Sales of tablets are expected to triple in the next two years, topping 180 million a year in 2013, easily outpacing growth in traditional PCs. Apple has sold 67 million iPads in two years since launch.
Apple, which makes both hardware and software for greater control over the performance of the final product, has revolutionized mobile markets with its smooth, seamless phones and tablets.
Rival Google Inc may experiment with a similar approach after buying phone maker Motorola Mobility this year.
Making its own hardware for such an important product is a departure for Microsoft, which based its success on licensing its software to other manufacturers, stressing the importance of "partners" and the Windows "ecosystem."
"The question is why is Microsoft doing it?," said Michael Silver, an analyst at tech research firm Gartner. "Lack of faith in the OEMs (computer makers)? There's definite risk here as Microsoft increasingly competes with its customers."
Microsoft stressed that "OEMs will have cost and feature parity on Windows 8 and Windows RT," meaning that it would not hold back any features from other hardware makers' Windows tablets.
When it has ventured into hardware, the Redmond, Washington-based company has had a mixed record.
Apart from keyboards and mice, the Xbox game console was its first foray into major manufacturing.
That is now a successful business, but only after billions of dollars of investment and overcoming problems with high rates of faulty units - a problem which was nicknamed the "red ring of death" by gamers.
The company's Microsoft-branded Zune music player, a late rival to Apple's iPod, was not a success and its unpopular Kin phone was taken off the market shortly after introduction.
The company killed off a two-screen, slate-style prototype of a tablet device called Courier later that year, saying the technology might emerge in another form later on.