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Windows RT Will Cost OEMs Over Twice As Much as Windows 7

Posted by Unknown on from the backroom-deals-with-intel dept.

MrSeb writes with this excerpt from Extreme Tech: "Good news: Last month's unbelievable rumors that a Windows RT (Windows 8 ARM) licenses would cost OEMs $90-100 were off the mark — in actual fact, as confirmed by multiple vendors at Computex in Taiwan, the Windows RT license cost is only $80-95. At this point, we're not entirely sure what Microsoft's plan for Windows RT is. It would seem that Microsoft doesn't want to flood the markets with cheap Windows RT tablets. At this rate, though, we would expect the cheapest Windows RT tablets to hit the market at around $600, with top-spec models (if they exist) in the $800-900 range — well above Android tablets or the iPad. We can only assume that Microsoft doesn't want to go head-to-head with iOS and Android, instead trying to stake out a position at the top end of the market. Whether this is a good plan, with x86 tablets and their full 20-year PC ecosystem also vying for market share, remains to be seen." For comparison, sources say that Windows Phone 7 ran OEMs the equivalent of $30 per device, and Windows 7 for desktops around $50.

9 of 310 comments (clear)

  1. Good news for AAPL investors by Anonymous Coward · · Score: 5, Insightful

    The iPad still has nothing to worry about. Does Microsoft secretly hold a ton of Apple stock? Are they just trying to make money by driving it up and then selling it?

    1. Re:Good news for AAPL investors by h4rr4r · · Score: 5, Insightful

      This will not work that way, the OEM will use lower quality tablet parts if they have to pay more for the OS. They will do this to get a competitive price and a reasonable profit margin. There are quite a few good android tablets out there, Samsung, Acer and Asus just off the top of my head all make more than one. Plus there is the fire and the nook for the lower end but still quite nice devices.

    2. Re:Good news for AAPL investors by fuzzyfuzzyfungus · · Score: 5, Insightful

      While I can understand that MS doesn't want 'Windows RT' associated with the sort of hardware that floats around on the dodgy end of the Android spectrum, it seems like pricing the software license as they have isn't an obviously helpful way to do that.

      If the OEM has to make a price point, because their customers or sales network says so, the money spent on software licenses will come out of something else(or, since Windows for x86 is apparently cheaper, simply cut a bloody swath through ARM devices and lead Intel to sell a bunch of Atoms...), which won't help hardware quality much.

      Given that they maintained a relatively iron grip over 'approved' specs for Windows Phone licencees(you either built the handset within certain parameters, or you didn't get a license, period.) it seems like that already have a template for a much better way to ensure uniform quality and a consistent experience.

      With this pricing strategy(along with the 'Ha Ha, no AD for you, not even with some sort of premium SKU" thing), one just gets the impression that they don't really want to sell this particular product...

    3. Re:Good news for AAPL investors by jmorris42 · · Score: 5, Insightful

      > one just gets the impression that they don't really want to sell this particular product...

      I think you are confused by trying to understand behavior that doesn't appear to make sense. Usually means we are missing part of the decision process. So lets toss theories around until one makes sense.

      Here is mine. Microsoft has a couple of long term problems. They have a monopoly on the desktop. It produces a shedload of cash. How much per unit is a secret somehow, odd that a large publicly traded corporation's flagship revenue stream's details are a closely guarded secret. (just an aside that may be significant) They fear the desktop might not stay so important and produce the revenue. But they have a second, equally important problem. They can't even stay the same, they have around 90% of the market and PC sales are flat, shareholders have been waiting patiently for a decade to see some share appreciation on MSFT and there doesn't appear to be a lot of upside on the Windows PC. They see Linux as a threat and we know shutting off the oxygen supply is a tactic that has worked for them. The open PC is the air supply.

      So Windows RT is designed to address all those needs. It answers the threat to the platform. It will produce Apple like per unit revenue which will make the pension fund managers smile. And it ends the Linux threat by carefully locking the platform and keeping a very tight leash on the OEMs.

      The question is whether the marketplace will allow them to get away with it. A lot of people have wanted to make insanely great margins on consumer electronics. Only one has succeeded. The chains are even questionable, phone vendors are removing them, not building stronger ones.

      --
      Democrat delenda est
  2. What is Microsoft thinking? by JDG1980 · · Score: 5, Insightful

    So they're basically screwing up the desktop experience on Windows 8 in favor of tablets and smartphones, and on top of that they're pricing it so high that it won't have any reasonable chance of success in the market they want.

    I'm betting that Steve Ballmer will be out the door by the time all this is over.

    1. Re:What is Microsoft thinking? by hmmm · · Score: 5, Insightful

      I agree. They appear to be betting the company on Windows 8 in an attempt to capture the market for touch enabled devices, and are willing to risk alienating millions of their customers as a consequence. Why they wouldn't follow through on that strategy by all but giving away the RT licenses is beyond me. Windows 8 makes it clear that they are not willing to settle on becoming merely niche players in this market, whereas high pricing on licenses seems to indicate the reverse.

      Perhaps we have two parts of the company engaging in competing strategies, in which case responsibility for the mess would fall very squarely on Ballmer and senior management who should be setting the overall company strategy.

    2. Re:What is Microsoft thinking? by JDG1980 · · Score: 5, Insightful

      I think it is more of a cautious approach to entering the market. Price the OS, so that it will only be included on the high end Tablets (ones with faster processors and more memory) So when these go on the market they run very well and smooth. You don't want bad reviews out of the starting gate because the starting tables are just running of the systems minimum specifications.

      The problem with this argument is that WinRT will never even get "out of the starting gate" if the first devices are so grossly overpriced. This isn't a new market; Microsoft has to compete with Apple and Google, both of which have substantial installed bases. Apple, in particular, already has the premium tablet market sewn up, while Google's Android is found on a very wide array of devices and can be implemented at a very low price due to lack of licensing costs.

      Microsoft has to seriously consider, from the customer's perspective, why anyone would choose a WinRT tablet over an iPad 3. The iPad 3 is $629 for the least expensive model with 3G/4G capability. WinRT tablets are going to be considerably more expensive. The iPad 3 has a premium name, massive installed software base, and Retina Display. The WinRT tablet won't have any of these things. What's more, you will get some customers who think because it's called "Windows 8" that it can run normal Windows software, and they aren't going to be very happy when they find out that this is not true.

      The whole Windows 8 project is shaping up to be a failure greater even than Vista.

  3. Re:Nice! by jellomizer · · Score: 5, Insightful

    No it will just go to Apple and Android (Some people count Android as Linux, others do not)...

    --
    If something is so important that you feel the need to post it on the internet... It probably isn't that important.
  4. Office included by robmv · · Score: 5, Interesting

    Isn't Office included on Windows RT? I think that is the reason of that higher price, some big corporations have so disconnected divisions that each one demands their cut to meet their yearly quota and do not see the big picture