Microsoft Discounting Windows 8 For OEMs to Boost Sales

Both the Wall Street Journal and DigiTimes are reporting that Microsoft has cut the prices of Windows 8 and Office 2013 to boost current lackluster sales.

The Redmond-based company's blocky new operating system is struggling to gain traction since its release back in September 2012 even though the company offered discounted upgrades until January 2013, and launched two branded tablets. Office 2013 just launched in January, but has been plagued with complaints about Microsoft's policy regarding the transfer of the suite from one PC to another.

However, news of a discount is surprising given that the company is typically reluctant to alter its pricing. But, even before the new platform was launched, industry sources said OEMs were worried about the inability to launch multiple devices given Microsoft's hefty licensing fees. By comparison, Google offers Android for free, and likely why HP recently announced an Android tablet rather than one based on Windows RT.

"They've always held [pricing] close to the vest," said Allan Krans, an analyst with Technology Business Research. "They've always been insistent on maintaining that pricing, but a discount makes sense, given the holiday season, the back-and-forth with the OEMs and the slow start to the Surface."

Earlier this week, research firm IDC partially blamed Windows 8 for a projected 1.3-percent decline in PC sales in 2013, saying that an "underwhelming reception" has led to a second-consecutive year of declining PC sales. The decline was even worse in 2012: a 3.7-percent drop from 2011's sales numbers.

Both reports claim that the discounts offered by Microsoft will be on the OEM side. According to the Wall Street Journal, a discount will be applied to a Windows 8 and Office 2013 bundle, cutting between $30 to around $120. The qualifying device must be a PC, or one with a built-in touch screen smaller than 10.8-inches.

As for DigiTimes, unnamed sources claim that Microsoft will knock $20 off the typical $80 or $90 licensing fee OEM's must shell out per PC. This discount will apply to several form factors including desktops and laptops, tablets and hybrid devices with touch screens 11.6-inches or smaller.

Based on the reports, Microsoft is seemingly trying to push devices with touch-based screens by reducing the licensing costs for OEMs. Touch screens are one of the more expensive components which is why so few Windows 8-based devices (outside the tablet and AIO sectors) are up for sale. Touch screen prices are definitely falling, but likely not fast enough for Microsoft, which seemingly depends on the technology to make Windows 8 work as intended.

As Computerworld points out, for a long while the bestselling notebook on Amazon has been Samsung's 11.6-inch Chromebook, which sells for $249. Customers out looking for a similar cutting-edge deals have balked at the prices brought on by Windows 8 notebooks sporting expensive touchscreens.

"If you think about the components in a PC, almost every one has dropped off a [price] cliff," Krans added. "Except for the OS. Microsoft's pricing is their one lever left, the last where it can have a big impact on PC prices."

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    Top Comments
  • geoc
    Drop Ballmer, Please...
  • diddo
    Flogging a dead horse.
    It is not about how hard you flog, it is about the horse being dead.
    MS does not need discounts, in fact sales were horrible even when IT WAS discounted at launch!
    They need a live horse, aka an usable operating system, to be sold instead of 8.
  • godfather666
    Dear Microsoft, pricing is not the reason Windows 8 is doing so poorly. It's because it's a horrible barely usable schizophrenic OS.

    The sad thing is, they can easily fix it. All they have to do is create two modes that the user can easily switch between: touch mode and desktop mode.

    And that's it. Done, you have a winner.
  • Other Comments
  • mforce2
    BigMack70I know there are some folks who like it but personally, you couldn't even pay me to switch from Windows 7 to Windows 8 on my desktop...

    Haha, my thoughts exactly. Windows 7 is kinda slow but for a Windows it's good enough. I also have Linux on my PC and I'm really, realyl happy. I see no reason to switch to Windows 8.
  • geoc
    Drop Ballmer, Please...
  • NightLight
    upgraded for less then 30$, never regretted it! once you get over the metro ui, it boots faster than 7, has a much better explorer and better performance overall.