Microsoft Is About To Make An Epic, Greedy Mistake With Its Tablets

Steven Sinofsky signs booksSteven Sinofsky

Photo: Microsoft PDC via Flickr

Microsoft product managers are almost insanely confident about their Windows RT tablets. And they could stupidly kill a product that people are otherwise pretty excited about.Microsoft is planning on charging device makers the same price for the Windows RT software as they will charge for full fledged versions of Windows 8, says IDC market research analyst Tom Mainelli, who tracks the mobile components market.

We talked to Mainelli on the phone as he was flying back from an analyst conference with Redmond.

“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,” Mainelli told us.

Mainelli didn’t know the exact price Microsoft will charge but Mainelli said he believed $80-$85 was accurate. Those are the figures reported earlier today by Theo Valich at VR-Zone.

Windows RT tablets will run on ARM processors and will be different from Windows 8 tablets and PCs that run on Intel processors. They won’t run older Windows 7 software, for instance. They won’t be aimed at corporate users because they won’t include many standard Windows security and management features.

At that price, device makers will be forced to charge $500-$700 for Windows RT tablets. Microsoft will be including the metro version of Office with Windows RT. So in Microsoft’s mind, people will think they’re getting a bargain.

But the hardware manufacturers are ticked. As it stands now, there’s no way for them to get a version of the operating that doesn’t include Office for a lower cost, so they could price their tablet below the iPad.

If Microsoft forces its partners to charge over $500 for a tablet, it’s toast.

Device makers can get Android for free (even though Microsoft has gone after them with threats of lawsuits if they don’t pay per device licensing fees to Microsoft).

And unless Redmond pulls off a miracle and produces a tablet that’s so face-rippingly fantastic that it makes the iPad look like a turd, there’s no way people will chose the Windows tablet over the iPad for the same money. Apple defined this category. And as nice as Office is, the iPad and Android have a lot more apps available than the Windows 8 store.

Microsoft should WANT to compete on price, like it ultimately did with netbooks. Microsoft charged $15 for XP for netbooks. Linux was the free alternative and was chipping away at Windows. Once it lowered its prices, Microsoft grabbed control of the netbook market.

Now the netbook market has since been killed by the iPad.

If Microsoft is going to make a dent, then it has to lower the price for Windows RT.

Microsoft refused to comment on the OEM price.

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