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Microsoft Discounting Windows 8 For OEMs to Boost Sales

By - Source: Computerworld | B 70 comments

Looks like Microsoft is hurting enough to drop the price of its licensing fees for Windows 8 and Windows RT.

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
  • 28 Hide
    geoc , March 7, 2013 12:17 PM
    Drop Ballmer, Please...
  • 24 Hide
    diddo , March 7, 2013 12:20 PM
    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.
Other Comments
  • 0 Hide
    mforce2 , March 7, 2013 12:14 PM
    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.
  • 28 Hide
    geoc , March 7, 2013 12:17 PM
    Drop Ballmer, Please...
  • -2 Hide
    NightLight , March 7, 2013 12:18 PM
    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.
  • 24 Hide
    diddo , March 7, 2013 12:20 PM
    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.
  • 7 Hide
    aoneone , March 7, 2013 12:25 PM
    Ha~! Keep sliding Microsoft, won't even consider it until it is about 10 bucks you hear me!?
  • 7 Hide
    gardoversoza , March 7, 2013 12:26 PM
    Just give us a black theme for Office 2013! Dark grey is not dark enough! Damn it MS!
  • 8 Hide
    ubercake , March 7, 2013 12:31 PM
    Windows 8 is seriously irritating for power users, but much like Android or iOS, for the majority of folks whose PC activities consist of reading/writing e-mail, playing Angry Birds, using Skype, Netflix, Facebook, reading/composing the occasional word doc, shopping online, and just browsing the web, it's perfect.

    As a power user, I'll be waiting to see if something better comes along and limit my Windows 8 use to the cheap family laptop.
  • 10 Hide
    cats_Paw , March 7, 2013 12:34 PM
    Personally, i wouldent use win8 even if it was free.
    I see no upsides, only downsides.
    Some time ago people jsut bought stuff, nowdays, since there is an economical recession, people are more carefull with their money, so companies that dont make good products are going to go down real fast.
  • 24 Hide
    godfather666 , March 7, 2013 12:35 PM
    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.
  • 19 Hide
    rad666 , March 7, 2013 12:38 PM
    I don't care about Win8 because I refuse to get a touch screen for my desktop. Why would I want fingerprint smears all over my primary display? I can't stand the occasional little smudges that get on there.
  • 12 Hide
    jdwii , March 7, 2013 12:39 PM
    aoneoneHa~! Keep sliding Microsoft, won't even consider it until it is about 10 bucks you hear me!?


    I can get it for free threw my college but its not worth it after this release i made sure i got 2 product keys for 7 though

    NightLightupgraded 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.


    The only reason why is because the desktop does not boot up at first and the performance is the same under many benchmarks when i tested it using 2 different computers.

  • 7 Hide
    deksman , March 7, 2013 12:42 PM
    mforce2Haha, 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.


    Hm... speaking from personal experience, I cannot really say that Windows 7 is slow.
    From what I was able to ascertain... Windows 8 is marginally faster than 7 in general tasks (even the boot-up is basically identical to Windows 7 once you turn off the Hybernate-like shut-down and do a cold boot of the system).

    However, Windows 8 might have certain things in its favor compared to 7. For example, some games might run faster, and general responsiveness of the OS might be improved - but realistically speaking, they could have released a SP2 for Windows 7 that does the same thing.
    In the end, most people certainly wouldn't notice those differences, and if you switch to an SSD on Windows 7, then basically there would be 0 difference.

    Ultimately, right now I see no viable reason to switch to Windows 8, and since I hadn't used it personally, I cannot say anything about it conclusively, but I don't see the need to switch to it seeing how I am comfortable with Windows 7, and it does everything I need/want very fast as is (and I'm using a regular HDD).
  • 10 Hide
    stefanGR , March 7, 2013 12:49 PM
    Windows 8 is a schizophrenic OS , not desktop , not tablet , bad at both . I dont hate metro , I just wish there was a way to disable it for desktop users . I know there are 3rd party solutions , but thats not the point . What used to be 2 clicks is now 3-4 . Its slower overall ,except boot times . Its not a bad product under the hood , but whats the benefit if you put a ferrari engine on a truck ? Im sticking to windows 7 , and Im already spending most of my time on Linux . When a couple of games that I play will be available for linux , Im never coming back . Gently pushing all my clients toward linux too , its in their best interest .
  • 12 Hide
    belardo , March 7, 2013 12:50 PM
    LOL! Everyone with half a Brian knows why windows 8 bombed. It's crap GUI design. They have been warned by US for months. It's ugly, the desktop is ugly. The layout is changed for the sake of change, not actual improvement.

    Price has nothing to do with it. If that was the case, apple should be long dead. But apple only charges $25-30 for OS upgrades.

    If windows 8 was given to me for free... It would be placed next to my dusty copy of windowsME.

    WIndowsRT of course is a mess... Bait and switch. Win8phone is still different, etc etc... A common looking UI with no compatibility and a worse learning curve than Linux. Then throw on their rip-off tactics of Office 2013???!! Even their Bing vs Google campaign is a farce. I tried it... Bing failed at finding my test inquiries... That google hand no problems finding.

    Microsoft / Windows = irrvelent
  • 11 Hide
    wiyosaya , March 7, 2013 12:51 PM
    :sarcastic:  What this article really says: M$ is desperate for Windows 8 sales. We've heard nothing about how well it is selling since November. My bet is it is not selling well; otherwise, M$ would be, everywhere, telling the world how well it is selling.
  • 13 Hide
    DjEaZy , March 7, 2013 12:55 PM
    ... Microsoft Discounting Windows 8 For OEMs to Boost Sales? Because it's CRAP!!! Everybody i know are downgrading from 8 to 7... or buying new PC with Linux or empty, to boot in Win7 later...
  • 5 Hide
    belardo , March 7, 2013 12:59 PM
    For $40 to get win8 upgrades? I didn't touch it. Even thou I have 5 XP lic. No longer used and 3 win7 systems. Hell, even for beta installs, anyone or I could have gotten the $40 upgrade deal. For clients, we still just went wi 7... Period. Not planning on windows9 either. Hopefully win7 will be my last MS OS.

    Other than deep pockets... MS seems to be much dumber than RIM.
  • 4 Hide
    belardo , March 7, 2013 1:00 PM
    For $40 to get win8 upgrades? I didn't touch it. Even thou I have 5 XP lic. No longer used and 3 win7 systems. Hell, even for beta installs, anyone or I could have gotten the $40 upgrade deal. For clients, we still just went wi 7... Period. Not planning on windows9 either. Hopefully win7 will be my last MS OS.

    Other than deep pockets... MS seems to be much dumber than RIM.
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