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.
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.
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Talkback
You assume...
Because they are invested in ARM.
They would have to pay me to use Windows 8.
Kin
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.
No
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.
Addresses issues?
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.
Agree about Metro
No desire to own a Windows Tablet
This is absurd.
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.
How can you write an article around 'supposedly'?
...
"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."
Good post
Even so it does bring up an interesting question.
Pagan jim
Not free
Even so.... I wonder how this will play out.
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
Margin aware?
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.
I try to look at the subject from all angles both
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
Android is not free to oems. They must pay MS for the stolen IP and google
They must?
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.
Not Free