Microsoft’s Steve Ballmer recently clarified that Microsoft isn’t just a software company, they are a services and devices company, too. The problem is that Microsoft has put software sales from Office and Windows at the forefront for so long that I don’t know if they really know how to be a services company.
I’m excited about Windows tablets but I feel that they are really missing the point here, it doesn’t matter how good their new RT/8 OS is if no one gives it a try. Adoption of the changes by consumers requires great marketing and hands-on demonstrations. Microsoft seems to understand that part, so far. Unfortunately, this is only half of the equation. The other half has to do with pricing.
Consumers need a compelling reason to give a Surface or Windows 8/RT tablet a try, and releasing entry/mid-range devices under the price of high-end Android and entry-iPad devices is the way to do that. Right now, all the ARM-based devices we are seeing seem to cost as much, if not more, than devices like the iPad.
The culprit of this high-price is in the licensing costs. Being a software company, charging a good deal for a license makes sense. IF Microsoft really is a “services” company though, they need to lower the cost of the license and trust that they will make back the money from Windows Store, Xbox Music and Xbox Live sales with Windows 8 and RT.
Android tablets might not be as optimized or as good as Windows tablets, but at least they are much cheaper, and that will appeal to many consumers over how good the product actually is. If Microsoft could knock the fee down at least by half, at least the price difference would be marginal.
Anyone ever heard of the Asus Transformer Prime? It is a reasonably decent Android-based tablet that starts at $499 at most retailers. The device is one of the more popular “high-end Android” tablets on the market. Well, Asus is repacking the same tablet- more or less – calling it the Asus Vivo Tab RT and adding an extra 1GB of RAM to the deal. The price? $599.
While many tech-oriented consumers might easily pay $100 more for the power of Windows RT over Android, the average less-tech-saavy consumer isn’t going to understand why they should get the same tablet for $100 more just for a UI that looks different.
If Microsoft was able to drop down the licensing fee? Perhaps Asus could push this for $499 or even $539 or something. At this price it would certainly look more appealing.
Don’t get me wrong, I like Windows RT and I think it has the chance to do quite well. I just think that pricing above high-end Android and iPad devices is a hard sell for an OS and app ecosystem that is unproven at this point.
What about Windows 8? Does the licensing need to drop there? Probably not so much. This OS will be packed onto higher-end devices aimed at users that want productivity capabilities. These folks probably already expect to pay top-dollar. These types of users will probably also consume less Microsoft services than an ARM-based user— mainly because they have access to tons of free services right through the desktop.
What do you think? Is Microsoft’s RT licensing going to hold them back from appealing to many consumers?