The lack of compelling form factors at attractive price points has been a major weakness of the Windows 8 ecosystem. However, with the upcoming release of Haswell, Intel’s next generation chip, and Windows 8.1 there is some hope that cheaper and more innovative form factors are on the way. Microsoft highlighted some of these devices earlier this month at Computex, but there was still only one “small screen” tablet announced (Acer’s Iconia W3), which shows to us that there is still a long way to go.
Nick Parker, the head of Microsoft’s OEM Confirmed at Computex that Microsoft is considering to reduce the cost of Windows 8/RT licenses for OEMs building devices smaller than 10.1 inches. The magnitude of the price cut is not clear, but we believe it is in the two-thirds range. The reason this is important is for OEMs to offer devices that are competitive at the low-end of the tablet market, which is seeing the most robust growth. For example, Acer’s Iconia W3 will start at $379 and will include the full version of Windows 8 (not RT); this is a much more interesting price point than the existing Windows 8 devices.
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In addition, Microsoft plans to bundle Office Home/Student 2013 (Excel, Word, OneNote, PowerPoint and Word), as well as Outlook, with Windows 8 on smaller (sub 10 inch) devices. Previously, the Office bundle was only shipped with Windows RT devices and did not include Outlook. Given the familiarity of Outlook to Windows business users, the company hopes the inclusion will help attract more consumers to the devices. PC OEMs inventory build-up suggests that this tablet will be on shelf before the back to school shopping begins. As the saying goes, two losers don’t necessarily make a winner is demonstrated with Microsoft – Nokia and will Microsoft – Intel [Haswell Mobile CPUs] follow ?
With the sharp increase in consumer adoption of smaller screen tablets, this would be a welcome addition, but we are not sure Microsoft would be willing to launch the device at a price point ($350 range) that would be persuasive enough to generate significant unit volume. However, the larger question is whether there is actually consumer demand for Windows-based tablets at the low-end of the market, which we are uncertain about.