

The Windows 8 tablet train wreck - mrsebastian
http://www.extremetech.com/computing/108335-the-windows-8-tablet-train-wreck

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teyc
Microsoft can no longer command high prices for its tablet OS because it lacks
incumbency and vertical integration.

The net result is her competitors are driving MS towards a cliff of zero or
low margin OS and inexpensive apps.

If you look at Windows 8 carefully, the ARM version will not run desktop mode.
This gives it some protection that a tablet manufacturer adding on a $20
keyboard turns a tablet into a replacement OS. However, as more applications
become metro-fied, its margins will be totally fried.

This is why Microsoft is pinning its hopes on the server. Azure and various
cloud services and tight developer tooling might make up for the lost revenue.

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missingm
The huge thing that this article fails to take into account is the frequency
of upgrades. Most people are not buying brand new PCs every two years, but
almost everyone upgrades their phones that frequently and I'd be willing to
bet that tablet upgrades will follow a similar pattern.

So a user who has a Windows Phone and a Windows Tablet will bring in $30 ($15
licensing fee x 2) every two years. If the average PC is upgraded every 4
years then the $60 of revenue for Microsoft that they realize in a 4-year span
in this hypothetical post-PC world would end up perfectly matching their
average revenue for Windows right now.

Does the average home user buy a full-blown copy of Office? Probably not, but
I'm sure that people will be willing to pay a monthly fee to back up their
documents or access some sort of Office subscription. Businesses will, of
course, get on board with a subscription model too. Or if they're willing to
keep paying full price every few years that's just fine as far as Microsoft is
concerned as well.

Furthermore, some users will end up with a Windows Phone, a Windows Tablet,
AND a Windows PC. That's even more licensing revenue for Microsoft.

$15 sounds scary compared to $60, but only if you think that people will hang
onto their phones as long as their PCs. They won't. If all of this plays out
as Microsoft hopes then they are going to be just fine.

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jinushaun
Interesting analysis. Everyone focuses on technology, but Win8 has a lot of
unanswered business questions. The premise of the article is essentially, if
MS sells Win8 tablets as a tablet (i.e., iPad), how can it continue to charge
desktop prices for Windows and Office in Win8? Especially since MS repeatedly
touted the "dual use" tablet/desktop scenario at BUILD. Both of these products
are basically free on WP and their equivalent products are cheap on iOS and
Android.

The options, as I see it are:

1\. Continue to make Office desktop only (does not work in Metro) 2\. Create a
tablet-only SKU for Office (does not work in Desktop) 3\. Create a dual use
SKU for Office (tablet + desktop). Ultimate? Sounds expensive. 4\. Switch to
subscription pricing for Office

None of these sound ideal. I think MS will ultimately go with #4. They've been
planning to do so for half a decade now.

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untog
_First, if you already use Windows 7 — and hundreds of millions do — there is
little reason to upgrade to Windows 8_

Same as there was no reason to upgrade to Vista or Windows 7 itself. Yet
plenty did and do.

 _Microsoft could buy out Nokia and create a beautiful Windows Phone 7
tablet._

Given that the distinguishing feature of WP7 is the Metro UI, what would the
effective difference be between a Windows 8 tablet and a WP7 one? It seems
like the whole point is merging these functionalities.

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mrsebastian
Compared to Vista -> 7, very few upgraded from XP to Vista. I think Vista's
market share topped out at just 17 or 18%, compared to XP's 80%+. Windows 7 is
now around 35%.

The difference between Win 8 and WP7 is cost, and the huge Windows ecosystem.
MS is trying to bring some of that ecosystem over to mobile apps with the
whole Metro/Windows Store thing. Hopefully it pans out.

