Microsoft

Microsoft has finally acknowledged that its Surface device could put other Windows 8 tablet makers in a bind.

Unveiled last month, Microsoft's Surface tablet is the company's attempt to compete with the iPad and the slew of Android tablets on the market. But Surface will also be competing with similar devices from Microsoft's own partners.

In an annual report filled with the Securities and Exchange Commission yesterday, Microsoft admitted that "our Surface devices will compete with products made by our OEM partners, which may affect their commitment to our platform."

Microsoft has been pushing its manufacturing partners to design tablets to take advantage of Windows 8. Many manufacturers are already counting on the upcoming OS to boost sales of their mobile devices at a time when PC demand has been dipping.

But Surface throws a monkey wrench into the works because now tablet makers need to worry about competition from Microsoft itself along with Apple and the top Android OEMs. Windows 8 itself will be enough of a gamble, with no guarantee that the new OS will spur tablet sales. Some manufacturers may be asking themselves whether designing Windows 8 tablets will be worth the risk.

In its annual report, Microsoft also commented on the challenges of developing Windows for both PCs and an increasing array of mobile devices.

"Users may increasingly turn to these [mobile] devices to perform functions that would have been performed by personal computers in the past," the company said. "Even if many users view these devices as complementary to a personal computer, the prevalence of these devices may make it more difficult to attract applications developers to our platforms."

Microsoft faces an uncertain time ahead with Windows 8, and the company may increasingly be worried about whether the new OS will appeal to enough developers and users in both the tablet and PC arenas.