty of hype leading up to the recent iPhone event on Sept. 10, the potentially upcoming iPad event later this fall is, for the most part, being overlooked. While some may still be seething over Apple's seemingly sluggish response to bring new products to the market, it would be a lie to say the new iPhones weren't pretty awesome.

They're fast, sleek, sexy and powerful. With fingerprint technology and a 64-bit processor, it's something the market's never seen before. The iPads, I can imagine, won't be any less thrilling.

On top of all the new gizmos and technologies is an improved operating system. I think this is actually very important.

By creating iOS 7 and having it integrated among all of its mobile devices, Apple is entrenching its users even deeper into its lucrative and enticing ecosystem. When I write an article on my iMac, I can quickly find it on my iPad or iPhone via iCloud. When I want to listen to a song or look at a picture, the iCloud makes it all that much easier to share my own information with myself, however silly that may sound.

But back to my main point: Microsoft is going to drive post-iPad customers willing to try something new, right back into Apple's arms.

By offering the trade-in credit, some open-minded individuals will likely give the Surface a shot, acknowledging that their iPad is feeling a little dated. Trying a non-iOS product and attempting to integrate it into their iOS lives will not likely be a pleasant experience.

I'm not saying this as an Apple "fan boy" or whatever some will call it -- I'm sure I'll hear it in the comments section. Surely, some who make the switch will ultimately stay with Microsoft. That's inevitable. But the obvious fact remains: Microsoft had to write down nearly $1 billion worth of its old tablets because they couldn't sell them!

Now, they're paying people to give it shot, an act that will likely end as bad as its first attempt with the Surface. Perhaps even worse. People want premium. People want the best. Apple continues to let the rest of tech slug it out for the low-cost marketshare, while many consumers continue to crave the iPad.

Now that it's offering iWork and iLife for free, it gives consumers an even bigger reason to crave the ecosystem. Everything ties together so easily. Those open-minded enough to give the idea of switching a chance, will find themselves dumping their Microsoft tablets just in time to start buying the new iPads.

Microsoft got it wrong the first time, what could have changed? It will be interesting to see how much it writes down next year on the Surface 2.

At the time of publication the author was long shares of AAPL.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Bret Kenwell currently writes, blogs and also contributes to Robert Weinstein's Weekly Options Newsletter. Focuses on short-to-intermediate-term trading opportunities that can be exposed via options. He prefers to use debit trades on momentum setups and credit trades on support/resistance setups. He also focuses on building long-term wealth by searching for consistent, quality dividend paying companies and long-term growth companies. He considers himself the surfer, not the wave, in relation to the market and himself. He has no allegiance to either the bull side or the bear side.

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