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Microsoft to reportedly cut Windows pricing by 70% as Apple, Google eat PC marketshare

post #1 of 122
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As the mobile device market -- led by device from Apple and Google -- continues to devour traditional PC marketshare, Microsoft is reportedly looking cheaper Windows licensing fees in a bid to stop the hemorrhaging.

Windows 8.1


Citing people familiar with the matter, Bloomberg reports Microsoft will slash Windows licensing fees by 70 percent for low-cost hardware manufacturers in an attempt to regain marketshare lost to devices running iOS, Android and Chrome.

Under the supposed pricing scheme, OEMs will pay $15 to preinstall Windows 8.1 on devices that sell for less than $250. The fee is down from a traditional rate of $50 per device. Further, Microsoft will not impose restrictions on hardware size or form factor as long as the final product meets the required low retail price.

In addition to the lower fees, Microsoft will also relax its licensing standards by allowing manufacturers using the cheaper rates to forego logo certification. Usually, hardware compatibility is vetted by the Redmond, Wash., company. In addition, these sub-$250 products do not have to be touch enabled.

Recently-appointed Microsoft CEO Satya Nadella is said to be pushing for accelerated development and launch timelines for new Windows devices. The rumored licensing price cuts may be part of that plan.

Friday's report follows rumors that Microsoft is "seriously considerding" allowing Android apps to run on both the PC and mobile iterations of Windows. The move would allow the Windows maker to tap into Google's immense share of the mobile device market.
post #2 of 122
These might stave off weakening PC sales and market share slightly but it doesn't resolve their core issues. I hope to see something more radical from Nadella this year but admittedly it could take years before a new direction might make it to market. It's a good thing for them they enough money to bleed for at least another decade.

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post #3 of 122
Originally Posted by AppleInsider View Post

In addition to the lower fees, Microsoft will also relax its licensing standards by allowing manufacturers using the cheaper rates to forego logo certification.

 

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​- The Architect, "The Matrix Reloaded"

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post #4 of 122
Originally Posted by SockRolid View Post

"There are levels of survival we are prepared to accept."

​- The Architect, "The Matrix Reloaded"

 

Can’t thumb that up enough. Speaks volumes about where Microsoft is as a company these days.

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post #5 of 122
Still $15 too high...
post #6 of 122
so... just so i am clear- they are not holding a minimum level anymore? so any crap device that can barely run a .dll filled menagerie that will give a user an ugly experience is now ok?

i for one, am glad that there is a companies like apple and lenovo who offer computers that have a high standard for its components so as to not release a $100 laptop that is buggered down in a month providing the a 'great' windows experience.
post #7 of 122

Why don't they just focus on making their software worth a fair fee? I think cost is part of the issue, but more so the OS itself.

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post #8 of 122
The title gives a very different idea than the article. "Microsoft to reportedly cut Windows pricing by 70%..." gives a different vision than "Microsoft will slash Windows licensing fees by 70 percent for low-cost hardware manufacturers". As a PC builder I have a lot of interest in one of those. The other, I have none.
post #9 of 122

I would say that they finally have someone who has enough humility to honestly attack their problems head on.  It says something that it took firing the last CEO jus to get to the point where they are immediately responding to market forces.  Apples change from a has been to the largest company in the world was driven by a ruthless blood letting that killed all that was still good about the old Apple so the new Apple would have the resources to build better products.  

 

If Intel was selling their base chips for $15- $20 a pop you would see some real competition for Apple and Android.  Part of the problems for PC OEM"s has been so little room to battle over price.  Microsoft should have made the price a percentage of the list price except for their top 2 versions.  They need to slowly kill windows and commit to building a better operating system.

 

I have been repeating my self on several websites, but the underlying problem is not just Apple making a better product.  The underlying problem is Moore's law is dying rapidly.  Back in 2002 Intel lost the ability to ramp up frequency with each new process node.  We have been stuck at 2.5 Ghz since 2002 and nothing anyone has done has changed this.  The PC has gone from being an expensive item that needed to be replaced every 2 years to something more akin to a TV.  I am typing this on a 5 year old Apple laptop which was the bottom of the Macbook Pro line when it was released in 2008.  The only function that has gone out of date is the graphics card for gaming.  Graphics cards have been able to stall their problems because of the parallel nature of their work load.  Multi processors can actually make a significant improvement over time.  Microsoft has no longer been able to count on obsolescence to force the replacement of desktops.  It is no coincidence that Windows XP is still around since it was the system in place when frequency his the wall at 2.5 Ghz in 2002.

 

Mobile has been able to catch up to the PC market based on the lower power envelope that allowed the frequency improvements to continue along with the rising transistor counts.  In 2002 ARM was rocking a 13 Mhz chip.  Those inexpensive and very power efficient chips have come a long way in 12 years. 

post #10 of 122
Originally Posted by Sam Graves View Post

The title gives a very different idea than the article. "Microsoft to reportedly cut Windows pricing by 70%..." gives a different vision than "Microsoft will slash Windows licensing fees by 70 percent for low-cost hardware manufacturers". As a PC builder I have a lot of interest in one of those. The other, I have none.

 

Just be glad if the Windows Tax (tm) is slashed.

Is that the one you're interested in?

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post #11 of 122
Quote:
Originally Posted by SockRolid View Post
 

 

Just be glad if the Windows Tax (tm) is slashed.

Is that the one you're interested in?

 

No, it's the other one. Why would the OP (or anyone else) be interested in the price of Windows on junk hardware?

post #12 of 122
Quote:
Originally Posted by Macnewsjunkie View Post
 

I would say that they finally have someone who has enough humility to honestly attack their problems head on.  It says something that it took firing the last CEO jus to get to the point where they are immediately responding to market forces.  Apples change from a has been to the largest company in the world was driven by a ruthless blood letting that killed all that was still good about the old Apple so the new Apple would have the resources to build better products.  

 

If Intel was selling their base chips for $15- $20 a pop you would see some real competition for Apple and Android.  Part of the problems for PC OEM"s has been so little room to battle over price.  Microsoft should have made the price a percentage of the list price except for their top 2 versions.  They need to slowly kill windows and commit to building a better operating system.

 

I have been repeating my self on several websites, but the underlying problem is not just Apple making a better product.  The underlying problem is Moore's law is dying rapidly.  Back in 2002 Intel lost the ability to ramp up frequency with each new process node.  We have been stuck at 2.5 Ghz since 2002 and nothing anyone has done has changed this.  The PC has gone from being an expensive item that needed to be replaced every 2 years to something more akin to a TV.  I am typing this on a 5 year old Apple laptop which was the bottom of the Macbook Pro line when it was released in 2008.  The only function that has gone out of date is the graphics card for gaming.  Graphics cards have been able to stall their problems because of the parallel nature of their work load.  Multi processors can actually make a significant improvement over time.  Microsoft has no longer been able to count on obsolescence to force the replacement of desktops.  It is no coincidence that Windows XP is still around since it was the system in place when frequency his the wall at 2.5 Ghz in 2002.

 

Mobile has been able to catch up to the PC market based on the lower power envelope that allowed the frequency improvements to continue along with the rising transistor counts.  In 2002 ARM was rocking a 13 Mhz chip.  Those inexpensive and very power efficient chips have come a long way in 12 years. 

 

They need to "slowly kill windows"? You mean, they should slaughter one of their two cash cows, for a product that does not yet exist? The bloodletting whereof you speak at Apple happened when Apple was a marginal player, at best. MSFT, with all their problems, remains immensely profitable.

post #13 of 122
No matter how cheap u make manure, it's still manure.
post #14 of 122
Now if they sent some thugs door to door saying: "Give us $15 or we'll install Windows on your computer", they might make some money. I know I couldn't pay fast enough!
post #15 of 122

I think the obvious consequence of this move is that PC makers will double down on the bloatware. PC makers get paid for each piece of crapware they put on the computers they sell, and the easiest way to get their crap hardware under a $250 max limit is to load up on the crapware. The user experience for these machines is going to get even worse than it is now, something that is only going to damage the "Windows" brand further in the long term.

post #16 of 122

The main problem with Windows 8.1 is not the price, it's all the tablet stuff that makes it hard to use on a desktop computer. If you are primarily selling to corporate customers you can make stuff hard to use and that's ok, they will just send their staff on training courses, but if you're selling to consumers it has to be easy. Microsoft should go on an "easy" crusade not a price crusade.

post #17 of 122
Quote:
Originally Posted by SolipsismX View Post

These might stave off weakening PC sales and market share slightly but it doesn't resolve their core issues. I hope to see something more radical from Nadella this year but admittedly it could take years before a new direction might make it to market. It's a good thing for them they enough money to bleed for at least another decade.

This is nothing more than to combat rising sales of Chromebooks.  For PC's costing more than $250 or for those upgrading from a previous version of Windows, it's business as usual.  This is nothing more than a token gesture. 

post #18 of 122
Quote:
Originally Posted by AppleInsider View Post

As the mobile device market -- led by device from Apple and Google -- continues to devour traditional PC marketshare, Microsoft is reportedly looking cheaper Windows licensing fees in a bid to stop the hemorrhaging.

Citing people familiar with the matter, Bloomberg reports Microsoft will slash Windows licensing fees by 70 percent for low-cost hardware manufacturers in an attempt to regain marketshare lost to devices running iOS, Android and Chrome.

Under the supposed pricing scheme, OEMs will pay $15 to preinstall Windows 8.1 on devices that sell for less than $250. The fee is down from a traditional rate of $50 per device. Further, Microsoft will not impose restrictions on hardware size or form factor as long as the final product meets the required low retail price.

In addition to the lower fees, Microsoft will also relax its licensing standards by allowing manufacturers using the cheaper rates to forego logo certification. Usually, hardware compatibility is vetted by the Redmond, Wash., company. In addition, these sub-$250 products do not have to be touch enabled.

Recently-appointed Microsoft CEO Satya Nadella is said to be pushing for accelerated development and launch timelines for new Windows devices. The rumored licensing price cuts may be part of that plan.

Friday's report follows rumors that Microsoft is "seriously considerding" allowing Android apps to run on both the PC and mobile iterations of Windows. The move would allow the Windows maker to tap into Google's immense share of the mobile device market.


Every ine of those paragraphs predicts something good for Apple in the near future. Ballmer's parting gift to Apple has been Windows 8.
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post #19 of 122
The cost of Windows has made it very hard to build and sell PC's competitively. The big brands get it cheaper and the small stores are forced to pay $90 wholesale for a Windows7 license. As a result, small stores do not sell as many units, and often repair vs replace units. If they made more money selling new units, more new units would be sold. Microsoft needs to lower the cost to all customers.
post #20 of 122

Geez these sub-$250 computers will be built so horribly, I mean more so than usual.

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post #21 of 122
If you cut the cost of windows by 70% how many more units must you sell to break even? Ponder that for a moment.
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post #22 of 122
Quote:
Originally Posted by BeltsBear View Post

The cost of Windows has made it very hard to build and sell PC's competitively. The big brands get it cheaper and the small stores are forced to pay $90 wholesale for a Windows7 license. As a result, small stores do not sell as many units, and often repair vs replace units. If they made more money selling new units, more new units would be sold. Microsoft needs to lower the cost to all customers.

 

Well, in that case they have a lot more lowering to do in the OS and Applications area with OS X and iWorks being free.

PCs are already cheap.  I think the Windows 8 UI needs to change.  The phone UI alienated a lot of people on the desktop.

 

Businesses still use Windows XP and Windows 7 although Virtual Desktop Infrastructures (VDI) have replaced a lot of physical desktops.

Many home users have discovered the Mac and have paid more for it because it is superior in many ways.  It will be hard to get them back.

 

If you take a close look at a typical $300 Windows Laptop or desktop, it is an absolute disaster.  The vendors have so much useless, annoying and crapy trial software installed, it is a frustrating experience for the users who have no idea how to uninstal them.  Not to mention the Frankenstein Windows 8 environment and the crapy explorer web browser.

 

Solution:  Buy a Mac and be happy.

post #23 of 122
Quote:
Originally Posted by snova View Post

If you cut the cost of windows by 70% how many more units must you sell to break even? Ponder that for a moment.

 

0.

 

Window is essentially a tax with no cost associated (The R&D is already expended, there is a few cents for support).

there is some costs with software directly sold to customers, but not in this case, it is the manufacturer that support them.

post #24 of 122
How about individual licenses? They should also be $15.
post #25 of 122

So MS are saying 'hey we don't give a shit what you install our software on, we trust you know what you're doing'. 

post #26 of 122
Quote:
Originally Posted by SockRolid View Post

"There are levels of survival we are prepared to accept."
​- The Architect, "The Matrix Reloaded"

Awesomost.

Post.

Ever!
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post #27 of 122
Quote:
Originally Posted by revenant View Post

so... just so i am clear- they are not holding a minimum level anymore? so any crap device that can barely run a .dll filled menagerie that will give a user an ugly experience is now ok?

i for one, am glad that there is a companies like apple and lenovo who offer computers that have a high standard for its components so as to not release a $100 laptop that is buggered down in a month providing the a 'great' windows experience.

What you are writing about will kill Windows faster than any other outside factors. It may not effect enterprise much, at first, but it will make the Windows experience so awful it will have a serious effect on sales. And to think, Microsoft is so desperate already that they are considering slaughtering one of the two sacred corporate cows!!
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post #28 of 122

Exhausted, the old cow can no longer produce usual quantities ....

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post #29 of 122
Quote:
Originally Posted by lukefrench View Post

Quote:
Originally Posted by snova View Post

If you cut the cost of windows by 70% how many more units must you sell to break even? Ponder that for a moment.

0.

Window is essentially a tax with no cost associated (The R&D is already expended, there is a few cents for support).
there is some costs with software directly sold to customers, but not in this case, it is the manufacturer that support them.

Dude that's one awesomely simplified view of expenses of a software company. Ship the code and then the next quarter expenses are zero. Lol. That's great.
Edited by snova - 2/22/14 at 1:37am
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post #30 of 122
"The move would allow the Windows maker to tap into Google's immense share of the mobile device market"

Not necessarily.
post #31 of 122

Great move! Windows will be even more associated with crappy, low end hardware and by making them run Android - what's the point of developing for Windows? Just make IOS and Android versions and be done with it. Goodbye and good riddance, Windows.

post #32 of 122

I can hear it now: "Android apps running on Windows is key to newfound computer malware/virus infections. Report at 11."

post #33 of 122
Quote:
Originally Posted by snova View Post


Dude that's one awesomely simplified view of expenses of a software company. Ship the code and then the next quarter expenses are zero. Lol. That's great.

 

The marginal cost of the additional copies is almost 0 for microsoft, because those costs are supported by the hardware manufacturer. Now you need to repay the investments  in R&D and such, but that is another story. What microsoft do here is reducing his profits and its future R&D possibilities.

 

Selling software directly to customer has many costs, including distribution, advertisements and such, but selling to EOM is costs fixed.

 

I think it is not a bad idea, but dropping the min hardware specs is as it will only renew the race to the bottom, making the low end barely capable  to run Windows.

post #34 of 122
Quote:
Originally Posted by lukefrench View Post

The marginal cost of the additional copies is almost 0 for microsoft, because those costs are supported by the hardware manufacturer. Now you need to repay the investments  in R&D and such, but that is another story. What microsoft do here is reducing his profits and its future R&D possibilities.

Selling software directly to customer has many costs, including distribution, advertisements and such, but selling to EOM is costs fixed.

I think it is not a bad idea, but dropping the min hardware specs is as it will only renew the race to the bottom, making the low end barely capable  to run Windows.

Windows being sold to manufacturers is not a tax with zero costs associated. That makes it sound like because it's all software, it's completely free. If you want to know how much it costs to make windows, look at their revenue versus profit.

Reminds me of how people say the iPhone 5s only costs a few more dollars to make then the iPhone 5c. Innovation costs money. Putting the fingerprint tech in the iPhone 5s cost Apple hundreds of millions just to purchase authentec, let alone working it into their operating system and hardware.
post #35 of 122
Quote:
Originally Posted by CanukStorm View Post
 

This is nothing more than to combat rising sales of Chromebooks.  For PC's costing more than $250 or for those upgrading from a previous version of Windows, it's business as usual.  This is nothing more than a token gesture. 

 

That sounds familiar...

 

Wasn't Linux making its way into the PC market when netbooks first came out? Didn't Microsoft re-release Windows XP and drop the price to push back Linux?

 

A Chromebook is nothing more than a repurposed netbook that's even more limiting in its capabilities. They'll die faster than netbooks did. There's no reason for Google to develop a desktop OS, why? Because they already make the lion's share of advertisement dollars on the desktop.

 

Microsoft needs to drop "Windows Everywhere" and follow Apple's playbook, write a separate OS that works for mobile.


Edited by mjtomlin - 2/22/14 at 6:32am
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post #36 of 122
Quote:
Originally Posted by AppleSauce007 View Post
 

 

Well, in that case they have a lot more lowering to do in the OS and Applications area with OS X and iWorks being free.

PCs are already cheap.  I think the Windows 8 UI needs to change.  The phone UI alienated a lot of people on the desktop.

 

Businesses still use Windows XP and Windows 7 although Virtual Desktop Infrastructures (VDI) have replaced a lot of physical desktops.

Many home users have discovered the Mac and have paid more for it because it is superior in many ways.  It will be hard to get them back.

 

If you take a close look at a typical $300 Windows Laptop or desktop, it is an absolute disaster.  The vendors have so much useless, annoying and crapy trial software installed, it is a frustrating experience for the users who have no idea how to uninstal them.  Not to mention the Frankenstein Windows 8 environment and the crapy explorer web browser.

 

Solution:  Buy a Mac and be happy.


And that is why (and I know people who want Microsoft to fail would rather not see this) building $499 PC's with no crapware and Windows 7 is what Microsoft should encourage.  Most big vendors do not do that, it is either Windows 8, crapware loaded or weak.   But paying Microsoft $90 wholesale for Windows 7 makes it turn into a $599 PC that sells less. 

 

Sure, Apple is better, for sure in software, often in hardware.  I admit that.  But a properly setup quad core 8gb/1TB Windows 7 machine with passwords and non-admin user accounts is not bad.  Microsoft has a unnatural want to sell Windows 8 when they make just as much or more on Windows 7.   This is when the PR/marketing department has more weight then the accounting department. 

post #37 of 122
Quote:
Originally Posted by aussiepaul View Post

Still $15 too high...

Even if that was what MS paid the user! 1biggrin.gif
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post #38 of 122
Quote:
Originally Posted by mjtomlin View Post

That sounds familiar...

Wasn't Linux making its way into the PC market when netbooks first came out? Didn't Microsoft re-release Windows XP and drop the price to push back Linux?

A Chromebook is nothing more than a repurposed netbook that's even more limiting in its capabilities. They'll die faster than netbooks did. There's no reason for Google to develop a desktop OS, why? Because they already make the lion's share of advertisement dollars on the desktop.

Microsoft needs to drop "Windows Everywhere" and follow Apple's playbook, write a separate OS that works for mobile.

As I see it though, Googles problem exactly is what you say (my input in brackets) . .... "why? Because they (Google) already make the lion's share of (their) advertisement dollars on the desktop."

The 'desktop' and it's earning potential for Google's business model is only on the web, html, port 80 and all that good stuff. Meanwhile, Apple with the lion's share of internet mobile traffic by a massive majority, bypass the web entirely other than for Safari usage and even then without Flash. Almost everything else uses the internet without traditional web browsing. That's what Apple's mobile Apps are all about. That is the paradigm shift Steve initiated and no one saw coming ( remember Apple being laughed at for dropping Flash and starting their own iOS ad system for app developers) . Google's ad strategy is effectively shut out of the main (Apple's) mobile market. Of course they have a gazillion Android bits of junk out there but no one uses them on the internet it would seem from all the data.

Microsoft has the exact same problem once the sale of PC boxes fades as it will, and they don't even have what Google has, a mobile success story of sorts.
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post #39 of 122
"Grandpa, what's Windows?"
"Oh my, that was a long time ago. Where did you hear about it?"
"Some A.I.'s on the Neural Link."
"Oh don't you worry about that. Windows won't hurt us any more."

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post #40 of 122
Quote:
Originally Posted by hawkse View Post

Great move! Windows will be even more associated with crappy, low end hardware and by making them run Android - what's the point of developing for Windows? Just make IOS and Android versions and be done with it. Goodbye and good riddance, Windows.

Microsoft is frequently fixated by beating a competitor, that they quickly forget who's really eating their marketshare lunch.

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