Microsoft must sell own-brand Windows 8 tablet for under $500: researchers

by Doug Drinkwater

June 18 2012

Microsoft is holding a tablet-related event in LA today (Monday)
Microsoft is holding a tablet-related event in LA today (Monday)

With Microsoft’s first own-brand tablet potentially just hours away, TabTimes spoke to various market researchers to find out what Microsoft must do with the device to succeed in the market.

Microsoft is copying Apple, but must beware tablet fragmentation

The consensus around the industry is that Microsoft is ‘doing an Apple’ by launching its own tablet, in the sense that the Redmond giant would then have its own hardware, software and pool of apps to police, thereby controlling the entire user experience.

To that end, Informa’s principal analyst David McQueen believes Microsoft is following Apple and (to lesser extent) Google in making its own devices, but stresses that Microsoft must not miss a beat when it comes down to marketing the device.

“By taking this approach Microsoft needs to make sure it hits the market running as it is essential the tablet is marketed properly and shows its full potential if it has any hope of displacing Apple’s iPad”.

That said, McQueen thinks that the success of Microsoft’s own-brand tablet will depend on Microsoft Office, and warns that ARM and Intel fragmentation could put the brakes on any Windows 8 tablets in enterprise, Microsoft-branded or otherwise.

“If it (the Microsoft tablet) has the requisite Windows Office applications available from launch and suitable peripherals to make input easier at a price point that is competitive, then I do see it displacing notebooks and netbooks replacement in the office.

“There may be a problem with fragmentation owing to ARM-based and Intel-based versions of the same Windows 8 OS, and possible differences by vendor, but this may be addressed in future Windows releases.”

Microsoft must sell the tablet for under $500, and keep OEMs happy

Context analyst Salman Chaudhry poignantly suggests that ‘there’s a lot resting on this one’ and even claims that the launch event may determine whether Microsoft’s entry into the tablet market is a success over the next two years.

For Chaudhry, Microsoft needs to get across the tablet’s unique selling points in face of competition from Apple, and he believes that any such Windows 8 tablet must be sold for under $500, offer native Office tools, Xbox Live functionality and a stable of high-quality apps. Interestingly, the analyst believes that Microsoft may make a loss on the device, at least when it is first launched.

“We would anticipate that Microsoft will be following its Xbox model strategy by looking to gain mindshare and market share despite potential initial losses made on sales of the device itself. Once enterprise adoption has been created, this will be followed by consumer adoption - which is taking a reverse approach to Apple”, said Chaudhry.

That said, Chaudhry says that Microsoft mustn’t forget those OEM partners who are licensing Windows 8 for tablets. “Microsoft needs to maximize and nurture relationships with existing OEMs and overcome the challenge of maintaining a hardware development strategy while keeping OEMs happy”.

Or: Microsoft will announce a content partnership, not it's own-brand tablet

For all the excitement over a Microsoft tablet, Carolina Milanesi, research VP for consumer technologies at Gartner, debates whether Microsoft will announce a tablet, and even questions what the point would be.

“I am not sure about the value a branded tablet would have for Microsoft, other than setting the benchmark for what it wants ODMs to deliver. But if this is the case, the event today seems way too hyped for it”.

Milanesi went onto suggest that today’s event more be more of a content partnership. “I am more on the thinking that the event today is linked to some content deal for Xbox or even for tablets".

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  • autotraveler
    2 years 5 months ago

    I, like so many others will be waiting for today's official announcement on Microsoft's expected tablet but I know one thing. If it's priced as rumored, the same or more than an iPad for a given RAM and connectivity set, it will be a non-starter, Windows RT included not withstanding.

    Lest you call me a Apple fanboy, I'm not. I just bought another PC laptop from Samsung after seriously considering a MacBook Pro. (I just couldn't justify paying twice as much for a laptop with a similar spec set.) Yet I bought an iPad 2 when Best Buy junked out an older laptop under the extended warranty (with the gift card I received). Even though I bought a slick Bluetooth case/keyboard, I see it in no way as a laptop substitute. The combination, like a Kindle Fire is fine to consume content but it's simply not robust enough to serve as my primary computer, especially when I need to edit images in the field or write a large document.

    I'm a digital magazine publisher so I'm not really looking at this from the tech perspective, I'm looking at this from the retail perspective. Quite frankly all I want to see in the marketplace is a viable competitor for the iPad with a nine to 10-inch screen, one that's priced closer to a Kindle Fire than an iPad. That's the game changer that's needed, not a tablet running bloatware software that costs the same or more than an iPad, which is what I'm hearing that a tablet running Windows RT will be.

    HP, RIM, and Motorola have already learned the hard way that the road to success with a tablet is not by selling a device at the same price as an iPad with similar specifications (RAM and connectivity). It just won't work no matter how good the specifications are. At this point Apple simply has such a huge head start that a similar strategy is doomed to fail. Remember what price it took for HP to clear out its TouchPad inventory? $99.

    Surveys already say consumers -- the bulk of the market, not the enterprise segment -- are unwilling to pay more than $380 for a Windows tablet. Yes, the installed base of PC laptops and desktops running Microsoft Office will nudge consumers, but the bottom line is that most consumers, if they want to buy a tablet will stick with the tried-and-true iPad with its established App Store, not move to a Microsoft tablet unless it is priced in a compelling way. That means $299 or less (a meaningful $100 less than the still-available iPad 2 with 16GB and WiFi).   

    Of course this is just my opinion but if the base Windows RT 10-inch tablet comes to market with 16GB of RAM and WiFi connectivity at $499 or above, don't expect it to gain much sales traction beyond a highly-hyped launch. Six months from now we'll see the inevitable markdowns, probably to $299, where such a device should have been priced at when it was launched.

    $279 to $299 is the available retail sweet spot right now, that's what will motivate consumers to consider a Windows RT tablet in place of an iPad. When you step back and look at the tablet marketplace objectively, don't most of you agree with me? If you don't, please tell me why.

    Richard Truesdell
    Editorial Director,

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