Microsoft's Live Grenade in The Tablet Wars
Richard is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
What is Microsoft (NASDAQ: MSFT) thinking? I recently read a column which stated that Microsoft intends to charge device makers $85 dollars for their Windows 8 tablet software which essentially matches the price Microsoft expects to receive for a version of the software designed for the PC, except the tablet software will come with limitations, including the inability to run Windows 7, and fewer security features.
This tells me one thing, and one thing only. Either Microsoft managers are insanely stupid, or are arrogantly predicting Windows Eight tablets are going to be the mega-bomb. We're not talking Hiroshima, we're talking Judgment Day bomb.
Let me put this into perspective for you; Google (NASDAQ: GOOG) gives away Android. For people who are price sensitive, an Android tablet is the way to go. Just assume for a second that device makers can use the same hardware, and create tablets able to run two different operating systems just as well. If one costs 20% more than the other, the only reason to purchase it is if the software is vastly superior. So unless Microsoft, which I am comfortable with, beats the pants off the Android tablet, there's little chance of many sales.
If you are familiar with Chrome versus Internet Explorer, I have genuine doubts about Microsoft being able to run ahead of Google, which seems to continually innovate and update at rates much faster than Microsoft.
Even if the Windows 8 tablet is somehow superior to the Android, now it has to contend with the Apple's (NASDAQ: AAPL) iPad on the high end. The iPad is Primo, the top name, top dog. Once again, Microsoft has to blow the competition out of the water to have a chance of success. How many people do you think are going to see the Microsoft tablets side by side by the iPad, even if they are deeming the Windows 8 tablet slightly better (a long shot), and are taking one to the cash register? Sorry, this is where name brand, marketing, and the cool factor take precedence. Microsoft, you aren’t wearing a black turtleneck.
When Linux had Microsoft worried, as it ate into Softy's market share in netbooks, Microsoft countered this threat by lowering the price of its Windows XP OS for net books to $15, successfully squashing the threat to its operating system dominance at the time.
I bring this up to illustrate how price conscious most consumers are, especially in today’s economy, as I’m sure many readers will rightfully point out that the ipad has come close to destroying the netbook market.
While Windows loyalists are undoubtedly excited about the possibility of having one operating system for all three devices they might own, (PC, cell phone, tablet) it seems to me that if Microsoft doesn't drop the cost of its tablets software substantially, it stands the excellent possibility of flopping on its face. Unless Windows Eight is “the bomb,” it will be “a bomb.” Mr. Ballmer you can avoid the shrapnel by listening to my advice. Otherwise prove me wrong.
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