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

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  • Reply 61 of 127
    Quote:

    Originally Posted by mstone View Post

     

    MS has always been focused on enterprise. Many people bought Windows PCs for their home because they were already familiar with it from using them at work. With Apple targeting the consumer so successfully, MS didn't want to miss the opportunity for a slice of that market, but they are just not consumer friendly.

     

    MS should stay focused on enterprise like Oracle does. They could certainly make a lot of IT departments happy if they cut the price of Windows 7 Professional in half.

     

    I recently built a custom computer for a new member of our office. I installed Win 7 Pro which is a pretty decent OS so long as the end user doesn't have to do a lot of interaction at the OS level. By this, I mean, once you are in your application window everything goes fairly smoothly.

     

    Windows itself is just not as polished as OS X. One example of Windows clunkiness is searching. It is slow and often doesn't find stuff that is actually there. OS X has awesome searching capabilities. Another example I ran into which demonstrates the lack of polish was loading fonts. From the OTE font folio there are read me files in the folders. If you select all then right click to install the fonts it generates an error because the read me file is not a font. Conversely on OS X if you do the same thing it just ignores the read me file because it knows it is not a font. That is the elegance of OS X.

     

    Redmond really needs to fix their copy machines.


     

    If you do IT stuff, you probably know much better than me that the license cost of Windows is a small fraction of the cost of running Windows -- the support and training costs dwarf the cost of the OS, so:

    1. It would not be useful for MSFT to drop the price -- the (relative) savings to enterprise consumers would be miniscule.

    2. Unfortunately, even improving the OS is not a clear win, because "improving" often means "changing", and the customers tend to not like change (in particular, because it adds to the (re)training costs.

  • Reply 62 of 127
    MarvinMarvin Posts: 15,320moderator
    lukefrench wrote: »
    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.

    In 2013, after Windows 8 had been finished, Microsoft made $78b in revenue and net income of $22b so their net margin is far from 100% once their software reaches deployment. They have over 100,000 employees. They don't just fire them and then hire them back when they need to put out a new version of Windows. There are ongoing marketing costs to let people know that Windows exists and expenses to bribe retail staff to convince customers to buy a Microsoft product instead of a knowingly superior product. They have stores to run too. The Windows division alone had $10b in operating expenses in 2013 out of $19b revenue.

    With the product price threshold of $250, this move shouldn't affect their current revenue much as they have insignificant marketshare at the low end anyway. This is a desperate move to gain marketshare in lower-end products. It also shows they don't know what the problem is with Windows. For Microsoft to win, they don't need Android to fail, they just need to do a better job. They don't know how to do a better job in mobile.

    It actually starts with hardware, no doubt why they tried their move with Nokia. When you look at the distribution of hardware units, it's massively dominated by Samsung and Apple. Microsoft isn't a hardware company, Nokia was a low quality hardware company. They need multiple leading mobile hardware manufacturers to push Windows as the default or at least premium OS. It's not appealing for manufacturers to do this now in mobile though because they already lost the apps race. Like what happened with Windows on the desktop years ago, it was the combination of the hardware price, the software compatibility and existing userbase. When retailers were asked about Mac support, we heard the phrases 'everybody uses Windows', 'Macs are overpriced', 'there's more software on Windows'. This perception kept building to give Microsoft 90% marketshare. They were too late in mobile and this has now happened with iOS and Android. What about Windows mobile support, well it's the same answers: 'everybody uses iOS and Android', 'Windows mobile products are overpriced vs Android products', 'there's more software on iOS and Android'. They'll try to fix the 2nd one, Android app compatibility might fix the 3rd and with those fixed, it will take time to fix the 1st but they have a mountain to climb and they are at the bottom.

    The biggest problem they have is that the solutions to their problems only benefit them. In order for their partners to adopt their software, there has to be a benefit for them too. With Windows, the benefit was having a platform a lot of manufacturers used and a lot of developers supported. The manufacturers already have that. They need to offer something Android doesn't rather than the same things it already does. They can do this to an extent with exclusive software that is compelling. Office isn't compelling enough but exclusive games from their Windows/XBox partners might help. I don't really think that they will be able to offer anything that would be more compelling to hardware manufacturers at this point.
  • Reply 63 of 127
    Quote:
    Originally Posted by Gordon Werner View Post

    Also, the bloat ware that comes installed on most if not all PCs is one of the main reasons why PCs have been relatively cheap.

    And this is where Microsoft is losing mindshare, even in the cheap PC segment. No matter how cheap a PC you can buy, it's no use if you can't use it! I've experienced so many occasions where I've finally convinced cheapskates to pay up and get something a bit more expensive and in the end getting thanked since their computer works so much better than what they've been used to.

     

    Why Microsoft would even want to *allow* installation of Windows on a machine infested with crapware is beyond me. That, and the inclusion of ads in Windows 8 apps, is really telling. It's about volume over quality.

     

    Consider SJ on the netbook: "We don't know how to make a $500 computer that's not a piece of junk, and our DNA will not let us ship that".

     

    This move will only hurt the Windows brand.

  • Reply 64 of 127
    Quote:
    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.

    Problem is with that scheme is  "Microsoft will slash Windows licensing feesby 70 percent for low-cost hardware manufacturers", not end users that would like to buy one off the shelves.  To us it is still $200.00 for a current copy of windows.  It does the end user no good.  Microsoft is a dead company walking, and especially if they allow droid apps to run on there phones.  With Apple and Gurgle giving OSX and Crome away for free Microsoft is being hit from both sides in the consumer market.

  • Reply 65 of 127
    snovasnova Posts: 1,281member
    In 2007 Microsoft CEO Steve Ballmer on the iPhone, during an on-stage interview at the CEO Forum with USA Today’s David Lieberman:

    There’s no chance that the iPhone is going to get any significant market share. No chance. It’s a $500 subsidized item. They may make a lot of money. But if you actually take a look at the 1.3 billion phones that get sold, I’d prefer to have our software in 60 percent or 70 percent or 80 percent of them, than I would to have 2 percent or 3 percent, which is what Apple might get.

    Great to see Microsoft still believes in this approach. We are gonna fight market share losses with lower price. Ok. Keep on trucking.
  • Reply 66 of 127
    Quote:

    Originally Posted by dasanman69 View Post





    What was Windows CE then?

     

    Wasn't that a competitor to the original Palm OS?

  • Reply 67 of 127
    Wasn't that a competitor to the original Palm OS?

    Yes and it was a OS specifically designed for mobile. Making a separate OS isn't something new nor foreign to MS as the OP seemingly suggests.
  • Reply 68 of 127
    Quote:

    Originally Posted by Macnewsjunkie View Post

     

    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.  


    Actually current core i5's and 7's and Xeons all have processors that run above 3Ghz some up to 3.9Ghz.  Intel slowed down the Megahertz Race on its own to focus on power consumption.  The current plan they have in place is that for every 100 Megahertz rise they reduce power consumption by 1%.  They are doing just that with the only processes in the world that can produce 10 nanometer wafers. And there working on 4nm and 2nm currently. As for there mobile processors, the Bay Trail currently runs at 2 to 3 Gigahertz.

  • Reply 69 of 127
    Quote:
    Originally Posted by snova View Post





    You make a great case for getting into the flip phone and netbook market. Not sure it's a wise business move however. Ask Nokia and Acer.

    If the average computer user doesn't do much more than browse the web and compose the occasional text document, then google's chrome strategy would seem spot on. Google seems to be trying to turn chrome from just a browser into a more general application platform that can satisfy the computing needs of the most users. Why else would they be pushing chrome apps (http://developer.chrome.com/apps/about_apps)? Think about the ad possibilities if Google can get the majority of people to spend most of their computer time in chrome.

  • Reply 70 of 127
    snovasnova Posts: 1,281member
    Quote:
    Originally Posted by Marvin View Post



    With the product price threshold of $250, this move shouldn't affect their current revenue much as they have insignificant marketshare at the low end anyway. This is a desperate move to gain marketshare in lower-end products.

    Marvin,

     

    While I agree on the short term assessment,  lets entertain Microsoft's strategy from a long term point of view.  

     

    Lets pretend for a moment that by lowering the price to 30% of current price, they are able to increase the number of cheap PC's by over 3.33x. This would yield the same revenue they are getting now on those computers.  For this new pricing strategy to be worthwhile, lets say they need to grow unit sales by 4x from current levels. 

     

    First off,  I'm not sure its realistic to expect to grow their low end market by 4x.  However, lets say they do.  What does this accomplish from an overall PC market point of view?  Are they going to increase overall PC unit market cap? If they pull off a miracle and do, what's the effect to the overall bottom line?

     

    I recall people were asking what iPad sales were going to do to the cannibalization of Mac sales.  While the iPad to Mac relationship is a bit unclear to me, I think  cheap PC to higher end PC are more directly related.   If low end PC's units take off and start shipping 4x+ fold, no doubt this will affect Microsoft's margins on higher end PC.  

     

    Just what is Microsoft's strategy for increasing overall revenue?  This seems like robbing Peter (high end) to pay Paul (low end)  approach because the PC market is capped.  I mean, how many laptops does one person need?  Hope there is some genius market analysist at Microsoft who has an idea how this gonna pay out long term and not just make things even worse at and accelerated rate.  

     

    Seems like a brilliant race to the bottom to me.

  • Reply 71 of 127
    snovasnova Posts: 1,281member
    Quote:
    Originally Posted by d4NjvRzf View Post

     
    Quote:
    Originally Posted by snova View Post





    You make a great case for getting into the flip phone and netbook market. Not sure it's a wise business move however. Ask Nokia and Acer.

    If the average computer user doesn't do much more than browse the web and compose the occasional text document, then google's chrome strategy would seem spot on. Google seems to be trying to turn chrome from just a browser into a more general application platform that can satisfy the computing needs of the most users. Why else would they be pushing chrome apps (http://developer.chrome.com/apps/about_apps)? Think about the ad possibilities if Google can get the majority of people to spend most of their computer time in chrome.


    Google has nothing to lose. All they have to do is make sure ad revenue covers their development costs of Chrome OS.  Its the guys that make these Chromebooks that are taking all the risk and bleeding money, like Acer.   We have gone from selling $4000 computers to $200 computers for the past few decades. What has this done for margins and fortunes of the HW OEM and where is all this going? Cheap Netbooks, Chromebooks  and Cheap PCs in general are not a good business move for the HW guys. Many of which realized this and if they have any hint of survival skills are running for the exits.   All the greats of days past, Dell, HP, Sony, Acer, where are they now? What's gonna cause them to reverse the trend? Even cheaper Chromebooks or Windows PCs?   Just who is gonna be left to makes these cheap Chromebooks when most of these guys fold up and leave? Will Chrome OS survive is no one is left to make the HW?

  • Reply 72 of 127
    Quote:

    Originally Posted by Rogifan View Post





    Honestly, MS should be less concerned about Windows everywhere (which is what Windows 8 was all about), and more concerned about being a great services company. I think it's a mistake for MS to try and be both vertical and horizontal at the same time. Forget about hardware, just make your services best in class and available on all platforms.

     

    I tend to agree.  Services means more than just providing good software tho.  Customer service is part of that too.

     

    On the rare occasion I have an issue with a MS product and need to call them, it's likely the worst thing I'm going to have to do all week.  I called them a couple of times over the years with product issues and it's been horrible. Customer service is one of the big reasons I think people like Apple.

     

    Quote:

    Originally Posted by Mechanic View Post

     

    Problem is with that scheme is  "Microsoft will slash Windows licensing feesby 70 percent for low-cost hardware manufacturers", not end users that would like to buy one off the shelves.  To us it is still $200.00 for a current copy of windows.  It does the end user no good. 


     

    I agree.  It's very irritating.  Sell me Windows for $50 and I'll never leave.

  • Reply 73 of 127
    Originally Posted by Macnewsjunkie View Post

    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. 


     

    That’s totally wrong.

  • Reply 74 of 127
    dysamoriadysamoria Posts: 3,430member
    But they'll continue to gouge consumers on upgrade prices and full licenses. I'm still on Vista because of their pricing.
  • Reply 75 of 127
    snovasnova Posts: 1,281member
    Quote:
    Originally Posted by Sam Graves View Post

     

    I agree.  It's very irritating.  Sell me Windows for $50 and I'll never leave.


    You would leave based on cost of Windows upgrades? How much will it cost you to leave? The math would be interesting from a breakdown point of view.  Factor in the cost of buying a new computer and all the apps you have bought vs OS upgrade cost. I suspect you will just stay with out of date version of Windows, Office and any other apps you have bought. $200 is nothing. It would cost you more to leave. Staying with old out of date software costs you nothing.  I also suspect that if Windows or Office upgrades were leaps and bounds better than older versions you would upgrade regardless of price. Which from my experience is not the case and why people stick with Windows XP and old MS Office.

     

    Leaving for me had nothing to do with price. It was about giving me something leaps and bounds better user experience; regardless of cost. THIS POINT IS KEY and why lowering the price, IMHO, will do nothing to reverse the downward Windows market trend.  Its not that Windows is too expense, its that there are products out that that give a more desirable and better experience; regardless of price and why people pay the extra money to abandon ship and start over go to a completely new platform. Cost of new HW, Apps and all.

     

    Chasing Chromebooks to the bottom based on price is just a bad business move. It won't generate new customers. It will just drive existing customers from more expensive PCs to cheaper and cheaper PCs.  People who buy Chromebooks don't need Windows Apps and therefore are not Microsoft customers anyways. 

  • Reply 76 of 127
    mstonemstone Posts: 11,510member
    Quote:
    Originally Posted by marubeni View Post

     
    If you do IT stuff, you probably know much better than me that the license cost of Windows is a small fraction of the cost of running Windows -- the support and training costs dwarf the cost of the OS, so:

    1. It would not be useful for MSFT to drop the price -- the (relative) savings to enterprise consumers would be miniscule.

    2. Unfortunately, even improving the OS is not a clear win, because "improving" often means "changing", and the customers tend to not like change (in particular, because it adds to the (re)training costs.


    You are probably right. I don't work in IT. Gauging from our totally useless IT department, I assumed that IT people in general don't want to do anything. All the PCs are old and slow and the IT guys never respond to requests. If you ask for a new PC, they find one that is not being used and replace yours, more than likely, with one that is worse than what you had before. They provide no training or support. That is why I built the PC for our new hire. Otherwise, she would have gotten some hand me down piece of crap with XP on it. Any time they have an issue with servers or CRM they call in an expert consultant. Even if MS gave them a corporate license for Win 7, they probably wouldn't use it because it would mean they would have to install it and that they can't be bothered with.

     

    Of course all the IT guys have monster computers with dual monitors. Fortunately they have no say in what our department does.

  • Reply 77 of 127
    mstonemstone Posts: 11,510member
    Quote:

    Originally Posted by snova View Post

     
      Its not that Windows is too expense, its that there are products out that that give a more desirable and better experience; regardless of price and why people pay the extra money to abandon ship and start over go to a completely new platform. Cost of new HW, Apps and all.


    You have to be a total computer expert and an invaluable asset to the organization to be allowed to overrule the IT department by bringing in Macs and hooking them up to a Windows-centric network.

  • Reply 78 of 127
    Quote:

    Originally Posted by snova View Post



    You make a great case for getting into the flip phone and netbook market. Not sure it's a wise business move however. Ask Nokia and Acer.

    Putting Windows on a netbook is going to result in a device that's incredibly slow and painful to use, that isn't a specialized device in the same way that a Chromebook is, and that has huge licensing / patent costs relative to the actual price of the product. It's like sticking OS X on an iPhone - inappropriate, unnecessary, and detrimental.

     

    As for flip phones, there actually is a market for low-end stuff - you only have to look at the groups Samsung targets with their cheapest phones to see that. The mistake they're making is to try and use Android at the lowest level - the legal and financial overheads that result make it much harder to profit.

     

    If they came out with a device that's designed from the ground up to fulfill the needs of a specialist market (namely, the people that just want a phone), they'd do a lot better. Apple understand this -it's what they do and why they're so successful. 

  • Reply 79 of 127
    Quote:

    Originally Posted by mstone View Post

     

    You have to be a total computer expert and an invaluable asset to the organization to be allowed to overrule the IT department by bringing in Macs and hooking them up to a Windows-centric network.


    Well, not in my place. If you bring a Mac that you paid yourself and dedicate to your work, I'll support it. No sweat. If you keep complaining about poor performance when you browse youtube and gossip on Facebook, I'll ignore you. Simple as that.

  • Reply 80 of 127
    snovasnova Posts: 1,281member
    Quote:

    Originally Posted by hawkse View Post

     
    Quote:
    Originally Posted by mstone View Post

     

    You have to be a total computer expert and an invaluable asset to the organization to be allowed to overrule the IT department by bringing in Macs and hooking them up to a Windows-centric network.


    Well, not in my place. If you bring a Mac that you paid yourself and dedicate to your work, I'll support it. No sweat. If you keep complaining about poor performance when you browse youtube and gossip on Facebook, I'll ignore you. Simple as that.


    we may be going off topic, but its been apparent to me that times have changed.  I've been using my own Macbook Pro on a "Windows centric" network for the past 6 years.  IT does not care as long as I can get my job done and don't get in their way.  I have a stack of unused company issued Windows laptops in a filing cabinet in perfect condition.   Can't say I'm special in this regards, its become quite common for people to use their own Macbook Pro's at work. 

     

    sorry, that does not seem to be the case where you work. 

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