Tuesday, July 24, 2012

Will Windows 8 be too pricy?

Microsoft is hoping to break into the tablet marketplace with the mobile version of Windows 8 (Windows 8 RT), along with its own announced tablet, called the Surface.  While the product announcement of the Surface included a couple of interesting hardware innovations, most analysts felt that that it wasn't quite up to iPad standards.  In fact, many saw the included keyboard (one of the interesting innovations) and with the announced OS being a version of the new Windows 8 operating system, the Surface would be more of a competitor for laptops and desktops, rather than pure tablets.
  This week, Microsoft made another announcement that's likely to put the Surface and other tablets running Windows 8 at a competitive disadvantage in the growing tablet market.  Microsoft has announced that when Windows 8 goes live, the minimum price for apps at the online Windows app store will be $1.49 (with Microsoft getting 30%, and forwarding payments only at $200 total sales increments).  That puts the minimum price for Windows 8 apps 50% higher than the minimum for paid apps in Apple's App Store or for Android OS apps at Google Play or Amazon's AppStore for its Kindle.  Further, studies are showing that most of the paid apps sold are at the minimum price (99 cents); that most tablet owners have dozens, if not hundreds of apps; and that which OS a tablet runs is a primary factor driving tablet purchases (often for presence of apps, or so that previously purchased apps are transferable).  Add to that the report that Microsoft is charging tablet manufacturers $80-90 a unit for the Windows 8 RT OS, compared to Android being a free OS, and Apple's iOS being effectively free, and you can see that Windows RT tablets are likely to be more costly to purchase, and more costly to stock with apps, than tablets running either of the two currently dominant mobile operating systems.  This places Windows 8 RT tablets at a considerable competitive disadvantage to start - at least in the tablet marketplace.
  Windows-based tablets might be able to overcome that disadvantage if the Windows 8 RT OS offers significant advantages over competing tablets and operating systems.  But looking at the rather dismal track record of Windows mobile operating systems, I'm doubtful that Microsoft will be able to offer anything that would give it a long-term competitive advantage for tablet users.  Windows may be the dominant OS for PCs and laptops, but that is due in large part to the huge amount of legacy software and the costs of conversion associated with shifting to another operating system.  It doesn't have that advantage in mobile.
  But it could be an advantage for those seeking a more portable replacement for desktops or laptops.

Sources -  Windows 8: No 99-cent Apps For YouInformationWeek
Windows 8 should NOT compete iPad priceWindowsMobile8.com
Making money with your apps through the Windows Store, Microsoft Developer Network document

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