Tablet Wars Apple iPad vs Microsoft Surface

Apple dominates tablet sales. Now Microsoft is going after the iPad head on.

(JP Mangalindan FORTUNE) Apple and Microsoft's relationship has had more twists and turns than Liz and Dick's. The two have been bitter rivals, vital partners -- even coolly indifferent. Microsoft's new Surface tablet could change things again. Apple's iPad has some 55% of the market. Amazon (AMZN) and Google (GOOG) have largely offered cheaper alternatives to compete. But Microsoft (MSFT) is taking Apple (AAPL) on directly: The Surface sells for a premium price. And analysis by firm IHS iSuppli suggests that Microsoft's -- not Apple's -- device has higher margins. If things go well, Microsoft could capture some 9% of sales by 2016, Gartner Research estimates. That's still far behind Apple, but not bad for a latecomer. Here's a look at what goes into making the two devices.

Note: Microsoft Surface RT with 32GB of storage and third-generation Apple iPad with 32GB of storage pictured. Cost of parts includes prices of components not listed, but not cost to manufacture. Source: IHS iSuppli

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