CEO Steve Ballmer announced the new tablet, calling it part of a "whole new family of devices" the company is developing.
One version of the device, which won't go on sale until sometime in the fall, is 9.3 millimetres thick and works on the Windows RT operating system. It comes with a kickstand to hold it upright and a touch keyboard cover that snaps on using magnets. The device weighs under 1.5 pounds and will cost about as much as other tablet computers.
The size is similar to the latest iPad, which is 9.4 millimetres thick and weighs 1.3 pounds. Microsoft also promised that the Surface's price tag will be similar to the iPad, which sells for $499 to $829, depending on the model.
A Microsoft Canada spokeswoman said the company does not yet have any details regarding pricing or availability in Canada.
Microsoft's broadside against the iPad is a dramatic step to ensure that its Windows software plays a major role in the increasingly important mobile computing market.
"They are saying it's a different world now and are trying to put the sexy back into the Microsoft brand," said Gartner Inc. analyst Carolina Milanesi.
Microsoft is linking the Surface's debut with the release of its much-anticipated Windows 8 operating system, which has been designed with tablets in mind. The company hasn't specified when Windows 8 will hit the market, but most analysts expect the software to come out in September or October.
Steven Sinofsky, president of Microsoft's Windows division, called the device a "tablet that's a great PC — a PC that's a great tablet."
A slightly thicker version —still less than 14 millimetres thick and under 2 pounds — will work on Microsoft's upcoming Windows 8 Pro operating system and cost as much as an Ultrabook, the company said. The pro version comes with a stylus that allows users to make handwritten notes on documents such as PDF files.
Each tablet comes with a keyboard cover that is just 3 millimetres thick. The kickstand for both tablets was just 0.7 millimetres thick, less than the thickness of a credit card.
Research In Motion's attempt last year to challenge Apple's dominance in the tablet market failed to deliver a threat to the iPad.
Following a lacklustre launch and disappointing sales, the Waterloo, Ont.-based company — a pioneer in the smartphone business — was forced to begin selling its PlayBooks at a discount to boost interest.
And earlier this month RIM (TSX:RIM) said it would discontinue the lowest-priced model. It continues to manufacture both the 32GB and 64GB PlayBooks.
Although the Surface looks like an elegant device, Forrester Research analyst Sarah Rotman Epps criticized Microsoft for not using attention focused on Monday's announcement to highlight some of the reasons that it might be a better option than the iPad. For instance, she thinks Microsoft could have shown on its video calling service, Skype, will work on Surface or how people might be able to use its motion-control sensor, Kinect, on the tablet.
"I am excited about this product, but it felt like Microsoft was pulling punches with this announcement," Epps said. "Hardware is only part of the dynamic. They need to explain how Microsoft manufacturing this device will change people's experience with a tablet."
Microsoft also may be limiting the Surface's impact by limiting the initial sales to its own stores and online channels.
The cautious approach may be part of Microsoft's attempt to minimize a possible backlash to an expansion that will thrust it into competition with some of its longtime business partners and customers.
Manufacturing a tablet represents a departure from Microsoft's highly successful strategy in the PC market.
With PCs, Microsoft was content to leave the design and marketing of the hardware to other companies, such as Hewlett-Packard, Dell, Lenovo and Acer, that licensed the Windows operating system and other software applications.
The more hands-on approach may upset some.
"Are their partners going to be happy about it? No, but there isn't much they can do about it," said Gartner's Milanesi.
Epps also believes Microsoft runs the risk of alienating key partners. Microsoft may even be able to build a sleeker device than traditional PC makers because it won't have to pay licensing fees for an operating system.
Microsoft has been making software for tablets since 2002, when it shipped the Windows XP Tablet PC Edition. Many big PC makers produced tablets that ran the software, but they were never big sellers. The tablets were based on PC technology, and were heavy, with short battery lives.
Microsoft didn't say how long the Surface would last on battery power.
It won't be the first time Microsoft has ventured into hardware, or even its first computer, in the broader sense. The Xbox game console is essentially a PC designed to connect to a TV and play video games.
Microsoft has also made its own music player, the Zune, and a line of phones, the Kin. In both cases, it produced these products after hardware partners had failed to produce competitive products with Microsoft's software.
Both products were failures. The Zune gained favourable reviews when it launched in 2006, but still couldn't hold its own against the iPod, and was discontinued last year. The Kin phones were panned and pulled from shelves within two months of their launch in 2010.
The Xbox, on the other hand, didn't tread on the toes of any Microsoft partners. Launched in 2001, it has made Microsoft a major player in console gaming, alongside Sony and Nintendo. But it was a money-loser for many years, and while it's been profitable more recently, it's only marginally so, especially when compared to Microsoft's lucrative software business.
AP Technology Writers Michael Liedtke in San Francisco and Peter Svensson in New York contributed to this report.