

Goodbye cheap Windows 8 tablets: Windows RT costs OEMs $85 a pop - hinathan
http://venturebeat.com/2012/06/12/windows-rt-pricing-85/

======
SlipperySlope
Microsoft is afraid to cross the chasm. It must become a hardware manufacturer
to compete with iPad.

The iPad has disrupted the steady decades-long growth of PC sales. Microsoft
has the choice of competing with Android on the tablet low end, or of
competing with Apple on the tablet high end.

But because Microsoft is a software manufacturer, competing with Android on
the low end means competing with something that is _free_ \- aside from
existing mobile patent royalties.

And competing with Apple is difficult because Apple keeps all the device sales
profits, whereas Microsoft must split profits with tablet hardware
manufacturers - who have the choice of using Android or some other Linux-based
tablet OS.

By the summer of 2013, we will begin to see how this is sorting out. Nokia,
who has bet their company on Microsoft, may be then only a year away from
bankruptcy. Enterprises may be reluctant to upgrade desktops to the Metro UI
in Windows 8.

What will be Microsoft's tablet market share a year from now? More than 10%?

~~~
azakai
> Microsoft is afraid to cross the chasm. It must become a hardware
> manufacturer to compete with iPad.

Well, Microsoft as a company already crossed that chasm with the XBOX (and
Zune, if that matters). But yes, for the Windows section of Microsoft, that is
a huge step to make.

~~~
ams6110
Odd how the history played out. Mac OS X began as NeXT's OS (NEXTSTEP). When
NeXT failed to get market traction with their high-end proprietary hardware/OS
platform, they abandoned hardware and became a software/OS company. Microsoft
already owned that space however. When NEXTSTEP the OS failed, they sold to
Apple, became Mac OS X and later iOS, and went back to being a high-end
proprietary hardware/OS platform. Microsoft however, long successful as a
software company, is now facing the prospect of having to compete as a
complete hardware/software platform, something they've never done, and
something that Mac OS X (as NEXTSTEP) failed at previously.

I guess it just shows that neither strategy is necessarily the "right" one.
It's all about providing what the market wants, when it wants it.

~~~
SlipperySlope
Right.

Its interesting to consider the choices available to the incumbents given
their respective legacies.

Is Microsoft making a mistake by pricing its mobile OS bundle at a high $85?
To what extent is that decision forced by their existing Windows franchise?

I think that Microsoft is making a locally optimal decision, and cannot yet
fully come to grips with the post-PC era.

------
krschultz
Windows 8 tablets can't sell for $800 or $900. I don't care what the tablets
cost the manufacturers to make and license, they simply won't sell any for
that price.

It may well be more featured packed and powerful than an iPad - but it will be
the premium product. At that price it will be pretty damn close to the price
of a Macbook Air or Ultrabook which aren't any more arduous to carry. The only
advantage of a tablet of those notebooks is the form factor. So how many
people are out there looking for the form factor of a tablet but find the
iPad's specs constraining?

~~~
MatthewPhillips
I'm no mathematician, but I fail to see how +$85 gets you up to "$800 or $900"
or how they're figuring that. For the 64gb models perhaps.

I'd gladly pay +$85 for a tablet where I have file system access so I don't
have to use another computer to get a file on the darned thing.

~~~
runako
He probably read TFA to get to those prices:

"Premium Windows 8 tablets will likely run between $800 and $900."

~~~
dubya
As I recall, "analysts" were predicting much higher prices for the iPad before
it was released. Maybe they'll be wrong again.

------
ScottWhigham
I'm surprised at everyone quoting the same line and no one crying, "Foul!":

"the new iPad starts at $500. Premium Windows 8 tablets will likely run
between $800 and $900."

Well, what's the "Premium iPad" go for? What do Windows 8 tablets start at?
It's like saying "The entry level Mercedes goes for $50,000. The premium
Porsche will likely run between $100,000 and $140,000." In that example, both
_can_ cost the same - it's all in the options/model chosen.

I don't know what the actual prices of the Windows 8 tablets will be but I'm
assuming Microsoft hasn't made their entry-level product 40% more expensive
than the iPad.

------
nekojima
"the new iPad starts at $500. Premium Windows 8 tablets will likely run
between $800 and $900."

Which is why I am more than happy to stick with a much more functional &
useful laptop, that's slim and has a long battery life. With the added bonus
of a built-in cover for the screen, without having to add a bulky cover for
that protection.

~~~
jere
>At launch, Win 8 tablets will cost at least between $550 and $800, which is a
scary price point to start at when the iPad 2 retails for $400 and the new
iPad starts at $500.

This part is worse to me. The way I see it, the _only_ advantage in the PC vs
Mac debate is that PCs can compete on price.

What chance do Windows 8 tablets have when they are more expensive than the
best (to many) tablet on the market?

~~~
commandar
>The way I see it, the only advantage in the PC vs Mac debate is that PCs can
compete on price.

Enterprise users.

Of course, Microsoft is dropping the ball there with WinRT, too, but that's
beside the point.

~~~
SlipperySlope
Enterprise users I know already bring their iPads to work and especially to
business travel. Enterprise IT departments already accommodate them.

~~~
commandar
I have two brand new 16GB iPads sitting on my desk at work right now that are
completely useless because we _can't_ accommodate them.

Our line of business applications are just plain too tied to Windows for it to
even begin to be an option; and I'm talking about software packages with costs
in the five to six figure range.

~~~
SlipperySlope
Yes, but I expect that you have the iPads interfaced to your corporate email
and to your web based systems. Those are enough for the execs and attorneys I
know.

And I assume you know about virtual desktop app solutions too. You may be
using those currently for remote Windows users unless you have chosen a VPN
solution to extend your enterprise network directly to remote users.

------
hinathan
I'm a little baffled by the pricing here — Microsoft's goal in the desktop
world seemed to more or less break even on OS and push the application suite
for the real cash.

Does anyone have a sense of whether this makes sense at all? Perhaps the
'preferred volume OEM' terms are hugely discounted.

~~~
robert_nsu
That $85 price tag is a Windows RT and Office Metro bundle. So, it's not
_just_ Windows in question. I think the title should be adjusted to reflect
this.

Read this Windows Team blog post to see what I mean:
[http://windowsteamblog.com/windows/b/bloggingwindows/archive...](http://windowsteamblog.com/windows/b/bloggingwindows/archive/2012/04/16/announcing-
the-windows-8-editions.aspx)

~~~
huxley
They are fooling themselves if they think the Office bundle justifies the
price. The rationale for the Office bundle should be to give an initial boost
to an unproven platform and overcome the scarcity of Windows RT apps.

~~~
lukeschlather
If Office Metro is half as good as the current Microsoft Office, it will be
worth $85 by itself.

I say this as someone who doesn't own any Windows licenses. (Except a Windows
7 starter OEM license for my netbook.)

------
Kilimanjaro
With Mountain Lion at $19 the trend in software prices continues to go down
year after year, propelled by the open source movement. In ten years I'd
prefer to be in Apple's shoes.

Software can be copied, pirated, or built up from scratch with an editor.
Hardware can not.

~~~
randomfool
Don't forget that free yearly upgrades are the norm for tablets (well, iOS at
least. Android, where art thou upgrades?).

What will Windows RT users be getting a year from now when iOS7 is released?

~~~
bcbrown
Microsoft is going to have a very hard time moving to an annual development
cycle for Windows, as opposed to the 2-4 years they've been at. I don't know
if they can solve that problem.

------
makecheck
After years I still fail to understand how Microsoft thinks an OS is worth the
prices it charges. I see two possibilities:

1\. The OS isn't worth this, in which case it's either extortion (if their
partners feel they have no choice) or cluelessness (if their partners end up
walking away).

2\. The OS _is_ worth this, in which case they've over-engineered: they made
their particular OS do _way_ more than it's supposed to and are trying to
recoup the cost of developing so damned much.

Fundamentally, an OS needs to boot a device and provide resource management.
In order to be compelling to developers it needs to include good libraries
that make common tasks easy and tricky tasks efficient. ARM tablets don't even
need Windows' backward-compatibility, so there should be a heck of a lot they
can just drop out of it! It is hard to imagine this OS being a beast;
apparently it is.

Technical points aside however, Microsoft is also the underdog, and a rich
one. If _anybody_ should be eating the true costs of an OS and charging
partners $6 a head to boost adoption (whether or not it's worth $85), it's
Microsoft.

~~~
nl
_After years I still fail to understand how Microsoft thinks an OS is worth
the prices it charges._

Show me an operating system (that comes with support) that is cheaper.

Ubuntu is $104.99/year for the cheapest support offering from Canonical. OS-X
is more.

Android is free, _but_ you have to pay to license the Google Apps (exactly how
much no one is saying).

~~~
damian2000
Vast majority of Ubuntu and Linux users don't pay for support - that's the
difference - they have a choice. With Windows there is no choice, just a huge
fee going to Microsoft, who are trying desperately to hang onto the lead in
the desktop OS market.

~~~
thornkin
You actually do have a choice. If you buy an OEM copy from, say, Newegg, there
is no support included. That's part of the reason it is so much cheaper than
the retail version.

------
fingerprinter
Haven't seen anyone ask this, but is this also going to be the OEM price for
say Dell, Lenovo etc for desktops and laptops? In a business with as slim
margins as those folks have, this could scream for an alternative.

Ubuntu anyone?

~~~
SlipperySlope
The Windows 8 OS bundle price for PCs - that is laptops and desktops - does
not need to change much from existing prices for Windows 7 OS bundles.
Microsoft already has awesome profit margins on Windows due to their
monopolistic-style lock on that market.

If someone wants to sell a laptop for example, for most of the world they
_must also include MS Windows_. When netbooks first came out, the Asus EeePC
was Linux, but customer returns forced subsequent models to be a stripped down
Windows XP - and a hard disk needed to be on netbooks from that point
forwards.

------
ajaimk
I wish the cheap was in brackets, as this spells doom for profit margins
completely for OEMs. They don't have the scale of Apple.

------
cooldeal
OEMs are going to get kickbacks from Microsoft.

[http://www.neowin.net/news/microsoft-rumored-to-give-pc-
make...](http://www.neowin.net/news/microsoft-rumored-to-give-pc-makers-
profit-deals-for-windows-8-apps)

That should drive the prices down a bit.

> While this opens a path for more impressive devices, it seems to us that
> Microsoft and Intel both took the Ultrabook route and charge “an arm and a
> leg” for the RT-powered tablet.

What? Intel is charging for an Windows RT ARM tablet?

~~~
SlipperySlope
Intel and Microsoft are very jealous of the high profit margins obtained by
Apple on gross sales.

The Ultrabook is an Intel marketing scheme to make a commodity category out of
the MacBook Air. Otherwise small form factor commodity laptops use less
expensive Intel CPUs & low-end versions of MS Windows OS bundles.

