lenovoIs Microsoft already becoming more pragmatic under new CEO Satya Nadella?

The company is reducing the price of Windows 8.1 for tablet and computer manufacturers by 70 percent, to $15, for devices that sell for less than $250, according to a report overnight by Bloomberg News, citing anonymous sources familiar with Microsoft’s program.

For computer users, the move could create what amounts to a new category of sub-$250 Windows tablets and potentially even notebooks. One big question: What will the quality be like?

It’s a key behind-the-scenes adjustment in the economics of the computer and tablet business, giving manufactures a new incentive to use Windows on low-cost machines. It comes as many of Microsoft’s longtime PC partners — including Acer, Samsung, HP, Dell, Acer and Lenovo — look to expand their lineups with new Chromebooks, low-cost machines (starting at $249) running Google’s Chrome OS. 

The move is not without risk for Microsoft’s business, which has historically benefitted from sizable Windows profit margins.

This is part of a broader effort by Microsoft to shore up its relationships with computer and device makers, even as it competes with them by making its own Surface tablets (and soon smartphones, as a result of its pending Nokia acquisition). Tami Reller, the former Windows executive who now leads Microsoft’s companywide marketing, outlined a series of changes in a recent Q&A at a Goldman Sachs technology conference.

“One of the consistent themes we’ve heard from our partners loud and clear, our OEM partners in particular is take friction out of the system for us, take friction out of the system, whether it’s certification requirements, whether it’s various other programs,” Reller said. “And we’ve done that. We have listened and we have moved as fast as humanly possible to remove some of that. And a lot of that is just happening now this spring.”

The idea is “to make it easy for them to build the types of devices on Windows that they want to build and be able to deliver those devices at the price points that they want to take them to the marketplace,” she said.

Bloomberg reports that devices that qualify for the lower-cost Windows 8.1 licensing won’t be required to complete Windows logo certification or be touch compatible.

Chromebooks gained steam over the holidays, with IDC citing them as one reason for strong sales by Samsung and Lenovo during the fourth quarter.

 

 

 

Comments

  • William Lawn

    OSX 10.9.1 was free, included a very Office like suite of software. Yeah the hardware is outrageous but it works, seamlessly with other Apple products.

    I’ll keep on doing it.

    It doesn’t happen very often though. Had my first apple product die. It was over 3 years old. I still have a laptop from the 2001 that works.

    • Guest

      Not really free. I tried to install OSX 10.9.1 “Mavericks” on my computers (one Apple, one Lenovo) and I was rudely told that neither would support it. I think it’s ridiculous that a “free” upgrade requires the purchase of a $700 brand new computer.

      @Apple, thoughts?

      • William Lawn

        Rudely?

        You mean your old computer can’t handle the new OS?

        Kind of the history of them, isn’t it?

        • Guest

          Yup, pretty ridiculous. If you look at the list of Mavericks features, there’s nothing that requires a 2.6 GHz Intel Core 3 Duo 2 whatever processor. I should be able to run it on any hardware I choose, and for free.

          • William Lawn

            Mine is 1.3 I5, seemed to work fine.

            Drama queen.

          • Guest

            I have a 2.2 GHz Core 2 Duo and 4 GB rams. @Apple, would you care to comment about how I’m not allowed to run Mac OS X 10.9.1 “Mavericks” on a compu with 900 more megahertzes than William’s?

          • clibou

            I have a 2008 2 Ghz core 2 duo and 2 GB rams. Mavericks upgrade took about 40 mins. Runs fine.

          • Guest

            I bought my comp in 2008 as well, and @Apple won’t even let me start the upgrade process! This is unacceptable.

            @Apple @AppleSupport @Scobleizer @lockergnome I’m calling you out. Please join the conversation to protect Apple’s brand integrity.

  • Guest

    Excellent strategy. No one makes a $250 computer that does even a small fraction of the functions that Windows 8.1 offers. I approve of this strategy.

  • clibou

    In Costco the build quality on Chromebook feels solid compared to similar plasticy Windows laptop. Hard to compete with a free licence. More changes needed to level up.

    • http://www.facebook.com/sangeet.khatri Sangeet Khatri

      The same guys who make Chromebooks also make Windows laptops. Nuff said.

    • SPM

      It isn’t just the Windows licensing cost – Chromebooks can outperform Windows with devices with less mass storage, less RAM, and less processing power.

  • http://www.christopherbudd.com Christopher Budd

    It’s interesting to look at this along with some of the reports of possible changes to Windows 8.1 with update 1 (making boot to desktop the default, adding back more of a start menu). If those reports are true, then taken together I read that the execs are getting truly worried about the future of Windows.

    • Quagmire

      Of course they are worried. They maneuvered themselves into a real dilemma. If MS continues the Metro-path with Windows 9 and potentially lands another failed OS they risk becoming entirely irrelevant to the consumer market. If they revert Windows 9 to be a continuation of the desktop tradition of Windows 7 in Look & Feel they admit defeat in mobile and effectively get stuck in the past. MS desperately wants to move on into and become a big player in mobile, but somehow the W8 Modern/Metro UX is not too well perceived by the masses. And yes, while 200 million copies is huge for any other company, for MS’s business model it is a disaster.

      • Phillip

        Not a disaster. Just sluggish. Considering the PC business decline as a whole, the sales would always be below where W7 was at this point. And while they would’ve expected to still be closer, 200M at this point is slow, but not disaster territory.

        Releasing W9 will help solve a lot of problems, because it’s all marketing. W7 wasn’t dramatically different a user experience from Vista, aside from some annoyances better contained. But Vista got saddled with a bad rep early on (deservedly so) and so W7 was a success.

        Although I enjoy the W8 metro approach on both my touch and non-touch laptops, I do think the changes of 8.1 and the upcoming update should settle desktop users’ complaints. It’ll virtually make the desktop experience no different from W7 even from initial boot-up. While W8 might already be tainted, so long as they don’t backslide on this with W9 I don’t see it being a major problem.

  • http://www.facebook.com/sangeet.khatri Sangeet Khatri

    Does that mean that now I would be able to purchase an OEM copy of Windows for a cheaper price than the $100 they currently come at?

    I am a hardcore Linux user but If the price of Windows was $15 or even $30, then I would not mind buying one copy of Windows since that would allow me to play games that are not availalbe on Linux.

    Microsoft needs to understand this, not everyone can afford a Windows License when his budget for overall build is something like $300. And while most people get away with piracy, but not everyone likes pirating, I don’t. Hence in an emerging country like India and China Windows is never going to sell until and unless they reduce the price of it.

    $100 is way too much for an average person to afford in India when the average sallary is something around $200-$250. Even middle class families have sallary of $400 to $500, hence it becomes very difficult to spend 20%-50% of your whole sallary just for a piece of software, so they choose the pirate t he software for free instead which is really plain wrong.

    Fun Fact : Had piracy not been there and everyone had to pay for licensing, then Linux would have had a lot more desktop market share than what it is currently having. Microsoft does nothing much against piracy because it knows that if they take serious actions to stop piracy in India/China, then people will stop using Windows and move to Linux, because let’s face it. They don’t have a tonne of money in their pockets to buy software. Hence MS chooses to not enforce strict piracy control just to maintain its market share. MS knows that people who are loyal would buy the license anyways.

    This is my friends, the main reason why Linux has never been able to grow, just because of piracy. Believe it or not, but having been living in India from ever I can definitely confirm this.

    • priceless

      Hm, having every single of my Laptops come with a legal copy of Windows (including W7 & W8), for me the very first thing has always been to wipe the HD and install Linux instead. I wish I could just donate my legal and purchased copies to someone in India or return the license to MS. For my needs Linux is simply a FAR better OS than Windows. Truth be told, MS could pay me $100 to use Windows 8 and I still wouldn’t, but then again I am a developer, not a gamer. On the other hand I believe that MS Office happens to be a fantastic product, although it’s not at all critical to my work/life.

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