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.
To its credit, Microsoft already appears headed in the right direction. It has allegedly offered discounted Windows 8 licenses and bundled Office software to OEMs that are making smaller tablets. The iPad Mini has demonstrated that consumers like the 7-inch form factor, and Redmond desperately needs a presence in that market segment. Smaller components should drive costs down, so with Microsoft's OEM enticements speeding new models onto store shelves, consumers might soon have what the Surface RT should have been in the first place. These devices should help.

There's also speculation that Redmond could produce a Surface Reader, perhaps a 7-inch device that could offer a differentiated package due to not only Windows 8.1, but also Microsoft's Barnes & Noble assets.

Even so, the path is fraught with uncertainties. To Microsoft and its partners, a $350 Windows RT tablet might seem like a great deal, especially if it features the original Surface's impressive build quality. I'm not convinced that cost will be low enough. It would barely undercut the just-released Samsung Galaxy Note 8 and rate only comparably to the iPad Mini. Both of those devices run on platforms with entrenched and loyal user bases. If Windows 8 is to attract users with prices that are merely similar to those of the competition, it will need a truly unique hook, some sort of differentiated experience. Neither Microsoft's first round of Modern core app updates nor recent Windows 8.1 rumors have suggested that Redmond will deliver this sort of leap in the short term.

[ Can consumers have too many options? Read Windows 8 Device Choices Baffle Buyers. ]

Even the appeal of Office, the most prominent advantage Windows 8 currently has over its competitors, might be eroding. Google's recent release of Quickoffice for both iOS and Android won't topple Office from its perch atop the market. But as users come to accept this and other alternatives, Microsoft will continue to lose leverage. Lacking any truly magnetic features that could convert those not already in its stable, Redmond must therefore turn to low prices to build momentum.

It will have to do so while maintaining OEM relationships, which could get tricky depending on how Microsoft prices future Surface products. Redmond is also surely concerned about one-time actions turning into precedents; low costs and discounted licenses might be necessary at the moment, but Microsoft certainly hopes to return to high-margin living, and to avoid coming off as desperate. Such hopes put pressure on the company to make major strides between Windows 8 versions. Windows 8.1 isn't a colossal overhaul, but if Microsoft lowers prices now and wants to raise them again later, it will need to offer a superior experience that users recognize to be worth the upgrade. Given that a Retina-equipped iPad Mini is almost certainly in the cards, Redmond could also encounter trouble if it encourages OEMs to use low-quality screens to bring down costs. It's a challenging situation all around.

Even so, Microsoft's future is in the Windows ecosystem, and in the billions of users it hopes to keep plugged into it. Current devices and even Windows 8 are only means to this end. Redmond might have grand plans a few years down the roadmap, but it will have trouble getting there if it doesn't get consumers onboard in the present. That means we need good, cheap tablets, and we need them fast.

Editor's Choice
Sara Peters, Editor-in-Chief, InformationWeek / Network Computing
John Edwards, Technology Journalist & Author
Shane Snider, Senior Writer, InformationWeek
Sara Peters, Editor-in-Chief, InformationWeek / Network Computing
Brandon Taylor, Digital Editorial Program Manager
Jessica Davis, Senior Editor
John Edwards, Technology Journalist & Author