Hardware 2.0

Adrian Kingsley-Hughes

Pricing could be a problem for Windows 8 tablet

By Adrian Kingsley-Hughes | December 12, 2011, 11:41am PST

Summary: $200 and $399 is the sweet-spot.

How much would Hardware 2,0 users be willing to pay for a Windows 8 tablet? Well, the votes are in, and it should make Microsoft and hardware OEMs sit up and pay close attention to the pricing of Windows 8 tablets:

The largest group of voters, 38% of he total, said that they would only be willing to pay between $200 and $399 for a Windows 8 tablet, while another 27% would be willing to go up as high as $599.

Only 16% of those who responded to the poll (over 1,400 voted) would pay $600, while only 5% would be willing to put down $800 or more for a Windows 8 powered tablet.

So the majority of Hardware 2.0 readers would be willing to pay the sort of money for a Windows 8 tablet that that they would expect to spend on an Amazon Kindle Fire Android tablet ($199) or a 32GB WiFi iPad 2 ($599). The readers have spoken, and I agree with them.

The $599 end of that price range should allow OEMs to grab a decent profit margin, but at the $200 price range OEMs would have to slash their wrists to bring Windows 8 tablets at these sorts of price point (even Amazon had to work hard to bring the Kindle Fire in under $200). The obvious price point for an entry-level Windows 8 tablet is $499, the same as the iPad, and this is what I would expect. If OEMs aim higher (like Motorola tried with the Xoom) then Windows tablets are once again likely to wither and die on the vine.

Note: All this hangs on the assumption that Apple doesn’t throw a curve-ball and drop the price of the iPad at the next refresh. In which case, that would be a game-changer.

The price point for tablets has been set by Amazon and Apple ($199 for the Kindle Fire at the low end and $829 for the all-singing, all-dancing 3G iPad, with $499 being the sweet-spot). These are the prices as set by those who showed up to the tablet market early, and it’s now way too late to start deviating from the script or setting new prices. If Windows 8 tablets come in at around the $500 mark, then I give them a chance. If OEMs get greedy and try to squeeze more from them … well, they need to learn from what happened to Motorola with the Xoom and RIM with the PlayBook.

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Pricing Strategy, Microsoft Windows 8, Tablets, Microsoft Windows, Notebooks, Hardware, Notebooks & Tablets, Operating Systems, Software, Adrian Kingsley-Hughes

Adrian Kingsley-Hughes is an internationally published technology author who has devoted over a decade to helping users get the most from technology.

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Misleading figures.

atrauzzi 31st Dec

The ranges here are too wide. Basically each one will ultimately be interpreted as $399.

I think $399 is a lot for a $7 ARM CPU.

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You forgot one other choice

ZombieSteveJobs 12th Dec

Not purchasing it at all.

No BRAINSSSS

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RE: Pricing could be a problem for Windows 8 tablet

Rubberduck Rabidson Updated - 12th Dec

@ZombieSteveJobs

W8 tablets are going to rule the world, make poverty history, supply limitless energy for free and cure me of herpes.

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RE: Pricing could be a problem for Windows 8 tablet

wright_is 12th Dec

@ZombieSteveJobs Agreed. I don't need a tablet, so I won't be buying one...

That said, for work we need some for a customer, but we keep coming up empty, at the moment. We need a powerful Windows 7 tablet (not convertable). We tried a couple of 499??? tablets, but they were Atom powered and useless for what we wanted - Android and iPad discounted themselves by not supporting a full Java Stack.

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How much power do you need in a tablet?

archangel9999 15th Dec

@wright_is Totally agree re: going to the dark side with whole Java stack or iOS development - but I run some fairly complex apps (with dynamic graphics, number crunching, network data transfers, etc.) on my Acer W500

Would be interested to hear what you plan to run on a tablet platform that needs more power than that?

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Functionality vs Cost

LiquidLearner 12th Dec

It's important for Microsoft to hit multiple price points. This is the reason I think it's less and less likely ARM Windows 8 tablets will be anything more than a Windows 8 Metro tablet. These will be the products that sell at the lower price points and the Windows 8 license will likely be in the $15 price range that we see for Windows 7 Starter. If you want a tablet that will handle both tablet and laptop/desktop needs then I'd expect to pay up to $1000 or so for a tablet. These will likely be the Intel based models with the full Windows 8 desktop on it.

I understand why MS wants to cover all devices with a single OS. It can substantially reduce their costs by not having to support multiple OS lines. However they have to be careful how they approach it if they want to compete with Amazon and Apple while creating a new market for ultralets. Oh, and Intel, that name is mine. Even if it is terrible.

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ARM versus Atom tablets is going to be interesting...

olePigeon Updated - 12th Dec

ARM versus Atom tablets is going to be interesting, considering x86 Windows 8 apps won't run on an ARM Windows 8 tablet, and vice versa.

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RE: Pricing could be a problem for Windows 8 tablet

wright_is 13th Dec

@olePigeon Hence Metro only, it uses HTML 5 and Silverlight, so no processor dependence.

Corporate LoB legacsy will bre Intel only, hence multiple price points.

We've had a couple of Atom W7 tablets in for testing & they are pretty much unusable with the LoB apps the customer has, finding a Core i3 or i5 tablet is very hard at the moment.

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Metro apps

archangel9999 15th Dec

@olePigeon Best performing Metro apps will likely be XAML/C# based - most of the .Net libraries have migrated into WinRT so they're no longer wrappers around old C-based objects but now first order OS (.Netish) objects

However you can also build outright C++/DirectX/HLSL apps too

So not just HTML5/Javascript pigs

Also, there's a skunk works project to convert .Net EXEs to Win8 Metro EXEs - and keep in mind that there's technically no processor dependence in .Net because the CLR can JIT to whatever the processor is

The big win would be for them to build an x86/x64 machine code EXE to an ARM machine code EXE - not trivial but DEC did something similar decades ago to transition EXEs from the older CISC VAX to RISC Alphas

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Just sell Windows tablets as ...

P. Douglas 12th Dec

... PCs, and charge PC prices. That is all MS and OEMs have to do. Do not get caught up on the race to zero.

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RE: Pricing could be a problem for Windows 8 tablet

Knowles2 13th Dec

@P. Douglas If they do that Android will take over the consumer section of the market. Apple will take the high end market. An Microsoft will be left with a relative stale corporate market, where spending on IT is not that great at the moment and it far more prone to swings in the market.

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RE: Pricing could be a problem for Windows 8 tablet

TsarNikky 12th Dec

Consider a Windows 8 tablet as an accessory to a "real" Windows 7 machine, and price it accordingly. If and when (if not already available) Apply and other tablet vendors have an easy way to connect to Windows 7 machines, the Microsoft tablet will be in the same arena as those vendors. Things will get ugly.

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RE: Pricing could be a problem for Windows 8 tablet

TheCyberKnight 12th Dec

Unfortunately, Microsoft will have minimal control over the tablet prices and this will end-up being the real issue: OEMs will become one important part of the success equation.

And as far as history goes, this is not really good news. They (OEMs) tend to be lazy and not very innovation prone, preferring to release hardware with minor tweaks to remain within their comfort zone. Without strong currents like the ones created by Apple, the PC ecosystem would still produce the same reheated sh*tty products.

There is no reason this attitude will change anytime soon.

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How much would you be willing to pay for an Apple desktop?

toddybottom 12th Dec

If that is how the question were phrased, would 38% of people say they would be willing to pay $5000? I doubt it. And yet Apple sells $5000 Apple desktops. Why? Hasn't the price for a desktop been set at $399 for a while now?

When you are able to figure out that dilema, you will be able to figure out why Windows 8 tablets can, and should, cost more than iPads.

I'd also like to laugh at any suggestion that your poll is in the least bit scientific. I know you didn't state that it was but because you suggested that MS and OEMs should pay attention to your poll, you are giving the reader the impression that your poll means something. It doesn't. It is completely unscientific and means nothing at all.

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RE: Pricing could be a problem for Windows 8 tablet

cwbuechler@... 12th Dec

@toddybottom that $5000 Apple Desktop you mention is a multimedia powerhouse that is specifically built for the high end graphics market. The $399 Windows desktop is closer in specs to the mac mini ($599)...I couldn't even find a PC that was similar to the MacPro 12 Core Intel Xeon powered workstation you mentioned.

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That whistling sound you heard?

toddybottom 12th Dec

@cwbuechler@...
It was the point flying straight over your head.

The point is that people are willing to pay $5000 for a 12 Core Intel Xeon powered workstation even though the "price" for a desktop has been set at $399 because the Mac Pro can do more.

I'm arguing against AKH's assertion that Windows 8 tablets can't possibly cost more than $499 because that is where the price has been set. Of course Windows 8 tablets can cost more if they can do more just like it is okay for a 12 Core Intel Xeon powered workstation to cost more than $399. Right?

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RE: Pricing could be a problem for Windows 8 tablet

wright_is 13th Dec

@cwbuechler@... I think that is his point exactly.

You can buy an entry level desktop for $399, so "why would anybody buy a desktop for $5000?" Why? Because they need the extra power, functionality and flexibility it brings.

The same reason why we have been looking at high end tablets (with little success), because Android and iOS don't provide the power and flexibility we need.

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RE: Pricing could be a problem for Windows 8 tablet

dave95. Updated - 12th Dec

Consumers will be asking the same questions they've asked since 2001 when tablet PCs were first introduced. Why would I pay $2000 for a limited tablet PC when I could purchase a more functional and feature-rich laptop for the same price or cheaper? The HP Slate which was released in 2010 is currently the price standard for such a x86 tablet PC ($800). But the Samsung Win8 tablet shown at build is said to cost around $900 (after tallying up the specs/parts).

Even if they get it down to $600-$700 (which I highly doubt), the question will remain: Why spend $600-$700 on a limited tablet PC when I could put the money towards a much more functional and feature-rich laptop for the same price or cheaper? It already comes with its own attached keyboard, larger screen for doing "real work" on, more powerful CPUs/GPUs, more ram, graphic cards etc etc.

Microsoft is again chasing a very niche market with these full Windows tablet PCs, they should have put that effort in ARM WM7 tablets NOW. Charge the same $15 to OEMs for using WP7 on tablets. Or better yet, bundle it free to OEMs that's currently pushing WP7 phones to help stimulate excitement and help build the platform (ala Apple iPhone + iPad + iPod + iOS).

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The problem with the Tablet PC ...

P. Douglas Updated - 12th Dec

@dave95.

... of old, was that it was a half-baked ecosystem. The interface wasn't fully developed like it is in Windows 8, and there was no apps to support it. Consumers will pay more for a superior user experience than their current one, as long as it is compelling. Touch based computing is a lot more compelling than the GUI model we have now, and if it is done right, people will pay more for it until the price comes down. It is crucial however that MS and OEMs come out with compelling touch based computer systems, as well as a sound ecosystem to support them.

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RE: Pricing could be a problem for Windows 8 tablet

toddybottom 12th Dec

@dave95.
"Microsoft is again chasing a very niche market with these full Windows tablet PCs, they should have put that effort in ARM WM7 tablets NOW."

Apple is again chasing a very niche market with Mac Pros, they should have put that effort in HDTV Apple TVs NOW.

Microsoft understand very well the futility of going up against iPads. There is no point. Android is dead on the tablet. WebOS is dead on the tablet. BlackBerry Tablet OS is dead on the tablet. Having Microsoft put WM7 on a tablet will ensure its immediate failure. Ah, now I understand why you are so anxious to see MS go this route.

Why does it threaten you so much to see MS attack the high end tablet market? Is it because you would do anything to see them fail against Apple? MS will not go head to head against a monopolist like Apple that has now twice been convicted of being an IP thief. It is futile. Far better to put out something different in a market that Apple doesn't have 95% marketshare. The alternative is to do what Apple did in the 90s: go running like a baby to the government and cry anti-trust. MS is a better corporate citizen than that and believes in competition more than Apple does.

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RE: Pricing could be a problem for Windows 8 tablet

dave95. Updated - 12th Dec

@toddybottom??

Having Microsoft put WM7 on a tablet will ensure its immediate failure.

I disagree. Funny that you never mentioned the Amazon Fire. They just entered and almost immediately secured the second spot in the tablet market race. Two of the biggest factors to the Fire's success is price and content ecosystem. Both things MS with its OEMs can achieve now with a WP7 OS optimized for tablets. It would have allow OEMs to compete more aggressively on price, now, with the iPad and Fire. Current WP7 apps would continued to run on these WP7 optimized tablets so developers and users don't have to reinvest into every app or a whole new developer platform. As they would with these Windows 8 ARM and Intel-based metro-style tablets.

Microsoft could have continued to promote the Intel-based Win8 tablets coming in 2012 as more pro-level tablet PC offering. And continue believing there is a large market for such device. But what's important is Microsoft with WP7 tablets would have already had a presence in that key iPad and Kindle Fire market.??

But instead the iPad and tablet devices like the iPad will be the ones driving the market forward, while Microsoft continue to chase after Gates failed vision

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HP Slate?

archangel9999 Updated - 15th Dec

@dave95. Why pay $800 for the HP Slate when I can get an Acer W500 for $475 - I've used both and the Acer is definitely better bang for the buck - Win8 will run on it but would expect a Win8 ARM-based tablet from them to be no more than $475

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RE: Pricing could be a problem for Windows 8 tablet

Mohater 13th Dec

"The largest group of voters, 38% of he total, said that they would only be willing to pay between $200 and $399 for a Windows 8 tablet, while another 27% would be willing to go up as high as $599."

then later on

"So the majority of Hardware 2.0 readers would be willing to pay the sort of money for a Windows 8 tablet that that they would expect to spend on an Amazon Kindle Fire Android tablet ($199) or ..."

Anybody sees the contradiction in this two statements or is it just because akh just wanted to throw in the Fire in there because apparently the majority likes something more than the Kindle Fire from my reading of the results. Or else they could have vote more for the below 200 price. just my two and a half cents.

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RE: Pricing could be a problem for Windows 8 tablet

Mokusatsu 16th Dec

It depends on what the tablets are meant to do. If Windows 8 tablets are going to be just slate-form "ultrabooks", i.e. full powered notebook PCs that can act as desktop replacements once docked, then I see no reason why they need to be cheaper than a normal notebook.

I'm practically drooling over a Samsung Series 7 Slate at the moment. The only thing stopping me running out and buying one is that university starts in a number of months and there is no rush and I strongly suspect other manufacturers are going to come out with comparable devices in the January CES.

A few hundred bucks is a fair price if tablets are just touch screen netbooks - devices which are capable of only basic tasks and primarily oriented toward content consumption.

Much more money is appropriate if it's a serious machine capable of being docked where it will run all my desktop software including huge Excel spreadsheets with VBA enhancements and have multiple windows open on several screens... which I can then pull out of it's dock and use as a tablet when appropriate.

I think Apple did great things for tablets, but they've also squashed people's imaginations a bit. Have we already forgotten the jokes we all made about the iPad when it first came out, how it was really nothing more than a large format iPod Touch?

I own an iPod Touch and an iPad, they're great toys with some capacity to be used seriously as well.

However, since I do Excel development work and use OneNote as my primary study tool, I'm nowhere near the point of doing away with my laptop and my desktop. I actually carry an iPad and a tablet PC with me to university. Considering that I'm a cyclist and need to haul that with my own sweat for 20km each way, that's a rather strong statement that the iPad is not sufficient for my needs.

If Windows 8 tablets will do everything my laptop can do then I see no reason why it needs to be cheaper than my laptop. For the record, I usually spend about $1,500 on laptops and will be happy to spend that much on a Windows 8 tablet if it's a similar machine to the Samsung Series 7 Slate.