Microsoft may cut Windows 8.1 prices by 70% - Business Standard ~ Electronic Gadgets

Just eight months after its launch, computer software giant Microsoft is reportedly planning to cut the prices of Windows 8.1 operating system by over 70 per cent for makers of low-cost computers and tablets. The move is mainly seen aimed at competing at cheaper rivals like Google, new agency Bloomberg said in a report on Saturday.

According to the report, manufacturers will be charged $15 to license Windows 8.1 and pre-install it on devices that cost less than $250 (around Rs 15,500), instead of the usual fee of $50. "The discount will apply to any products that meet the price limit, with no restrictions on the size or type of device," Bloomberg reported citing unnamed sources. A Microsoft India spokesperson decline to comment.

As per experts, the move could have multiple benefits for Microsoft such as helping it gain a larger market share in the fast-growing tablet computer business, where Windows is a smaller player compared to operating systems like Android. Especially in markets like India where Android commands over 90 per cent of the tablet market, this would help Microsoft to get some inroad to survive in the game.

"Their strength has always been in the PC segment, but with smartphones and tablets taking off the end users' demand from PCs, it is important for Microsoft to exist in these spaces. In tablets, the story on Windows is still very slow; they are just not there as yet, especially in India where the tablet market is around 3-4 years old," said Kiran Kumar, Research Manager with IDC.

About Windows 8.1

Released on August 27, 2013

Over 200 mn Windows 8 licences sold since launch

Rate of Windows 8 sales slower than Windows 7

MS' code name for Windows 8 was 'Windows Blue'

Includes Internet Explorer 11

Allows automatic app updates

Provides deeper integration of SkyDrive

Some believe that the price cut may provide some encouragement to original equipment manufacturers (OEMs) to look at the Windows 8.1 operating system, as the brand is widely considered to be safer and 'tested and proven'. In the desktop space, the price cut could encourage manufactures to look at making cheaper models, in turn leading to some revival in demand in the fading desktop business.

"Microsoft is basically looking to incentivise manufacturers to opt for Windows, mainly to compete with Android," said Vishal Tripathi, Principal Analyst with Gartner. "Though the $250 price band is too low, but they are basically telling manufacturers that if you can come up with a product in that segment, we are giving you an incentive. It is a good way to penetrate into the segment; however, one does contest the quality of sub-$250 tablets."

This price cut, which is limited to sub-$250 devices could be a follow-up to the 'starter edition' that Microsoft had offered with its Windows 7 version, which was exclusively for netbooks, S Rajendran, chief marketing officer at Acer said

"Probably this move is to provide some kind of a follow-up to the start-up edition," Rajendran said. "The tablet ecosystem is currently growing and maturing in India and Windows has a legacy of itself. So if a buyer is looking at a tablet for official use, Android is good, but Windows is certainly better," he added.

Additionally, the move could also be a precursor to Microsoft's plans to increase focus on device manufacturing, especially after the company acquired the handset business of Nokia for $7 billion. Various experts said, Microsoft could seriously get into tablets manufacturing going forward.

Microsoft had earlier said that it has sold over 200 million licenses of Windows 8 since its launch in 2012, which is a slower rate of adoption compared with Windows 7.

However, for India, most experts believe that the price point of around Rs. 15,500 is too low for a Windows-operated tablet or desktop.

"Windows is a slightly premium OS mainly because it is used for official needs and it has a legacy. If Microsoft starts encouraging manufacturers to bring tablets with Windows at such a low price point, they would be disrupting the market, there will be a huge impact," an analyst with a research firm said.

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