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Report: Microsoft under price pressure to lower cost of Windows

updated 11:10 pm EST, Fri February 21, 2014

Considering discounts of up to 70 percent for low-cost device licenses

Having seen its share pummelled by mobile devices that continue to eat into traditional notebook and desktop PC sales, Microsoft is said to be looking at discounts to Windows licensing on low-cost hardware in an effort to regain marketshare, Bloomberg reports. Citing unnamed sources "familiar with the matter," the move is intended to fight back against the consumer move to tablets and smartphones as substitutes for much of what desktop and notebook PCs used to do.

According to the report, OEMs who make devices that sell for less than $250 -- very low-cost, usually very low-quality PCs -- will be able to preinstall Windows 8.1 for as low as $15 rather than the traditional $50, a discount of 70 percent. This will mostly benefit makes of cheap "hybrid" notebooks that can also double as tablets, as MS will no longer be restricting size or form factor as it has in the past, only requiring the low retail price. The sub-$250 devices also will not need to submit to logo certification, meaning they won't be required to have touchscreens or be approved by Microsoft.

The loss of Windows licensing income, one of the leading profit centers for the company, would hurt Microsoft in a big way with investors unless the company can make up for the discounts through additional sales in a flood of cheap devices. Critics question whether the discounts will have any effect on consumers moving to mobile devices as substitutes for most of the duties of traditional PCs -- both iOS and Android, the two leading mobile platforms, work well with Windows (and Macs) already, and there's little indication that consumers might move to re-adopt traditional PCs for general use.

Microsoft, despite strong attempts at reinventing its principle OS for mobile, has failed to find a significant audience for Windows Phone. Instead, it is increasingly relying on the still-vast but dwindling core Windows user base to sustain itself, even as PC shipments (and thus Windows license sales) drop. Google's Android, along with iOS and (with its most recent release Mavericks) OS X are all given to users for free.



By Electronista Staff
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Comments

  1. cashxx

    Fresh-Faced Recruit

    Joined: 04-13-09

    How about Free to match others??

  1. The Vicar

    Junior Member

    Joined: 07-01-09

    If this is true — note that for now it's still unconfirmed — this is a sign of major change from Ballmer. Recent Microsoft behavior is to react to shrinking market share (still huge, but smaller than before) by raising prices so as to create artificially rising profits.

    The big question, though — other than "is this true?", of course — is "will this pricing trickle down to consumers?" Will you be able to get a copy of Windows 8.1 Pro (i.e. "the version which makes Windows marginally less useless") for a price below $50? Even Windows 7 (as a non-upgrade package) is still in the $75 range for now.

  1. chucker

    Fresh-Faced Recruit

    Joined: 03-29-07

    If they made it free, how would they make any money?

  1. Lifeisabeach

    Fresh-Faced Recruit

    Joined: 05-25-10

    "If they made it free, how would they make any money?"

    By the magic of increased market share! Right? Uh...

  1. coffeetime

    Mac Enthusiast

    Joined: 11-15-06

    The culprit is Windows 8. It's neither a tablet nor a desktop OS and it drives consumers nut. They retreat to Apple where fine line is drawn.

  1. climacs

    Forum Regular

    Joined: 09-06-01

    "The culprit is Windows 8. It's neither a tablet nor a desktop OS and it drives consumers nut. "

    and that's why it was destined to fail. That's why Tim Cook made his comment about combining a toaster and a refrigerator.

  1. Charles Martin

    MacNN Editor

    Joined: 08-04-01

    Somehow I don't think a flood of cheap, poorly-made craptops/craplets are going to turn the tide for Microsoft, but maybe Windows 9 will reverse 40 years of disappointment and save the day!

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