Microsoft Confirms Windows Price Cuts To OEMs For Making Small Sized Tablets

Acer W3 Windows 8

WSJ reported few months back that Microsoft is planning to cut the Windows price it charges the OEMs to increase the sales. At Computex event held in Taiwan, Microsoft’s OEM division head Nick Parker has confirmed about the price cuts, but it is only applicable for tablets/PCs that are less than 10.1 inches in size. According to WSJ, Microsoft is cutting by two-thirds the cost to license Windows and Office software, or roughly $100 before marketing rebates Microsoft offers to PC makers.

This may sound that there will be a significant reduction in price for Windows devices on retail. But it may not happen, here’s why. Microsoft is planning to ship Microsoft Office with all small sized tablets for free, so you can understand the logic behind price cuts.

“I think this is revenue neutral, that the end price to the OEMs is neutral, but they’re throwing in Office,” said Patrick Moorhead, principal analyst with Moor Insights & Strategy.

Smaller displays mean less expensive displays, Moorhead explained. “Going from 10.6-in. or 11.1-in. to 8-in. or 7-in., you’re going to bring down prices dramatically. So any price reductions will be more on the basis of the new hardware, and not attributed to what Microsoft is doing.”

Source: WSJ, CW

About the author  ⁄ pradeep

Pradeep, a Computer Science & Engineering graduate.

  • DKJr

    Good move and great for the consumer!

  • Agosto Nuñez

    Lowering the price for Windows would allow more consumers to get ”a taste” of services like Microsoft SkyDrive and other services, who will then pay for more, financially it would be better, also the developrs would create more applications/programs and thus will gain a larger revenue from their payments, it’s a profits snowball if it’s done right.

  • RichFrantz

    Reducing the price of Windows will only reduce the cost of the devices if the OEM chooses to reduce it. They could use the cost to protect their margin. We’ll see.

  • Bugbog

    This may, again, be an issue of OEM’s being slow to adopt opportunities offered!; It’s been known for months that Microsoft has cut the price of licensing for Windows/Office [Student], for devices under 10.1″. Seemingly, only Acer (and maybe one or two others) have taken advantage of this.

    If, as widely believed, Microsoft reveals an 8″ device at Build, the most likely price will be $299 (or $329 at most). And given Microsoft’s [so far] proven ability to design and build quality devices, it will, again, be the OEM’s that will lose out! (Especially if they, again, come late to the market, and with higher prices!).