Can Windows 8 tablets be priced low enough to compete with iPad, Kindle Fire?

Can Windows 8 tablets be priced low enough to compete with iPad, Kindle Fire?

Summary: Microsoft is supposedly charging tablet manufacturers $90 to $100 for Windows 8. One research firm estimates a Windows 8 tablet using an ARM processor will cost an average of $610.

SHARE:

Microsoft is hoping the touch-screen-friendly Windows 8 is its ticket into the growing tablet PC market. But its pricing of the new OS may be doing the company no favors when it comes to competing against the established powers in the space.

According to DigiTimes, tablets running the new OS and using ARM processors (a marked departure from Windows' usual reliance on x86-based chips) could have a hard time matching up against the iPad and Kindle Fire price-wise. That's because Microsoft is supposedly charging vendors $90 to $100 for Windows 8, which would balloon the cost of materials enough to make it difficult for tablet makers to turn a profit. According to TabTimes, that amount is significantly higher than the $50 Microsoft charges manufacturers for PC versions of Windows.

Apple and Amazon can keep costs low because they either manage the supply chain ruthlessly (Apple) or can sell content to users post-purchase. Windows tablet makers won't have either of those advantages. Furthermore, Windows 8 slates using ARM processors won't be able to use existing x86 applications, which limits one of Microsoft's main selling points for tablets running the new OS -- backward compatibility with all those Windows programs you already have. (There will be a version of Microsoft Office included for ARM tablets, at least.)

Market research firm IHS is estimating that the average selling price for an ARM-based Windows 8 tablet will be $610, which is slightly more than a new 32GB iPad. An 7-inch version would obviously be far cheaper, but could they priced in the same ballpark as the Kindle Fire, especially if Amazon decides to drop the $199 price in exchange for running some splash-screen ads?

No doubt Microsoft could throw marketing dollars toward the vendors to help defray the slim margins, much as Intel has reportedly been doing to promote the Ultrabook platform. Speaking of Intel, the pricing difficulties for ARM-based Windows 8 tablets could help the chip giant, which is looking to jump into the tablet game with Windows 8 models of its own. Intel could also subsidize manufacturers using its chips to produce Windows 8 tablets.

Enterprises may be willing to tolerating paying slightly more for Windows tablets knowing that they will come with a version of Office installed, or in the case of Intel versions, be compatible with existing Windows software (including the security apps their IT departments rely on). But it will be tougher to stoke consumer demand, which is more price sensitive, especially given the iPad's formidable library of apps that are built specifically for it.

Will Microsoft be able to match Apple in pricing for 10-inch tablets, and Amazon for 7-inch ones? What is the price you would be looking for in order to buy a Windows 8 tablet? Let us know in the Comments section below.

Topics: Hardware, Amazon, Tablets, Software, Operating Systems, Mobility, Microsoft, Laptops, Apple, Windows

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Talkback

86 comments
Log in or register to join the discussion
  • You assume...

    ...Microsoft cares what happens in the ARM marketplace. With Intel bringing increasingly more power efficient, no-compromise x86 compatible chips to the tablet/phone space why should MS care?
    wolf_z
    • Because they are invested in ARM.

      That's not a very compelling argument, if MS cared nothing for ARM they wouldn't have dumped so much money and development costs into supporting it. Performance and cost benefits of ARM aside, it has gotten MS around the precarious expectation of backwards compatibility; which even on Intel versions that support it legacy apps will be sketchy at best. They will also have to keep costs as low as possible regardless of which processors are best at any given time for a while; so an "all eggs in one basket" approach would be unwise.
      Socratesfoot
  • They would have to pay me to use Windows 8.

    Not being rude or argumentative, just honest. I have never liked the metro interface and the fact that Microsoft is pushing it so aggressively to spite consumer negativity scares me and reminds me of the KIN; which was dropped only 6 months after it's release leaving many people burned who invested $200-$300 in the phones. Why spend money on a possibly DOA device? Microsoft has done nothing to show Win8 can be viable or that they've worked to address consumer issues.
    Socratesfoot
    • Kin

      The problem with Kin was that ISPs did not wanted to subsidize Microsoft's very new (i.e. unknown future) phone.

      Worked to address consumer issues? Since you are talking about Windows 8, why it should not? Windows is already addresses issues of 90% of the PC customers all over the world.

      Windows classic is still there and Metro is just a bonus for tablet users.
      wmac1
      • No

        The Kin failed because no one bought it. It had nothing to do with the ISPs. Why on earth would an ISP care, since they have nothing to do with the phone (or did you mean phone carriers)?!?
        As for working to address consumer issues, being that the response to Metro is decidedly negative, MS announces more and more details about Win8 that do NOT show move toward choice, and as the release date is now just around the corner, I think it is pretty clear what MS will and won't do.
        And the idea that because MS has a 90% market share, that they are "addressing issues" of that market is absurd.
        And FTR, Windows classic is NOT available for Win8 on ARM.

        So in other words, not a single thing you wrote is accurate.
        .DeusExMachina.
      • Addresses issues?

        [i]"Windows is already addresses issues of 90% of the PC customers all over the world."[/i]

        Sorry but holding 90% market share and addressing the issues of 90% of the market are not one in the same, they are two very different.
        non-biased
    • Agree about Metro

      But do not see MS dropping Win8 anytime soon even if it is an overall flop.
      non-biased
  • No desire to own a Windows Tablet

    I've been trapped in the Wintel juggernaut both at work and home for 2 decades. I find my Android 4.0 phone extremely liberating. I am very happy that the Apple iPad is dominating the tablet market. It is an extremely well-designed product. I, for one, never intend to own a Windows tablet or any mobile computing technology running on Windows 8 or any other Windows OS.
    vadertime
  • This is absurd.

    People have ragged Apple for years about being pricey, now they are going to be the low price leaders? That's too ironic for words.

    And HP must be horrified because they are about to repeat the TouchPad nightmare all over again. No price advantage, no hardware advantage, no compatibility advantage, no app store advantage, no familiar look and feel, nothing.

    Just the Windows logo.
    terry flores
  • How can you write an article around 'supposedly'?

    Wouldn't it be more accurate to find out what they're actually charging?
    William Farrel
    • ...

      Exactly! I have a hard time believing MS is charging MORE for WinRT than for x86 versions. Even in one of the articles you referenced, your claim of a price difference is not well supported:

      "However, Digitimes has a spotty track record and its claim that Microsoft is demanding a license fee of $90-$100 for Windows 8 has been called into question since Microsoft reportedly only charges about $50 for PC licenses and $30 for Windows Phone 7 devices."
      NativeFloridian
      • Good post

        I find it hard to believe MS would charge more for the ARM version, as it clearly offers less then the normal x86 version. Which is in any case the only version I would consider running on a tablet.
        sjaak327
    • Even so it does bring up an interesting question.

      In theory android is free to OEM's and since Apple does not use OEM's I doubt Apple charges itself for iOS. So in a price conscious and margin aware world where does an OS that actually costs OEM's fit?

      Pagan jim
      James Quinn
      • Not free

        Android OEMs still spend lots of time and money supporting their products with custom skins and OS updates which they don't need to deal with with a Windows device.
        Jeff Kibuule
      • Even so.... I wonder how this will play out.

        dagamer34
        I suspect that Windows based tablets will fight amongst each other as various OEM's have in the past and continue to do so in the PC world. They will also face android tablets so price wars are inevitable. Will OEM's try to dip in their old bag of tricks to make up for lost revenue's? Something like "blankware" bundles? What about quality issues as the fight to squeeze out more revenue gets tighter and tighter? Same thing with support issues? In the end it's all about the money and THAT is the question. how much is to be made and when?

        Pagan jim
        James Quinn
      • Margin aware?

        I think by world you mean tech community. Most people I know in the non-tech world are of the opinion that Apple's higher price means it comes with more superior parts, which is not always necessarily true.

        Again... do you and your friends shop at the high-class grocery stores where higher prices give you the allure of higher quality?

        Most people don't care about anything, but price and quality. Kindle Fire's sell well because for $199, the product is as good or better than what someone expects. iPad's sell well because for $499, it is better or equal to what someone expects.

        At the end of the day, licensing costs come into play. If Microsoft can let the OEM decide if they want to include a feature (ie DVD playback), that is something that can also be used by said OEM for product differentiation.
        ikissfutebol
      • I try to look at the subject from all angles both

        ikissfutebol
        consumer and OEM. For the consumer it is price and quality of course. For any given OEM it's likely to be PROFIT and a huge part of that calculation is margin per sale and if not good then VOLUME to hopefully make up for lack of margin results per sale. In the end it all comes into play for if consumers don't buy or the OEM can't say afloat due to not enough coming in then the industry has a problem.

        Pagan jim
        James Quinn
      • Android is not free to oems. They must pay MS for the stolen IP and google

        for access to any google services like the app store.
        Johnny Vegas
      • They must?

        @Johnny Vegas
        They must? Who says? So far, only MS. Well, they and you. Certainly no valid legal authority.

        Yet another in your misinformed, biased and useless posts.
        .DeusExMachina.
      • Not Free

        Google charges the device manufacturers for the Gmail, Marketplace (Play), Maps, etc. So no, it isn't free.
        clcrockett