What Microsoft Needs to Do With Windows Blue

on March 8, 2013

windows-blueBy now you probably have been hearing about a major update to Windows 8 called Windows Blue.
Various tech sites have written about it after Win8China wrote about it and suggested it would have tighter integration with Microsoft’s search engine Bing. Some news sites suggest that this version is a major upgrade to Windows 8. There is no doubt Microsoft needs something to inject life back into the ecosystem for their hardware partners. The real question is whether Windows Blue is what the doctor ordered. We think there could be two specific ways Microsoft can address needs in the market.

Low Cost Tablets

Ben wrote a column here last week titled “the invasion of cheap tablets” and pointed out that we are about to see dozens of cheap tablets hitting mature markets this year, making it possible for people to own many for use in their home and businesses. He also pointed out that low cost or cheap tablets, mostly in the 7” to 8” range, should dominate the tablet market going forward and that Microsoft has no answer for this form factor. To date all of their “tablets” are in the 10.1-inch range and the version of Windows 8 on these tablets cannot be scaled downward for use on screens below 10.1 inches–at least in current specs.

If Microsoft were smart they would allow Windows Blue to help fill this gap. To do so Microsoft would need a new pricing strategy for screens in the 7″ and 8″ size range. It should be priced low enough so these new lower cost Microsoft tablets can be priced in the $199-$349.00 range. Most Windows 8 tablets today start at $499. If Microsoft does this, they could finally have a competitive product to Google, Samsung and Amazon. Mind you, however, they would still not be competing for the ultra low end of the 7” tablet market that is now in the $89.00 to $129.00 price range. News of late suggests they will offer a $20 discount to OEMs for devices below 11.6 making these price points possible.

Low Cost PCs

If that is true and they do offer this lower price point on devices under 11.6-inches then it could also be used in some type of hybrid or clamshell offering for the lower end of the tablet and notebook market. We are hearing from OEMs that there is interest in using Windows 8, and in this case it would be Blue, in an ultra-thin Netbook like device priced well under $399 to be in the market this holiday season. For that price I doubt it would have a touch-enabled screen in a clamshell style device but if it were a tablet with detachable keyboard it would have a touch screen as part of the design. A well designed clamshell with touch screen could possibly be in the $499-$549 range.

If what I am hearing is correct, this could be a very interesting holiday season. While really cheap tablets will drive much of the tablet growth, there is still big demand for robust tablets with multiple cameras, more memory, faster processors, all priced in the $249-$349 range. At the moment Apple, Samsung, Google own this market, especially with tablets in the 7.9 “ to 8.1” range.

With Windows Blue it would give Microsoft a fighting chance in this low-end tablet space as early as this holiday. If they do make it possible for OEMs to bring out an ultrathin clamshell using Windows Blue at consumer friendly prices, it could also be a solid product for the consumer market even if it is netbook-ish in nature. This is because of the Windows 8 app ecosystem that is starting to finally grow, which would make a clamshell like this much more acceptable to the low end consumer market. And of course, it would be able to runs the tens of thousands Windows applications already on the market.

What is interesting about some of the conclusions I have made with regards to the Windows ecosystem is that we are talking about success being needed in the low end. This is not a game every OEM is positioned to succeed in, but it is unfortunately the road it looks like Microsoft needs to go down.

I suspect we should be hearing more about Windows Blue in the next coming months. If Microsoft is smart with Blue, it could boost their partners volumes, help turn around their struggles in tablets, and inject some needed life back into their ecosystem.