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2/22/2014
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Windows 8 Devices Get Cheap

Microsoft will reportedly cut Windows license fees to encourage production of sub-$250 Windows 8 devices, including non-touch PCs.

If anything has encouraged Windows 8 device sales, it's been lower prices. So Microsoft and its partners might be about to sell a lot of new PCs and tablets: Microsoft is slashing the cost of Windows 8.1 licenses for OEMs by 70%, according to a Bloomberg report published Friday evening. Citing people familiar with the company's plans, the article states manufacturers will pay only $15 to license the OS -- but only for devices that will retail for less than $250. The program reportedly aims to combat Chromebooks, which have eaten into Windows sales at the low end of the market.

In response to an inquiry about the report, a Microsoft spokesperson told InformationWeek, "We have nothing to share."

[ Are you feeling the Windows XP fury? Read Windows XP Shutdown Outage: Users Boo Microsoft Blog. ]

Friday's report isn't the first indication that Microsoft is modifying license costs in order to stimulate Windows 8 adoption. Last March, The Wall Street Journal and the Taiwanese tech website DigiTimes independently reported that Microsoft had cut OS and Office license costs to stimulate production of smaller Windows 8 tablets.

The company never confirmed those claims, but products that have since hit the market support the narrative. After sticking with prohibitively expensive price points for the first half of 2013, OEMs such as Dell, Toshiba and Lenovo spent the second half touting inexpensive mini-slates that come pre-loaded with Office. Other reports from late last year claimed Microsoft might altogether eliminate license costs for Windows Phone and Windows RT.  

Many Windows 8.1 devices could soon sell for less than $250.
Many Windows 8.1 devices could soon sell for less than $250.

Microsoft announced strong quarterly results in January. As has been the case for much of the last year, however, Windows figures were tinged with troubling signs, including a 3% year-over-year revenue drop. That mark was good enough to beat 2013's historic 10% decline in PC shipments but it was also inflated by a 12% boost in revenue from the professional-oriented Windows OEM Pro -- and masked how much the consumer PC market has unraveled.

Microsoft also recently announced it had sold more than 200 million Windows 8 licenses -- a large number, but also one that trails Windows 7's precedent by a significant margin. Windows 8 and 8.1 accounted for less than 11% of desktop users in January, finishing third behind Windows 7's 47.5% and Windows XP's 29.2%.  Win 8 also remains a niche player on the tablet scene, where iPads and Android tablets control most of the market. Apple's tablets have carved out particular dominance within the enterprise

It's noteworthy that the new program allegedly targets Chromebooks. Microsoft's Windows 8 ads have taken swipes mostly at Apple's iPad, but as the low-cost Chromebooks have become popular in industries such as education, Microsoft has switched tactics. Andrew Waber, an analyst with online ad network Chitika, told InformationWeek's Thomas Claburn that Chrome OS could become more popular in the enterprise thanks to Google's recent pact with VMware to offer virtualized Windows desktops on Chromebooks.

Chromebooks now come in a variety of form factors, such as LG's Chromebase, an all-in-one desktop.
Chromebooks now come in a variety of form factors, such as LG's Chromebase, an all-in-one desktop.

Also noteworthy: Whereas Microsoft allegedly cut license costs last year to promote tablet growth, the new program reportedly applies to any device under $250 -- including PCs and laptops without touchscreens.  

As such, the reduced license fees tie neatly into recent reports that Microsoft wants to re-engage its longtime PC users, many of whom grew disenchanted with Windows 8's more radical UI departures from previous versions. Microsoft's efforts are expected to include an update to Windows 8.1 that could arrive by April and make the touch-oriented OS more palatable to mouse-and-keyboard users.

With various leaked builds circulating online, the update appears imminent. It includes more refined integration between the Modern and desktop interfaces, including Live Tiles that respond better to mouse commands, and the ability to pin Windows Store apps to the desktop's taskbar. The update will also allegedly recognize the type of hardware on which it is installed and adjust accordingly; it is expected to boot to the desktop by default on non-touch hardware, for example, and to continue booting to the Modern UI on touch-equipped devices.

Forrester analyst David Johnson told us last week that the update sounds promising. "They have two operating regimes," he said, "and they are learning that it's not a good strategy to sacrifice one to make the other better."

Still, the upcoming update is not expected to reintegrate Windows 7's Start Menu, the absence of which has upset some users. According to various reports, the Start Menu, as well as the ability to run Modern apps in windows on the desktop, will debut in Windows 9 in 2015

Will users wait until 2015 for a feature that's been in other Windows versions for years? Johnson said Microsoft might be moving slowly and deliberately in order to avoid the perception it has made a mistake. "If they try to move too quickly, it could undermine confidence in the Modern UI, which they need to be committed to," he said.

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Michael Endler joined InformationWeek as an associate editor in 2012. He previously worked in talent representation in the entertainment industry, as a freelance copywriter and photojournalist, and as a teacher. Michael earned a BA in English from Stanford University in 2005 ... View Full Bio

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AsokS489
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AsokS489,
User Rank: Strategist
3/2/2014 | 12:24:34 AM
Re: CRAP IS CRAP, EVEN IF IT'S FREE
Microsoft Flunky to New CEO: Sir, people don't think our Windows poop-on-stick sandwich 8.1 is very tasty.


New CEO: No problem. Lower the price 70% on Windows poop-on-a-stick sandwich 8.1. It'll still taste horrible but at least it will be cheap.

Microsoft Flunky to New CEO: But sir, why not make it tastier instead?

New CEO: Are you kidding me? Then we would have to admit we were wrong about the taste. Boy, do you have a lot to learn! That's why you're a flunky and I'm a CEO!

 
shakeeb
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shakeeb,
User Rank: Black Belt
2/28/2014 | 7:04:57 PM
Re: CRAP IS CRAP, EVEN IF IT'S FREE
@anon- When it comes to windows phone I have to agree that Microsoft is a failure. The navigation itself is driving me nuts. (The same way it did when Windows 8 desktop version was launched)
shakeeb
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shakeeb,
User Rank: Black Belt
2/28/2014 | 7:02:16 PM
Re: CRAP IS CRAP, EVEN IF IT'S FREE
@Johnd985 – Don't you think reducing the prices will make Microsoft devices more attractive to the customers? 
Laurianne
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Laurianne,
User Rank: Author
2/27/2014 | 2:58:54 PM
What is the right price?
I am helping a family member shop for a new tablet right now. (I brought up Chromebooks as an option, for the price advantage. But not everyone wants to learn a new interface.) What do people think the right pricepoint is for a Windows 8 tablet?
Michael Endler
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Michael Endler,
User Rank: Author
2/25/2014 | 3:13:53 PM
Re: How does a $250 Windows 8 laptop sound? Or a $200 2-in-1?
Maybe, but Microsoft runs interesting promotions-- e.g. buy Office 365 for your teachers and all of your students get it for free. That stuff had already sweetened the deal enough to persuade some, and cheap devices can only help.

My bigger concern is that the new devices end up too cheap. The first low-cost Windows mini-tablets (i.e. that used the previous generation Atom chips) were almost unusable because of poor hardware-- I'm talking about at you, Acer Iconia. The newer, post-8.1 batches have been much better, thankfully. Anyhow, the same point could apply for these forthcoming, low-cost Windows laptops and 2-in-1s. Budget devices can filter users toward more lucrative services and higher-end machines-- but if the device components are too cheap and the experience suffers, it won't help.

Plus, as I've noted elsewhere, Windows 8.1 hasn't appeased mouse-and-keyboard concern as much as I'd expected. The upcoming update takes things a step further than 8.1-- but if it also produces less-than-anticipated adoption, what then? The idea that a $250, non-touch Windows PC will satisfy is predicated on the UI being agreeable to the average user.

Suffice to say, I see the market, but I also see the ongoing concern.
GBARRINGTON196
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GBARRINGTON196,
User Rank: Strategist
2/25/2014 | 3:02:31 PM
Re: How does a $250 Windows 8 laptop sound? Or a $200 2-in-1?
A market for a sub $250 tablet that runs Windows? Sure I can believe that, but a version of of MS Office to run on it that costs (either through susscription or outright purchase of license) that costs in the neighborhood of $120 a year? For Students? Sounds like a dumb purchase to me.
rradina
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rradina,
User Rank: Ninja
2/25/2014 | 2:04:00 PM
Re: How does a $250 Windows 8 laptop sound? Or a $200 2-in-1?
Metro a huge hit in 1994?  I'd like to see that.  It would run on a 640x480 256 passive LCD screen that sports a microwave-oven-quality touch screen, 5lb NiCad battery, coax Ethernet port whose signal terminator doubles as a handle and a 486 SX2/66 that might, might offer 8MB of RAM with the right EMS TSR to load drivers into high memory.  That would be something!
Michael Endler
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Michael Endler,
User Rank: Author
2/25/2014 | 1:18:01 PM
Re: How does a $250 Windows 8 laptop sound? Or a $200 2-in-1?
I don't think Office is irrelevant by any means, though it doesn't appear invincible in all markets any more. For enterprises, I think Office 365 presents a lot of legitimate benefits. For consumers, the advantages are less obvious-- especially because, as you point out, a lot of free/cheap alternatives are "good enough" unless you're a power user. But even for consumers, the multi-device licenses can be useful, and as Office apps become increasingly integrated with one another, the suite's collaboration and social tools could become a bigger deal, in the office and at home. In any case, even if there are good alternatives to Office, I think a market clearly exists for sub-$250 Windows PCs. Give students a non-touch, $200 laptop that runs Office, for example, and I think you'll see a lot of happy school administrators. The 8-inch Windows tablets that come close to that price point aren't all that useful for Office-- but a 13-15 inch, no frills laptop offers clear utility at that price.
GBARRINGTON196
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GBARRINGTON196,
User Rank: Strategist
2/25/2014 | 8:42:45 AM
Re: How does a $250 Windows 8 laptop sound? Or a $200 2-in-1?
As far as the Win 8 controversy goes, I think of it as a product being sold out of its time.  The Metro interface would have been a HUGE hit in 1994.  But now, it's a "me too" touch UI, and as a desktop UI, it addresses needs people simply don't have.  It is aimed at people a bit afraid of the computer, who have no experience with them and who have no pre-concieved ideas of how computers should work, and how they should work with computers.  There just aren't many people like that left.   Win 8 adresses issues that stopped being issues 15 years ago.

To a different poster, MS Office isn't irrelevant, but what it provides has become a commodity that can't really be sold at a premium.  It's like trying to get people to believe that a chicken sold by Tyson is significantly better than one sold by Perdue.  Chickens are still relevant, but a chicken is still a chicken.
rradina
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rradina,
User Rank: Ninja
2/25/2014 | 7:37:28 AM
Re: How does a $250 Windows 8 laptop sound? Or a $200 2-in-1?
The OP said his kids prefer Office.  As such, your comment is irrelevant.  Besides, a subscription is paying for the software you use.  Perhaps what you meant to say is that you prefer to pay once for a perpetual license.

 
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