Yesterday Peter Klein, the CFO of Microsoft, took many questions and answered many things about Windows 8 at the Goldmann Sachs Technology and Internet Conference. We already covered his talks about 7-inch Windows tablets, but what about the company’s general stance on how Windows 8 is doing and where it is going?
When asked about Windows 8, Klein had the same generic response we’ve heard before: The Windows 8 ecosystem is still evolving.
Beyond that, Klein said that Microsoft has doubled the number of certified systems with Windows 8 and believed that going forward we will see lower priced tablets and ultrabooks based on Intel Clover Trail and other architectures. He mentioned specifically the price point of $599 and lower. In other words, things are slow going but are starting to pick up as pricing drops.
Some of Kleins comments seems to indicate that Microsoft realizes that Windows 8 devices (particularly with touch) are too expensive right now when compared to more mainstream tablet options out there running Android. The iPad is around the same price as the Surface, but it has a much more developed ecosystem and less risk involved.
When asked how Microsoft would further reduce costs of devices, Klein largely ignored the question. Instead he simply said, “What we aim to do is make sure we have the right set of experiences at the right price points for a given scenario or customer segment”.
Microsoft’s long-term strategy is pretty clear: bring Windows and their other products together under a more unified roof. We’ve already seen this with the Xbox getting a Modern-like UI, Windows Phone 8 and Windows 8 sharing the same core and other moves. We are going to likely see an even bigger push with a unification of the Windows Phone Store and Windows Store, and probably even a stronger push with the next Xbox.
Klein talks about this quite a bit. He mentioned that Microsoft is aiming for an ecosystem play that delivers a consistent experience across all devices and that they are getting “closer and closer every day”.
I agree that this is important for Microsoft. We are moving towards an age where people don’t want fourteen different computing devices with each fourteen only being able to do specific tasks. We want 1-3 devices that are highly compatible with one another and create a seamless, integrated experience.
Microsoft is on the right track, but honestly, it doesn’t matter without the right pricing structure. You can have a great unified experience but if consumers find it overpriced for the value it brings, it won’t matter.
Microsoft needs to start relying on its services more, and rely on software licensing profit less. They need to be able to work with partners to create low cost devices and then make their money back on the sale of apps and other services. Until they can do that, most consumers aren’t going to give them a chance.
Of course that’s just my opinion. Let’s face it though, Microsoft had to spend countless billions to truly break into the video game business. The same will likely need to be done if they want to truly release their vision for a unified experience across PC, mobile and living room entertainment devices.
What do you think, is Microsoft’s pricing structure for tablets and touch devices too high as it is, or not? Additionally, do you think they can deliver on their promise of a unified and consistent experience on all Microsoft products?
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