SEATTLE, USA: Next week, a high-ranking Microsoft Corp executive will stand on stage and show off a new version of Windows on a tablet computer.

It won't be the first time. Chief Executive Steve Ballmer did it last year. Co-founder Bill Gates did it 10 years ago.

This time, even before Windows chief Steven Sinofsky shows off an early version of its next touch-enabled, tablet-friendly operating system – code-named Windows 8 – to independent developers at their annual conference in Anaheim next Tuesday, there is a sense that it really matters.

"It's a big deal," said Todd Lowenstein, portfolio manager at HighMark Capital Management, which holds Microsoft shares.

"Investors are hungry to see how they are going to join where the market's going. They've been lagging and they need to catch up and surpass what's going on, to demonstrate they truly are an innovative company."

Despite foretelling the tablet revolution a decade ago, Microsoft is last off the blocks with a saleable device. The tablet PC Gates unveiled at the Comdex tech show in November 2001 was too clunky to catch on. The slick-looking Hewlett-Packard prototype slate brandished by Ballmer at the Consumer Electronics Show in 2010 did not even make it onto the shelves.

The first generation of touch-enabled tablets running Windows 8 are expected on the market in about a year.

That gives Apple Inc two-and-a-half years headstart with its iPad, which has already sold 29 million units. Tablets running Google Inc's Android software will also have gained ground, likely boosted by an expected Amazon.com device.

The shift away from desk-based PCs – which mostly run on Microsoft software – towards tablets and smartphones is happening quicker than expected. The future of Microsoft, and its moribund stock, may hinge on how well Sinofsky can sell the latest combination of tablets and Windows.

"Windows 8 might actually matter, if they can do the touch-screen innovation," said Michael Yoshikami, chief executive of fund manager YCMNET Advisors. "Otherwise, Windows 8 is just Windows 7 with one more number."

Hearts and minds

First, Microsoft needs to get itself back in tune with developers and entrepreneurs, who are flocking from Microsoft-centric programming platforms to the more exciting realms of Apple and Android.

The shift to a Apple-based culture is noticeable among innovators and entrepreneurs, said Matt McIlwain, managing director at Seattle-based venture capital firm Madrona Venture Group.

"Five years ago, I would have said 80 per cent of the start-ups or ventures, which came to pitch us, pulled out their laptop and started showing us their PowerPoint presentation," said McIlwain. "Now, 80 per cent pull out their Mac. If I were Steve Ballmer, that would be concerning to me."