Why Microsoft & Nokia are walking the plank with Windows RT tablets

by Doug Drinkwater

September 24 2013

Doug Drinkwater is the International Editor of TabTimes and is based in London, England.


Microsoft is pumping money into its ailing smartphone business that includes some well-regarded products, but Nokia's tablet future doesn't look bright, especially if it hinges on Windows RT.

I started writing this article last month, when Nokia was still a standalone company, a once mighty giant in the smartphone business, struggling with the likes of  HTC and BlackBerry to stay relevant. 

As we now know, Microsoft has acquired Nokia’s phone business and one-time CEO Stephen Elop – amusingly dubbed the ‘Trojan horse’ by Finnish media – has returned to Redmond, where he is now expected to replace outgoing CEO Steve Ballmer.

The deal means that things are a little muddled as to who controls what and Nokia’s ambitions with tablets (Nokia's PR team has not returned my emails on the matter and it’s unclear if future slates will be Lumia or Surface branded).

However, one thing does remain a near certainty; Nokia will launch a tablet. The ‘Sirius’ model reportedly has a 10.1-inch screen, Windows RT and a price comparable to the iPad.

Here’s where the words ‘dead on arrival’ spring to mind.

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Speed: Nokia’s Achilles heel

Just two years ago, Elop sent out a memorable email to his employees. He was summing up Nokia’s smartphone business -- and Nokia’s decision to go with Windows Phone to be specific -- in an anecdote about a worker at sea.

“As the fire approached, the man had mere seconds to react. He could stand on the platform, and inevitably be consumed by the burning flames.

“Or, he could plunge 30 meters in to the freezing waters. The man was standing upon a 'burning platform,' and he needed to make a choice.”

As it was, Nokia jumped too late and arguably onto the wrong platform (it turns out the firm had been testing Android).

The same thing has happened with tablets. As I’ll go onto explain later, the firm has chosen an ailing platform and at the wrong time – Windows RT has yet to receive any serious traction and consumers increasingly favor smaller tablets  at prices $300 or lower, rather than closer to Apple's iPad $499 starting price. 

Sadly, Nokia has a history with speed. The Finnish maker dominated the feature phone market in the early 00s with Symbian, but arguably didn't tackle smartphones until 2011 (2010 if you include the Nokia N8), some four years after the first iPhone.

Windows RT is trapped in no-man's land

The problem for Nokia isn’t distribution or design – the Lumia 1020 and 920s are testament to that -- but that it is betting on a failed platform in Windows RT.

Put simply, the tablet market is divided by two segments. Apple’s iPad is at the high-end, along with a smattering of hybrid Windows 8 tablets, while cheap Android tablets -- along with Apple’s iPad mini -- are at the other end of the spectrum, where prices range from $199 to $329.

The problem for Nokia – and more so Microsoft -- is that Windows RT is in no-man’s land. It's not powerful enough and doesn’t have enough apps to compete with iPad or Windows 8, but is priced out of competing with Android.

Stats would seem to back this up – Strategy Analytics said Windows tablets (including Intel-powered Windows 8 models) had a 4.5% share of the market in Q2, while Taiwan supply chain makers reckon the OS accounts for 5-8% of all tablets.  Back in March, IDC forecast that Windows 8 and Windows RT tablets would grow to represent just 10% of the tablet market by 2017.

With these figures in mind, vendors have been quick to abandon the sinking ship.

Just ten months after the release of the ARM-based operating system, Samsung, Asus, Lenovo and HP have all swam to shore. Dell has been quiet on future models and even Microsoft has been aggressively cutting prices of its Surface RT, albeit ahead of the release of new models. 

 

(Image: Windows RT tablets, like the Surface RT, have struggled for sales since launching last October).

This poor demand – brought about in part by the absence of Outlook (which will come pre-installed on Windows RT 8.1), poor developer interest and a lack of integration with desktop apps -- seems to have kicked Microsoft into re-positioning Windows RT as a rival for Android rather than iOS (maybe now those anti-iPad ads will stop?)

For example, one future version of the Surface RT is expected to have a smaller screen and a rumoured price of $299, while Microsoft has also reportedly dropped Windows RT license fees in the hope of driving cheaper third-party models.

Given these prices, smaller screens and the fact that both platforms have a problem attracting excellent tablet apps, it would seem that Microsoft thinks Windows RT has a chance against Android, especially if you include Microsoft Office and (optional) useful accessories like the Touch and Type Cover (both of which have been updated now that Microsoft has launched the Surface 2 tablets)

This still may not be enough, though. New full-fat Windows 8 tablets with Bay Trail processors are expected to come from Dell (Venue), Lenovo (Miix 8) and Acer (new version of the Iconia W3) in the next few months, and at around $199 or possibly ever cheaper.

Analysts too remain unconvinced by Windows RT’s long-term prospects.

“What is interesting about where we are today, however, is that Windows RT is all but dead,” wrote Ben Bajarin in a recent column for TabTimes.

“Why does it think it can 'dumb down' its OS to please users who have grown accustomed to the features and functions of a full Windows OS experience?” wrote analyst Jack Gold .

“If Microsoft believes its OS is not competitive with iOS or Android, it should do something about that directly. And it can’t compete on a direct cost basis with Android at the low end, nor should it try.”

Nokia has the design quality, patents and fan base to achieve something with tablets. But it remains to be seen if its efforts will be undone by poor timing and an operating system that's been unable to attract users. 

("Choosing your next tablet" is a featured session at the upcoming TabletBiz conference & expo coming to New York on November 13, 2013). 

Doug Drinkwater is the International Editor of TabTimes and is based in London, England.

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