Windows RT: Can Microsoft snatch victory from the jaws of total failure?

Windows RT has 12 months to prove itself, but could smaller tablets provide the breakthrough that Microsoft desperately needs?
Written by Steve Ranger, Global News Director

The next 12 months will be crucial for Windows RT, the slimmed down version of Windows that Microsoft hopes will help it to break into a tablet market dominated by Apple's iPad and hordes of Android-powered devices.

Windows RT is a trimmed back version of Windows designed to run on smaller devices with ARM processors, and has limited functionality compared to Windows 8: devices build using it can only run applications from the new Windows Store — not standard Windows applications, for example.

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The new operating system is best known for powering Microsoft's new Surface RT tablet, but it's a combination that has not made a huge impact since it was launched in October last year.

Indeed, over the past month Microsoft has been offering Surface RT cheap in what looks like an attempt to clear out inventory. For example, it's been offering the Surface RT 32GB for $199 (instead of $499) to schools and universities, while attendees at TechEd Europe later this month can snap up a Surface RT 64GB for £69.99 (retail price £559).

Some other vendors have dipped a toe in the water with Windows RT, but again with limited success: recently Dell cut the price of its XSP 10 RT-powered slate to $299, down from $499 at launch, while other vendors are still to decide whether they want to build RT devices at all.

Around one million RT devices were shipped last year — less than one percent of the total tablet market (roughly 140 million devices). And while analyst house Gartner thinks as many as 3.5 million RT devices could ship this year, the total market for tablets could hit 230 million — which means the RT still has a lot of catching up to do before it's considered even a niche player.

Annette Jump, Gartner research director, said that while Microsoft has huge hopes in terms of RT, it has "struggled to present an image of relevance for many users" because customers remain confused about how Windows RT relates to Windows 8 (the home version of the operating sytem) and Windows 8 Pro (the business version).

It's not just a problem for Microsoft's Surface RT but also for other hardware manufacturers, she said. "Most of them have been a bit disappointing in terms of sales because there's been no clear positioning whether those devices are for consumers or for businesses, so the users were not that attracted. "

Jump told ZDNet: "Based on the enterprise feedback we've had so far, enterprises generally are very interested in Windows 8 Pro tablets. In some cases, they could be used as replacements for iPads or as an additional device for more mobile users. But for RT devices, virtually none of the companies we talk to have indicated that they are considering deploying Windows RT devices."

That's perhaps no surprise. While the Surface RT does come with Office, it's a Home and Student version, so to use it for work you must be the primary user on another PC licensed for Office 2013 Home and Business, Standard, Professional Plus or Office 365 ProPlus.

If the Windows RT tablet is the user's only device, the user or the enterprise must purchase a copy of Office for the device — for licensing purposes only — as it cannot be installed.

Windows 8 confusion

But even worse, according to a research note by Gartner, confusion around Windows RT could actually be causing problems for businesses that want to roll out Windows 8.

"Problems with Windows RT devices could have a ripple effect across the rest of the Windows family. If Microsoft is not drawing a distinction between Windows RT and Windows 8 (x86) in its marketing, any problems users have on either platform could be attributed to both platforms.

"Consumer problems are likely to flow into the enterprise as users ascribe negative feelings they have about Windows RT to the organisation's Windows 8 projects. These notions could create resistance to Windows 8 deployments or initiatives to simplify the infrastructure by converting iPad users to Windows 8."

A lack of apps in the Microsoft Store when compared to Android and iOS has been another factor in poor takeup of the Surface RT, Jump said, as well as limited distribution which means that outside of the US there were few opportunities to buy the device anywhere other than online. "For a new quite expensive device not as many consumers will be willing to do that," Jump said.

The confusion around Windows RT is part of a broader shift in the device market. Most PC manufacturers are still struggling to come to terms with the unexpected, wild, success of the iPad and the rapid decline of the traditional PC market.

As a result, manufacturers are experimenting with form factors and operating system as they try to figure out what works in this new post PC (or maybe PC plus) era.

"Some of the vendors will still experiment with RT for another six to 12 months and I think if the uptake is still as it is now they may look at other market opportunties: if they succeed in the positioning and get the right price point we might see that market take off a bit in the future," Jump said.

Despite a tricky first few months, Microsoft remains committed to Surface (it did not respond to a request for an interview for this story). With Windows 8.1 it will add Outlook to Windows RT devices, and there could be a new Surface on the horizon featuring Qualcomm's Snapdragon chips.

Windows RT is also important to Microsoft because it's another step towards the world of integrated devices and services provisioned via the clould. Taking a step back from that strategy would be a wrench.

Still, with Windows RT and Surface both being new products with uncertain positions in the market, Microsoft has managed to create a very complicated back story to its assualt on the tablet market.

But Windows RT could have one ace in the hole: size. While the initial tablet market was characterised by big screens — the 9.7-inch display of the iPad being the most obvious — as the market has evolved, smaller screens with 7-inch or 8-inch screens have become more attractive to customers.

Windows RT makes a lot of sense as the operating system for these smaller tablets — which are mostly devices for consuming content rather than creating it.

That means the lack of "legacy" apps become less of a problem, but means Microsoft has to get the app ecosystem going a lot faster than it has done so far. It also means it needs to get to pricing right if Microsoft is really going to compete with the $200 Nexus 7 for example — but that's a slightly easier job with Windows RT than it would be with Windows 8, and reports suggest Microsoft is cutting the licensing costs around small tablets.

On a small tablet, Windows RT finally starts to make sense as a bridge — at least in terms of look and feel — between Windows Phone and Windows 8. Now Microsoft has to persuade consumers and business to see it that way, too.

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