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4/9/2013
03:29 PM
Michael Endler
Michael Endler
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Windows 8 Tablets: Why Microsoft Must Slash Prices

Microsoft can maintain its market dominance with Windows 8 if it tries something not in its normal playbook.

When consumers evaluate personal electronics purchases, one principle can generally sum up the experience: good, fast, cheap -- pick two. It's a tried and true business formula, a twist on the notion that customers get what they pay for. Microsoft needs to erase that two-out-of-three strategy from its tablet playbook.

With the first wave of Windows 8 tablets, consumer mileage has varied on the "good" and "fast" fronts. "Cheap," though, has rarely been a blip on the radar, least of all for Microsoft's Surface tablets. With both Windows 8.1 (Windows Blue's current nom de jour) and a new spate of devices on the horizon, this needs to change. Redmond needs to rush satisfying tablets to market -- and they can't just be competitively priced. They need to be downright cheap.

Here's the reasoning: The Surface RT, decried though it's been, is actually a pretty nice device. If Microsoft had charged $250 for the tablet and maybe another $50 for the Type Cover, I probably would have bought one at launch, and I suspect I'm not alone. At that price, I'd have been willing to remain patient while Microsoft developed its lackluster app library. Yes, the iPad would have offered more variety and polish, but the Surface RT would still have been a decent media-viewing tablet that, with its watered-down version of Office, would have featured better content-creation tools than anything on iOS. That's enough use to justify a couple hundred dollars.

[ How much does touch matter? Read Windows 8 Doubt: 3 Ways Touch Won't Help. ]

Unfortunately, the Surface RT costs nearly twice as much as I am willing to pay. Ultrabooks and even the Surface Pro -- the most thought-through Windows 8 device to date -- are no better. Newer, faster and more energy-efficient models that run on Intel's next-gen Haswell processor are just around the corner, so why should someone buy an expensive item today when a better, and perhaps less costly, alternative is only a few months away?

Windows 8 and Windows RT have struggled, in other words, due only partly to their UI awkwardness, mediocre apps and various rough edges. Cost has been the other culprit; there's a price beyond which customers simply aren't willing to deal with learning curves, impatience and other frustrations that might be more palatable with cheaper devices. For many consumers, the Windows 8 devices evidently cross that discouraging cost threshold, and the result has stuck Microsoft in a holding pattern of bad press.

Microsoft seemed to assume that Windows 8's dual identities would be an obvious game-changer, and that Windows RT's native Office app would trump the iPad. Had Redmond been correct, the story would be different. People deal with learning curves if the payoff is a premium experience. But it's become clear that most customers have decided Windows 8 asks too much while offering too little.

Asking less of the consumer would not only help Redmond stimulate adoption, but also help address its other lingering problem: apps. Where the user base goes, developers will follow. According to MetroStore Scanner, the Windows Store currently has around 57,000 Metro-style apps, and app submissions, which had been on a downward spiral since launch, but have risen steadily throughout March and April. The progress is nice -- but the libraries of iOS, Android and even BlackBerry 10 put Redmond's catalog to shame.

Microsoft allegedly spent $1.5 billion to promote Windows 8. It's an astronomical sum, enough to fund a typical Hollywood marketing blitz three or four times over. All that money was directed at the consumer market, which, as analysts have recently made clear, has the power to determine whether Microsoft remains a leader or regresses into a role player. Imagine if Microsoft had instead tilted its budgets such that an iPod Touch was more expensive than a Windows RT, and a MacBook Air more costly than a Surface Pro. Imagine if OEMs had been incentivized from the start to produce low-cost models, a process that has, according to unverified reports, only recently unfolded. How many millions of additional users might be in the Live Tiles ecosystem? How many more apps might there be?

But there's not much use at this point in criticizing Microsoft's earlier strategy. Hindsight is 20-20, and Redmond has probably reconsidered a number of previous decisions. The point in bringing up the company's earlier missteps is not to pour salt in the wound, but rather to prescribe appropriate remedies.

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Erik W
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Erik W,
User Rank: Apprentice
4/10/2013 | 6:11:38 PM
re: Windows 8 Tablets: Why Microsoft Must Slash Prices
I've been dealing with Microsoft products since DOS 2.0 and have watched the computer industry grow over time. I've never seen Microsoft as an innovator, they were always more of a late adoptor.

They took the ideas of many small software venders and incorporated into the various products they offered past and present. E-Mail, Web Browsers, Image Viewers, Zip Files, CD Burning, essentially anything that was written on DOS or Windows.

There was a period much like a glorious renaissance in which new software and ideas would come out and a lot of innovation occurred. Almost every company I can think of that came out with something innovative was borrowed from by Microsof and subsequently gone out of business.

Now, today, anyone writing innovative software platforms on Windows can pretty much be labled as doing market research for Microsoft.

The point is, this company has never been innovative. They have always followed the lead of someone else and either just built a better mouse trap or bought the rights to it.
gwilson153
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gwilson153,
User Rank: Apprentice
4/10/2013 | 6:02:21 PM
re: Windows 8 Tablets: Why Microsoft Must Slash Prices
I haven't used any of the MS devices, but I do have a Samsung Galaxy tablet. In six months of regular use it has never crashed, it doesn't lag or anything else. It's a great tablet. However, I am not sure I would want it as my sole device yet. I think for a lot of people, especially people like me use to the Windows interface, it would require me to reprogram myself a little. I am a regular user of Google Apps, and while it has come a long way, there are still a few minor limitations.

I am sure the MS device is decent, took them long enough, but they have created a more confusing OS strategy now. I don't see MS's tablets being any more successful than there phones, which is to say not very. Actually, I hope I am at least partially wrong, and that we have a really, really good three horse race in the tablet market.

The most interesting aspect of this is that as MS improves Surface, which they will need to do to be competitive, the more 8 for the desktop/laptop will suffer. If I can buy a $500 device that is as capable as a laptop and more flexible, why do I want a laptop (still a few years away, but hopefully that makes sense). I am sure they realize this and know they have to go forward so they don't loose the entire end user market.
PWHITE000
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PWHITE000,
User Rank: Guru
4/10/2013 | 5:46:01 PM
re: Windows 8 Tablets: Why Microsoft Must Slash Prices
Microsoft can learn from Apple.
Apple was known as a high priced computer company. Before the first iPad release, people wondered if it would be around the $1000 mark. Apple surprised us all with a $500 tablet that even the competitors couldn't match for a long time... for the same quality. The result has been one of the most revolutionary products of the past decade.

As a tablet user for almost twenty years, I can verify that Apple's $500 iPad is simply remarkable. I had grown accustomed to most prior quality tablets costing over $1000 and only the junk going for $500 or less.

If Apple can bite the bullet, Microsoft can as well.
pblanc108
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pblanc108,
User Rank: Apprentice
4/10/2013 | 5:25:40 PM
re: Windows 8 Tablets: Why Microsoft Must Slash Prices
I disagree and I disagree with the comment made by eZrod. the android tablets are fine for the low end consumer willing to accept low build quality in hardware and a less than stellar user experience. Android is not consistant, its quirky, lags, freezes, crashes, etc, etc.
For people looking for a higher end experience in the consumer market, the ipad offers everything.. fast, beautiful build quality, reliable and wonderful ecosystem. It cannot, however, replace a laptop or desktop for busienss use.
Enter the Surface Pro. It is beautifully made from high end materials, it is fast, very fast, powerful and is rock steady reliable. It is the ONLY tablet that can truly replace a laptop.
Some of us do not like carrying around a laptop and love the tablet from factor. The Surface Pro can replace my laptop and my ipad and is a true computer replacement. It is a very sophisticated device with no other product like it. Why shouldn't Micrpsoft be able to charge more for a premier device.
The Pro caters to the high end user who wants a full blown computer in a sleek, beautiful tablet form. For those looking for a cheap, plastic device , offering a low end user experience to sit on the couch and mindlessly surf then there is the google nexus or the samsung.
The Surface Pro is light years ahead of those and intellignet it guys are recommending the Surface Pro to their clients.
Laurianne
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Laurianne,
User Rank: Author
4/10/2013 | 2:46:49 PM
re: Windows 8 Tablets: Why Microsoft Must Slash Prices
$299 has always been a magic price point in the consumer electronic market. Can Microsoft go that low?

Laurianne McLaughlin
InformationWeek
eZrod
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eZrod,
User Rank: Apprentice
4/10/2013 | 1:58:48 PM
re: Windows 8 Tablets: Why Microsoft Must Slash Prices
Great article Michael, and good subject material. Microsoft has never been a "bargain" product source, but the utility of their products was worth the added expense. However, the tablet market is flooded with highly functional and easily affordable Android products that are consumer friendly in function and price. Microsoft playing catch-up is not an option, it's a fiscally strategic reality.

Consumer purchasing rules the marketplace, and reasonable pricing is #1 on the consumer's agenda. Subsequently, because of "unfriendly pricing" Windows RT is barely treading water regardless of the Surface moniker.
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