Microsoft, the cornered animal in tablet space, lashes out by building their own tablet - or not?!?

What's going on with Microsoft in the tablet space? By now you know that Microsoft is building a version of Windows 8 for ARM-based tablets called "Windows RT.

What's going on with Microsoft in the tablet space? By now you know that Microsoft is building a version of Windows 8 for ARM-based tablets called "Windows RT." Several months ago I wondered what Microsoft would charge OEMs (HP, Samsung, etc.) for Windows RT. Charge too much, and these tablets can't compete against the iPad. Charge too little, and Microsoft loses big money.

Fast forward to last week, when it was revealed that Microsoft planned to charge OEMs $80-85 for the Windows RT license for ARM-based tablets. Business Insider quoted IDC analyst Tom Mainelli saying, "Product managers at Microsoft made it clear that they don't feel they should charge less for Windows RT running on ARM than for Windows 8 running x86."

Yikes!

I was traveling during the second half of last week, so I was originally planning on writing an article over the weekend about how crazy that price point is and how that means there's no way that Windows RT tablets will compete with iPads. But before I could publish that article, a new rumor surfaced that Microsoft themselves are planning to build and sell their own Windows RT-based tablets!?!

Double yikes!

Business Insider points out that in the tablet market, both Google and Apple don't have a model where the tablet maker has to license the OS. So this means that tablet makers will force Microsoft to drop their licensing prices or they'll just move to Android.

With Windows RT it's especially interesting since that OS will include a built-in version of Microsoft Office 15. If an ARM-based "tablet" has a keyboard and pointing device, now all of the sudden you've got Windows and Office for almost nothing. So what's Microsoft to do? Not let these things have keyboards? Will Office have a $400 mouse tax? No matter how you slice it, Microsoft is kind of screwed. (In the context of Windows RT and Office on ARM.)

So perhaps they're like a cornered animal who has nothing to lose by lashing out. If they don't create their own tablet they can sell for less than an iPad, what choice do they have? Although is competing on price really a "choice" anyway? Maybe they'll compete on Office? (If so, triple yikes—what a world we live in.)

Just think of all the unresolved questions that Microsoft building their own tablet will bring up, including:

  • Will Microsoft continue to license Windows RT to other OEMs? If so, how will they differentiate and message this in the market?
  • If you were a tablet maker, do you have ANY reason to build Windows RT tablets?
  • Will Microsoft have to PAY tablet makers to run their software? (Hey, it's a strategy they're trying for Windows Phone? ;)
  • Will third party tablet makers get a cut of the Windows Store content that users buy from their tablets?
  • Or what if this is all nonsense, and Microsoft is really just announcing a Windows Phone-powered Nook eBook reader?

What do you think?

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Wouldn't Microsoft be smart to take a hit on the OS licensing to get more people to their platform?  Can't they make up the different, plus some from the Windows Marketplace?  They must make a profit from everything sold there.


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Maybe that's where RIM's hardware will end up.


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I almost spit out my coffee laughing when I read the quote about MS PMs wanting to charge the same price for an x86 license. Seriously?


Sure, for x86 Windows 8 enterprise will keep  paying the price so they can manage the devices (whatever form factor they may be) in the same old way, but at TechEd they spoke of a vision where the RT tablets would be all of the BYOD devices that show up. So I guess they're supposed to all be made by MS, too?


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