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Microsoft’s Windows 8 and Office 2013 price cutting: A dangerous game

In a double whammy of bad news, it seems that Microsoft has been forced to cut the price of Windows 8 and Office 2013 licenses to spur the adoption of Windows 8 – and Samsung, citing lack of consumer interest, has pulled its Windows RT tablet from Germany and “additional European countries.”

According to the Wall Street Journal’s anonymous sources, over in the US Microsoft has been offering a dual pack of Windows 8 and Office to OEMs for $30 (£20) since late February, for touchscreen devices under 10.8in that is. The previous price was $120 (£80). This massive discount is obviously intended to increase the number of affordable touchscreen laptops and tablets running Windows 8, which is currently experiencing very slow adoption.

Adding credence to the WSJ’s anonymous sources, the CEO of Asus recently said the following at the company’s investor conference: “Microsoft has been making many efforts lately that I cannot talk about in specific, but that will help give momentum to the notebook and netbook and Eee PC area.” Digitimes, a Taiwan-based site with knowledge of the high-tech supply chain, has also stated that Microsoft is discounting the OEM price of Windows 8 and Office licenses.

We still don’t know exactly how many touch-enabled Windows 8 devices are actually being used by consumers, but the mere fact that Microsoft hasn’t shared any figures – either in general, or specifically for its Surface tablets – is a strong indicator that things aren’t going to plan.

The only real indication we’ve had is from retailers such as Newegg, which said that sales of Windows 8 tablets had been very slow, and that most Windows 8 devices sold had been laptops or tablets. Numerous industry analysts have also chimed in to say that Windows 8 adoption in general has been slow, with some specifically claiming that sales of Microsoft’s own Surface tablets have been lacklustre

Which leads us neatly onto the second tidbit: Samsung is pulling the Windows RT Ativ Tab out of Germany and “additional European countries” (Samsung hasn’t yet specified which ones). This follows on from Samsung’s decision not to release the Ativ Tab in the US, citing a lack of consumer interest and confusion over what Windows RT actually is. The reason for a lack of consumer interest in Windows RT, incidentally – according to Samsung, at least – is because of the continued and growing success of Android and iOS tablets in the US.

Like the Surface RT, we don’t have any exact figures when it comes to Windows RT tablet sales. The latest estimate from IHS iSuppli pegs Surface RT sales at around 750,000 units after three months of public availability (the end of January 2013). In the same quarter, Apple sold 22.9 million iPads. We can only guess at the Windows RT sales figures from Samsung, Asus, Dell, and Lenovo, but they’re probably much lower than Microsoft’s highly (and expensively) publicised Surface RT.

Moving forward, we should also remember that Microsoft is working on Windows Blue, which will reportedly be very cheap – or possibly free. It isn’t yet clear whether Blue will be a standalone version of Windows that you can buy off the shelf, or the codename for Microsoft’s internal shift towards annual releases, instead of every two or three years.

It is possible that Microsoft’s slashing of Windows 8 and Office license costs is simply a precursor to Windows Blue. Considering how Windows and Office bring in the lion’s share of Microsoft’s profits, though, this certainly seems like a dangerous game for Microsoft to be playing.