Don’t call it a tablet. Well, you can, but Microsoft is referring to its two new Surface tablets  as PCs. The company traditionally known for its software showed off its latest hardware at a launch event in Los Angeles yesterday, with one Surface running tablet-style operating system Windows RT and the other offering the fuller Windows 8 Pro. Windows RT and Windows 8 Pro are the tablet and high-end versions, respectively, of the upcoming Windows 8 operating system.
While the software will differ, each version’s hardware is largely the same. Both feature a 10.6-inch HD display, front- and rear-facing cameras and microSD as well as USB slots. Storage-wise, Surface for Windows RT will come in 32 GB and 64 GB models, and Surface for Windows 8 Pro will come in 64 GB and 128 GB models.
Microsoft is making clear that its Surface tablets aren’t just for curling up on the couch to watch Netflix (although the company did announce Netflix for Windows 8). The backs of both Surfaces flip out into a kickstand, and the covers Microsoft will offer come with a built-in keyboard. A user could stand up a Surface on a table and have the cover flattened in front to type, instead of typing with an on-screen keyboard or a physical keyboard connected through a cord as with the iPad. The five Touch Covers use pressure-sensitive technology to sense when someone fingers a key, so it’s kind of like typing on a regular keyboard without actually pressing down. For those who want to press down to type, Microsoft will offer the Type Cover.
Microsoft shied away from offering specifics on availability and pricing. Surface for Windows RT will launch when the Windows 8 OS does—Microsoft hasn’t said when that will be—and Surface for Windows 8 Pro will launch around 90 days later. As for pricing, Microsoft said both models will be “competitive with a comparable ARM tablet or Intel Ultrabook-class PC.” That suggests that the Windows RT version will be in the $600-$800 range and the Windows 8 Pro version will cost around $800 and up.
Competition will be the biggest issue facing Surface. Not only is Microsoft going up against historical rival Apple in a market that company owns and largely created with the iPad, but it’s also vying for consumers’ wallets alongside an Android ecosystem that’s still working itself out. However, the competition Microsoft may need to keep most in mind is its own. Microsoft will need to balance from being too competitively priced so as to anger manufacturers like HP and Dell that market their own tablets running Windows. Were Microsoft to agitate them too much, they could switch over to developing for Google’s Android OS, although Google’s facing a similar dilemma with its recent purchase of Motorola Mobility.
“This is an experiment emboldened by the Xbox success. But in the game console market, Microsoft doesn’t compete against itself,” wrote Forrester analyst Sarah Rotman Epps in a blog post .
Within hours of announcing the Surface tablets, Microsoft previewed  its in-app ad plans for Windows 8 apps. The company is working with AKQA, Big Spaceship, Razorfish, Team Detroit, UM and Y&R to develop the ad products, but sampled an idea of what the ads could look like. Within MLS soccer team Seattle Sounders FC’s Windows 8 app, Adidas could run a display ad that opens up to a product showcase. The preview ad would only run within Windows 8's Metro view—the user interface that resembles Xbox Live—that will be available on Surface or any tablets running Windows 8. The PC version of Windows 8 will also let users switch to the Metro view, so the Adidas ad could run in the Sounders app on that platform but would revert to a traditional display ad when switched back to the standard PC view.