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6/14/2012
09:02 AM
Paul McDougall
Paul McDougall
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Windows 8 Tablets: Will The Price Be Right?

Microsoft's new OS is right for our connected times, but the company's business model may make it tough for Win8 partners to compete with Android and even iOS tablets.

I saw a trove of impressive Windows 8 hardware at Microsoft's TechEd conference earlier this week. Win8's Metro interface is a new desktop metaphor that will resonate with younger users who believe a computer is first and foremost an onramp to the social Web. But that alone won't guarantee sales.

Metro puts social networking and communications front and center through Live Tiles, onscreen blocks that alert users when an app has a new message or information. It's the right metaphor for these connected times. Until now, the standard GUI, whether on Mac or Windows, hadn't changed much since the 80s, when PCs were standalone devices used mostly for word processing, manipulating spreadsheets, and playing simple games.

Metro recognizes that the personal computer (whether in the form of laptop, tablet, or phone) has become a digital proxy for our entire lives, in all its facets. With a quick glance, Windows 8 users can know about any new events related to their work, family, or social circles. "The new era is one of connected devices and continuous services," said Microsoft server & tools president Satya Nadella, at his TechEd keynote in Orlando, Fla.

Metro shows that Microsoft clearly gets that. But there's still one big problem that the company and its partners will have to overcome to make Windows 8 a hit.

Unlike Google and Apple, Microsoft needs its operating systems to generate cash. Windows accounts for about a quarter of the company's total revenue. That means Redmond has to charge OEMs like Samsung, Lenovo, Dell, and others a relatively hefty fee for each instance of Win8 they preinstall. Reports out of Asia this week indicate that the fee may be as much as $85 per tablet for Windows 8 RT.

[ Get expert guidance on Microsoft Windows 8. InformationWeek's Windows 8 Super Guide rounds up the key news, analysis, and reviews that you need. ]

That's $85 more than OEMs need to pay to produce an open source Android tablet. Apple has its own, internally developed OS. And content providers like Amazon and Barnes & Noble can sell their tablets at a loss, confident they'll make up for it through increased e-sales. Microsoft doesn't have such luxuries--software is its end product.

That means Windows 8 tablets could be at a big price disadvantage when they hit the market later this year as hardware makers pass the Microsoft tax on to consumers. It's hard to imagine HP, for instance, producing a tablet that can compete with Amazon's $199 Kindle Fire, when its costs include $85 for the OS alone. It might even be tough for OEMs to match the $399 starting price for the iPad 2.

The upshot: Microsoft needs to rethink its pricing strategy when it comes to Windows 8 tablets. One option would be to adopt the cellphone model, where devices are sold to end users by carriers at steep discounts in exchange for long-term contracts. Microsoft could opt for a piece of that action instead of a per-device license fee.

It could also offer up Windows 8 as the foundation for a retail tablet, like the Nook from Barnes & Noble, in which Microsoft recently agreed to invest $300 million.

From what I saw at TechEd, Windows 8 is a technical and aesthetic marvel. But that alone won't shield it from the realities of the cutthroat, low-margin hardware market. With the OS basically done, Microsoft and its partners now need to get creative about pricing and marketing. The old model, just like the old "sea of icons" desktop metaphor, no longer works.

Microsoft’s ambitious new OS tackles servers, PCs, and mobile devices. On the server side, we dig into the latest offering: Microsoft has boosted the capabilities of Hyper-V, streamlined management, and made other changes that IT will appreciate. Download the Windows 8 Vs. The World report now. (Free registration required.)

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ANON1237925156805
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ANON1237925156805,
User Rank: Apprentice
6/19/2012 | 10:24:30 PM
re: Windows 8 Tablets: Will The Price Be Right?
I agree that there's a lot of cunning sleight of hand in Windows 8; it's impressive and admirable. What it isn't is intuitive. I don't know yet whether it's worth the slog to master it and I'm thinking that others may share my sentiments. If folks won't give this a try, then it'll be a moot point.

You've got many users who avoided Vista like the plague. Some are now wrestling Windows 7 to the mat because XP is being all but orphaned. Many core functions don't work as they did before and it isn't always clear why.

That's a recurring theme with upgrades to Windows and Office: there are a gazillion changes that feel cosmetic or forced, rather than being genuine improvements that I would have wished for. Change for change's sake does not make a worker feel more productive.

Now we're being told learn live tiles. This time for sure. We've nailed it. You're gonna love it. Well, expect some skepticism please.

Also I don't see how Live Tiles will enhance a corporate experience where access to the global universe and even one's personal calendars, etc. are verboten. We'll see. . .
moarsauce123
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moarsauce123,
User Rank: Ninja
6/16/2012 | 11:01:33 AM
re: Windows 8 Tablets: Will The Price Be Right?
That is what I call the cost of doing business with Microsoft. Putting all your eggs into the Microsoft basket is just plain wrong. Single vendor strategies never panned out for the auto industry, so why should it work better for software? Waiting until Microsoft gets something off the ground is purely negligent. Your house is as much asleep at the wheel as is Microsoft.
tbissell900
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tbissell900,
User Rank: Apprentice
6/16/2012 | 3:54:37 AM
re: Windows 8 Tablets: Will The Price Be Right?
I am tired of bad drivers...let's have traffic directed by a FEDERAL GOVERNMENt with ACCOUNTABILITY!! LOL
melgross
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melgross,
User Rank: Ninja
6/16/2012 | 12:53:23 AM
re: Windows 8 Tablets: Will The Price Be Right?
I've been working with it since the consumer preview, also in a VM. It's confusing, and throws you out of either Metro or the Desktop depending on what you're trying to do. Two totally different browsers. People are going to be seriously messed up with this.
Francoman
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Francoman,
User Rank: Apprentice
6/15/2012 | 9:45:42 PM
re: Windows 8 Tablets: Will The Price Be Right?
We are a Microsoft Development House. MS is so late to the dance. We stalled our customers. For so long, we were hoping that MS would come to the market with something really hot. I now think it is too late. I the tablet market has sailed and Apple is a the helm and google is on the deck waving good-bye to those of us loyal to MS. There will likely be no catching up. The only think MS could do that would impress me is to give the tablet version away or sell it for pennies and make make money on MS Office and clould services. I truley wish this was not the case, but it is - sadly. We will continue to be a MS development house, but mostly for cloud apps for tablets and phones.
jphillips101
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jphillips101,
User Rank: Apprentice
6/15/2012 | 6:30:59 PM
re: Windows 8 Tablets: Will The Price Be Right?
If history serves as a guide, Windows 8 tablets will probably be overpriced, overweight, short battery life, poor displays and underpowered. It seems to me that the hardware manufacturers have always produced devices that gave people many negative reasons not to buy it and too few positive reasons. Maybe this time wil be different but I am not expecting it to be so.
MyW0r1d
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MyW0r1d,
User Rank: Strategist
6/15/2012 | 3:38:36 PM
re: Windows 8 Tablets: Will The Price Be Right?
I loaded the Win8 beta into a VM to experiment with it. It definitely will be a functional change from previous Windows versions. I purposely did not read anything in advance on it (to play the new end user who simply buys a device) and it was everything but intuitive. Navigating the tiles was not clear, hidden menus along the sides or corners does not replace the single home button on other similar devices.

Clearly their pricing and revenue model will need to be carefully reconsidered.
melgross
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melgross,
User Rank: Ninja
6/15/2012 | 11:10:58 AM
re: Windows 8 Tablets: Will The Price Be Right?
"The old model, just like the old "sea of icons" desktop metaphor, no longer works."

So, the most popular tablet in the world, by far, has a UI that no longer works? Do I detect a bit of fanboyism in this writer. As most people exposed to Win8 seem to dislike it, and the Zune HD that was the first to use Metro, failed, along with dismal sales for Win Phone phones, why is that so good?
melgross
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melgross,
User Rank: Ninja
6/15/2012 | 11:04:54 AM
re: Windows 8 Tablets: Will The Price Be Right?
Microsoft does have a big problem here. There is no question that tablets are stunting PC sales. But if Microsoft sells Win8 at "Starter" pricing as they have for netbooks, they will begin to shrink their sales and profits. That's something they want to avoid at all costs.

But there is no evidence that people will like this OS. In fact, on the tech sites, Windows users seem to be united against it. I think it will be very confusing to consumers, as they will go into the store thinking it's Windows, which it's clearly not. Remember when Asus first came out with netbooks. It was the beginning if the recession, and a lot of people wanted cheaper computers, so they bought a lot of them. When they took them home and found they wouldn't run their Windows programs, they brought them right back. That could happen here.

Then, of course, x86 Windows tablets will have the same old problem. You can't run Windows on a tablet with a stylus in a useful way. This didn't work with 13 and 15" screens on the Convertables, and it will be even harder on an 11.6" screen as we see on the new tablets (some as small as 10").

Microsoft really has their work cut out for them here. Win 8 was rushed to compete with Apple, and that's never a good reason.
Bob Forsberg
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Bob Forsberg,
User Rank: Apprentice
6/15/2012 | 2:13:20 AM
re: Windows 8 Tablets: Will The Price Be Right?
Reality Check: Who ever would have imagined 10 years ago that Microsoft would be irrelevant when it came to OS, playing catch-up without much of a chance in being successful?
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