For years Microsoft has left it to hardware manufacturers to build the smartphones, tablets and PCs running its software. Not anymore. According to published reports, the company plans to unveil a tablet of its own in Los Angeles on Monday.

According to reports in The New York Times and elsewhere, the device will run a new version of Windows and mark the first time Microsoft has sold its own computer, assuming one categorizes the Xbox as a video-game console. But others have speculated the new device will be more of an entertainment-oriented e-reader, perhaps not running Windows at all.

Strategic Shift

The move - originally reported by The Wrap - would mark a major strategic change for Microsoft, conceding that its old business model that reaped billions over almost four decades is falling apart in a world that is quickly becoming dominated by tablets and smartphones.

A Microsoft tablet also implies that Apple has it right with its model of tightly controlling software and hardware with the Mac, iPhone and iPad. Such control has made it possible for Apple to provide customers with a combination of industrial designs and user experiences that have yet to be matched in the Windows world.

Apple Envy Is Contagious

Microsoft is not the only company with Apple envy. Google too has abandoned its software-only approach with the $12.5 billion acquisition last year of mobile phone maker Motorola Mobility.

Given that Apple is now the most highly valued company in the world, it’s no surprise that more competitors are trying to emulate its business model.

But there are important differences. Even with its own tablet, Microsoft would continue selling Windows to hardware manufacturers, just as Google continues to make Android available to a wide variety of manufacturers. This dual approach, though, puts software makers in the uncomfortable position of creating hardware that competes with their software customers.

A Spotty Record

Microsoft also has a spotty record in building consumer hardware. While the Xbox is a success today, it took years for Microsoft to take it there. Microsoft’s Zune music player failed to win many fans in the company’s bid to unseat the Apple iPod. The product line was discontinued last year. And in 2011, Microsoft killed its Courier tablet project before launching it.

Nevertheless, Microsoft has little choice but to do something dramatic. Apple iPad sales are clearly cutting into the PC market, and there are no signs that trend is going to stop.

Whither Intel?

The Microsoft tablet is expected to run Windows RT, the Windows 8 version built specifically for tablets running ARM processors, not the Intel chips that power PCs, according to The Times. ARM chips power the vast majority of tablets and smartphones today.

If Microsoft has indeed chosen ARM, the next question concerns the impact on longtime partner Intel, which is also trying hard to transition from PCs to mobile devices. If Microsoft has decided ARM is better, then what effect would that have on other tablet makers?

Bottom line: Microsoft’s failure to keep the PC at the center of the tech universe is shaking up the industry’s old guard. And it’s far from clear how a Microsoft tablet will end the chaos.