Microsoft's pricing could kill Windows RT, Windows-powered ARM tablets

Microsoft's pricing could kill Windows RT, Windows-powered ARM tablets

Summary: Cheaper x86-powered tablets that can run any software that can run on a PC will be seen as a safer bet than a cut-down tablet PC running a locked-down operating system.

TOPICS: Windows

According to multiple hardware vendors, Microsoft is charging OEMs as much as $95 for each Windows RT license.

Tech site VR-Zone quizzed a number of hardware vendors on the convention floor at Computex Taipei and $85 was "the most commonly quoted price" for a Windows RT license for ARM-powered tablets, with quoted prices ranging between $80 and $95.

To put this into comparison, it's rumored that Microsoft charges OEMs about $30 per Windows Phone license for a smartphone, and around $50 for a Windows 7 Home Premium license for a PC.

If this pricing is accurate -- and it does correspond to rumors and whispers that I've heard from OEMs -- then it could have far-ranging implications for Windows RT and Windows-powered tablets.

The first is that Windows RT-powered ARM tablet vendors are going to have to absorb this additional cost. This essentially means that we're not going to see cheap Windows RT tablets. If the Windows 8 pricing structure remains roughly the same as that for Windows 8, then x86-powered Windows 8 tablets should come in at a lower price point purely because the operating system loaded on the devices is cheaper.

Another implication is of this pricing is that it's clear that Microsoft is not interested in competing at the low-end of the market with Windows RT. Android, a free operating system, allows OEMs to save on the cost of having to license a platform. This in turn allows them to make a cheaper tablet and command a better profit margin per device sold.

It's also clear that Microsoft is not interested in Windows RT competing against the $399 iPad 2. Given the bill or materials breakdown I've seen for ARM hardware, it's going to be impossible for OEMs to bring a device to market that matches this price point when you include the price of Windows RT. In fact, it's going to be hard for OEMs to compete against the $499 iPad 3.

Based on hardware bill of materials I've see, I'm now expecting Windows RT tablets to come to market at around $600, with high-end models priced as high as $900--1,000. Even at $600, the market is going to look at Windows RT tablets as premium products, and as the price climbs closer to $1,000, I am all but certain potential buyers will gasp in disbelief.

It's possible that by staying out of the cheap and budget end of the market that Microsoft is trying to associate Windows RT tablets with quality. The problem with this is that the consumer and enterprise markets have already associated Apple and the iPad with quality, and it will be almost impossible for Microsoft to change this opinion based simply on price of the Windows license or the end hardware.

I think that Microsoft's justification for charging more for Windows RT is the fact that, unlike Windows 8, it will ship with Office "15" components such as Word, Excel, PowerPoint, and OneNote.

This might be enough to convince some to take a gamble on Windows RT on ARM-powered tablets, but it's a massive gamble. After all, as far as the enterprise is concerned, I think that a cheaper x86-powered tablet that can run any software that can run on a PC will be seen as a safer bet than a cut-down tablet PC running a locked-down operating system, even if it comes with a free copy of Office "15".

Image source: Craig Simms/CNET.


Topic: Windows

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  • Insanity

    Microsoft are pricing themselves completely out of the home market and aren't developing Windows 8 based on the needs of the business market.
    This is going to make Windows Vista look like a picnic.
    • .

      windows + office for under $100 sounds like a bargain.
      • until you consider all the aspects

        don't confuse this with full windows, that "bargain" means that all your current favorite windows programs WILL NOT work on that WinRT device. remember no x86 code is included in WinRT. Plus we are still not sure if all the components of Office 15 will be included or if it'll just be a "lite" version.
    • its the right price for OS + Office

      Microsoft is not into tablet hardware, and software is their bread and butter. Its worth paying $100 more for the Microsoft ecosystem. Comparing it to iOS or Android is not apples to apples, as Apple gets more of its revenue from its hardware and Android through advertising
      • Let's see WinRT and "mobile" Office running on a device first.

        "[R]ight price" is fairly subjective.

        Regardless, I'm highly dubious of the accuracy of the $85 price. The whole thing has a DigiTimes smell to it.
    • It's so ironic ...

      if Apple ends up being the low-cost provider of tablets in the market. I will laugh myself silly if that happens.
      terry flores
      • It's already true...

        No one yet has come up with equal spec at a lower price (although I haven't done an exhaustive survey...) Apple's competition is higher spec at a higher price, or lower price with lower specs. Apple offering value!!! Who would have thought!!!!
  • Basic arithmetic

    $40 for an OS and $40 for Office ... doesn't sound too bad to me.

    $600 for a tablet and $2000+ for a Macbook Pro ... sounds exhorbitant.

    I'd go for a $300 10" screen tablet with Office ... and a $1000 colour-accurate 30" screen 'surface' device (the screen would probably have to fold in two).

    Looks like I might have to wait awhile :-(
    • But that "surface" device will set you back more than $1,000

      The last price I saw was over $8,000, admittedly it was a 40" device, so a 30" device would fall in the $5,000 to $6,000 range. The last time I checked the retail price of Microsoft Office was anywhere from $149, to $800. To be honest an average price of $475 for Office sounds exhorbitant.

      But back to the real subject. Microsoft wants nothing to do with ARM based devices. They want everything to be x86 based, "so it can run a full version of Window 8" The whole idea of Window RT is to say they "tried", but there was no interest". Window RT is supposedly the same thing Window Phones will be running, the only question is, which ODM will figure it out first?
      Jumpin Jack Flash
      • ROTFL!

        One of your worst spin attempts yet.

        Your handlers in Mountain View are going to be upset. ;)
        William Farrel
      • @ William "toddbottom3" Farrel

        I do not have any handlers. Just because you do have them (in Redmond), does not mean that everyone that disagrees with you is a foot soldier for Google. I don't even have an android phone, though I've used plenty of them. They are better tan that Abomination, called Window Phone 7 "Man-goo"
        Jumpin Jack Flash
    • $40 for Office

      This is not going to be the same desktop MS Office. At best, it will be slightly more Microsoft-oriented variation of the existing touch "office" apps, like those that Apple provides for iOS. And these can hardly command $40 price tag combined. Further, users are already spoiled by the low price points of tablet software.

      These "$40 for Office" will be always-included in the minimum price and will put away those who are not interested in any "Office" software on their tablet, for example,because those people believe Office is properly done on a desktop with large display and hardware keyboard. Or, those who would rather prefer someone else's Office suite.

      For the colour accuracy... you will also need to bring with you an portable studio room, with appropriate lighting. For no "colour-accurate 30" screen surface' is going to be any "colour-accurate" in say, bright sunlight. :)
      • Scaled Down Office?

        I think you're wrong on this.
        The Office applications to be included with the Windows RT tablets are the same as their x86/x64 version. They are not the scaled down Metro versions that many were expecting.
      • You know what that will start?

        "The Office applications to be included with the Windows RT tablets are the same as their x86/x64 version."
        If so it will highlight how much Microsoft has been gouging customers, which is never a good thing. When you're average selling price (retail) for a product, is $475. Selling it for $40 on one device is going to tell the world you've been screwing them over.
        Jumpin Jack Flash
      • @ TheCyberKnight

        While I don't really care, because I use neither Windows, nor MS Office, nor see any value in Windows RT - other than professional curiosity where they will goof :) :) :) -- there is no way we will see the same MS Office on an tablet, as we see it on the desktop.

        If you indeed turn out to be correct, and the Windows 8/tablet and Windows RT Office versions are one and the same, then it follows that both will be dumbed down "like MS Office" suites.

        For me, it is enough evidence that Microsoft calls this suite "Office 15".
    • forgot the variables

      if you pay $40 for an OS and $40 for Office, what can you do with them? You forgot to factor in the hardware.

      Now, if you pay $600 for the tablet, you get the software included, same with the $2000 macbook pro. I'm not saying either is a bargain but at least they include both hardware AND software.
  • I understand your concerns but...

    ...I have a difficult time imagining that Microsoft hasn't thought about these issues themselves. I doubt they'll price themselves out of the market -- especially considering their "come from behind" position. They're trying to catch-up to the iPad after all -- I would think -- aren't they? If they feel they have a comparable product, I doubt it will run any more than a comparable iPad.

    Hard to say if Microsoft feels it's competing with Android at this point. I am all for the Android table market succeeding and agree the Kindle Fire is terrific. I myself own a Lenova IdeaPad K1. However, the sales figures for Android tablets are disappointing (for me disappointing as I'm a big fan) to say the least. Therefore, I would not venture to guess if Microsoft plans to "compete" against the Android market.

    I can't wait for Windows 8 to release and become available on all the various devices -- not because I plan to buy it, I don't. I just can't wait to see what happens. All this "fortune telling" is fun, but I want to see what really happens. We live in exciting times, mobile-computing-wise.
    • Microsoft.. have strange concepts of "research"

      Considering the current market state, Microsoft could only compete with Android tablets. Their 'competition' with the iPad will be actually both platforms growing in parallel. About the only market in which "Microsoft" might grow is the x86 tablets and this is because there is simply nobody else interested in playing there.

      There is only one way Microsoft can compete with Apple on tablets (and generally, on personal computers): Microsoft starts designing, manufacturing and marketing their own hardware. If Microsoft does not want to go this route, they will either fall badly, or collapse into "application software vendor" with main business centered around Office and business applications. They might even keep the "enterprise server" segment for a while, but without viable user terminal offering, that will be lost very soon too.
      • Agree

        [i]"There is only one way Microsoft can compete with Apple on tablets (and generally, on personal computers): Microsoft starts designing, manufacturing and marketing their own hardware."[/i]

        Something I've been pointing out also. They need to pull a Zune and build their own tablet device to truly compete with Apple. I think they're actually hurting their partners and themselves by continuing their high-priced licensing strategy on Windows RT tablets.
      • Uh, how'd that work out for Microsoft up to now?

        @danbi @dave95 [i]"designing, manufacturing and marketing their own hardware"[/i] was an expensive success with the Xbox, but it was an expensive failure with the Zune and a [b]very[/b] expensive failure with the Kin. I'm not sure anyone, important, in the Entertainment and Devices Division is willing to stake their job, or their options, on going all-in on tablet manufacturing.