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%?
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.
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.
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.
Is Apple a hardware manufacturer re: the iPad? Do they have chip foundries, LCD plants, manufacturing plants?
As you know they certainly don't.
Samsung, on the other hand, does. They make their own...everything. How is that working out for them? Are they destroying Apple with their profit advantages.
It is never so simple. It is actually ridiculously complex, and cargo-cult hand picking of attributes of leaders and losers (while ignoring all of the exceptions) is seldom a useful exercise.
Microsoft has the choice of competing with Android on the tablet low end, or of competing with Apple on the tablet high end.
Another rather questionable analysis, sorry. The iPad dominates because it's cheap (options like the Xoom have been, perversely, more expensive). In what universe is the iPad the "high end"? Further as prices do move down, Apple most certainly is just as heartily in that competition, and we know that a 7" iPad is not far off.
Microsoft needs to make a product that people want. It's as simple as that. Android had faltered on tablets because it was, simply, a terrible tablet OS. It is becoming a very credible contender. Is Windows 8? Time will tell, but I see little to competitively sell it over either ICS or iOS but a lot of hot air and futurist speculation about how Microsoft will somehow leverage their other markets to take over the tablet market (a strategy that has failed miserably for them, but here we are again. How many people actually want Office on a tablet again?)
Really it is quite simple to analyse the confounding situation Microsoft finds itself in with regard to pricing its mobile OS bundle. They can either price it high or they can price it low. I consider why they priced it high.
iPad in the current reality is the high end of popular mobile tablet devices. One need only look at tablets for sale at Amazon.
You say that "Microsoft needs to make a product that people want". OK. But Microsoft sells software - and does not have direct control over what actually gets sold to tablet customers. This software approach worked for the commodity PC market for decades - thus the chasm.
I agree with your arguments about Microsoft's bet on Windows 8.
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?
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.
If that is your entire set of requirements you can get Android tablets for $85 (total) that give you file system access.
"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.
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?
Of course, Microsoft is dropping the ball there with WinRT, too, but that's beside the point.
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.
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.
I think this argument is bull- and we can poke a ton of holes in it but it's difficult to communicate this to many people. I almost always try to sell them on a Macbook Air instead (a Windows ultraportable would work as well, I just haven't had as good experiences with non-Apple ultraportables).
"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.
Does anyone have a sense of whether this makes sense at all? Perhaps the 'preferred volume OEM' terms are hugely discounted.
Read this Windows Team blog post to see what I mean: http://windowsteamblog.com/windows/b/bloggingwindows/archive...
I say this as someone who doesn't own any Windows licenses. (Except a Windows 7 starter OEM license for my netbook.)
So if we accept that Windows RT itself is a bundle, the headline isn't particularly misleading.
I love my iPad because it doesn't have office. It's not a laptop, it's a whole new kind of personal computer. Maybe I'm wrong but it's nothing like a laptop and as long as they're trying to make it a laptop in a different form factor I just can't see it
Software can be copied, pirated, or built up from scratch with an editor. Hardware can not.
Apple has an incentive to sell Mountain Lion at $19 which is to increase the adoption of new OS versions. They also make money predominantly on hardware so a lower software cost isn't such a financial hit. Lowering the price of their newer OS also depresses the value of operating system software in the eyes of consumers. This is important with the upcoming release of Windows 8.
Innovation and market differentiation is essentially what you are looking for. And ultimately you need a good product and resulting sales.
What will Windows RT users be getting a year from now when iOS7 is released?
A typical smart phone or laptop contains an astounding number of nano-sized parts made from otherwise hard-to-manufacture chemical compounds.
After the singularity, I suppose that robotic logistics will make possible local on-demand customized manufacturing from a very efficient supply chain. Think UPS or FedEx but orders of magnitude more automated and efficient - as input to your locally-shared "maker" - which would be a completely automated robotic CNC, machine shop, electronics fab, paint shop, testing rig, etc.
Where manufacturing plants are located, and the degree of customization offered, appear to be functions of the cost of labor and the cost of transporting various inputs and outputs. Post singularity economics may very well favor localized manufacturing when the customized output product is needed tomorrow.
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.
And also, from TFA the actual source of the article is hearsay at best. Pricing is more likely to be based around individual agreements with suppliers. They have a real incentive to get units out (to drive more App store revenue), But for smaller players they will continue to milk the Windows brand for as much as people are willing to pay for it.
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).
Microsoft doesn't support the consumer directly, but it does support the manufacturer.
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.
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?
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.