Will Windows 8 Eat Android's Tablet Lunch?

Windows 8 is a big deal. There, I said it. Despite what market researcher IDC believes, I don't think Windows 8 will bomb. I won't go as far as to say that Microsoft (Nasdaq: MSFT  ) has a sure-fire home-run hit on its hands, but I don't think the OS needs to see the types of sales that Windows 7 did to be considered a success.

The software giant has already sold over 525 million Windows 7 licenses, making it the fastest-selling operating system ever since 350 million of those were sold within just the first 18 months. In comparison, the disaster known as Windows Vista sold only 180 million copies in the first year and a half.

Part of IDC's bearishness on the OS relates to what the company foresees as "effectively no upgrade activity from Windows 7" within traditional PC form factors, which is an absolutely justifiable point. While technically supporting good old desktops and laptops, Windows 8 is really about one thing: mobile.

Windows 8: Mobile Microsoft
Microsoft's mobile strategy is embodied within Windows 8, and the company is going to make a massive push into tablets. Here's where I think the OS has a very good chance of gaining traction, as Microsoft has already tapped into a slew of hardware partners, including both sides of the chip equation with traditional x86 processors from Intel and ARM Holdings (Nasdaq: ARMH  ) designs brought to you buy NVIDIA, Qualcomm, and Texas Instruments.

It's also gunning hard for app developers to get onboard to create a lively ecosystem of Metro-styled apps, and it seems clear that Metro and ARM will be front and center of Windows 8's strategy since the Windows Store will sell only Metro apps, and non-Metro apps won't work on ARM-based hardware.

A low bar to beat
On the other hand, Google's (Nasdaq: GOOG  ) foray into the tablet market with Android has been a veritable failure by almost any measure. For example, soon-to-be subsidiary Motorola Mobility (NYSE: MMI  ) has seen Android tablet shipments (not even sales) sputter and took a full year to move just 1 million Xooms and Xyboards. Over that same time, tablet king Apple (Nasdaq: AAPL  ) has sold (not just shipped) over 40 million iPads.

Amazon.com's Kindle Fire does its own thing, despite the fact that it technically runs Android. Samsung's Android tablets are the most popular offerings (other than the Fire), and Sammy product strategy exec Hankil Yoon even recently conceded, "Honestly, we're not doing very well in the tablet market."

Android head Andy Rubin says there have been about 12 million Android tablets sold so far, and says Google will "double down" this year on tablets. If we look at cumulative figures, Apple's tally jumps to almost 55.3 million iPads. Rubin attributes Android's primary tablet problem as convincing buyers that it's a "viable platform," since most Android apps aren't optimized for tablets.

He also adds that he's "hoping people decide to put in the muscle and make their apps work great on tablets," admitting at the same time that he "can't force someone to write a tablet app." While those are true statements, they point to an underlying passive mentality that is also likely a culprit in Android's tablet underperformance, while the OS boasts considerable strength in smartphones.

It also didn't help that the first Android tablet version, Honeycomb, was admittedly a rushed-to-market "emergency landing," while the first fully-fleshed out version, Ice Cream Sandwich, is just now hitting the market.

All together now
Meanwhile, Microsoft is actively and aggressively courting devs in a concerted approach to line up all the pieces -- including hardware OEMs and app developers. The Windows 8 Consumer Preview, which was released this week, saw over a million downloads within the first day, so there's clearly interest among users to test-drive the new OS. When Windows 8 was unveiled in September along with a Developer Preview, it took months to reach 3 million downloads.

The bar to become No. 2 in the tablet market isn't high, so all Microsoft has to do is clear this low hurdle with Windows 8 for me to consider it a success. It doesn't need to even remotely approach the levels that Windows 7 has, in the hundreds of millions -- it just needs to best Android's slowly growing 12 million.

I doubt it will ever beat the iPad 3, which is due out next week, but that shouldn't be the goal.

The smartphone leader is a toss-up between Apple and Google, while the tablet leader is indisputably Apple. The tablet silver medal is up in the air. Who will catch it?

The iPad has started a revolution, but Apple is hardly the only winner. Some of the winners are hard to see because they're buried deep inside the gadgets. Check out this new special free report on "3 Hidden Winners of the iPhone, iPad, and Android Revolution" that names a handful of companies that provide the crucial components that these gadgets rely on. It's free.

Fool contributor Evan Niu has sold bullish put spreads on QUALCOMM and owns shares of ARM Holdings, Apple, and Amazon.com, but he holds no other position in any company mentioned. Click here to see his holdings and a short bio.

The Motley Fool owns shares of Microsoft, Texas Instruments, Google, Amazon.com, Apple, QUALCOMM, and Intel. Motley Fool newsletter services have recommended buying shares of Microsoft, NVIDIA, Google, Intel, Apple, and Amazon.com; creating a bull call spread position in Apple; writing puts on NVIDIA; and creating a bull call spread position in Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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  • Report this Comment On March 03, 2012, at 1:34 AM, gslusher wrote:

    "while the first fully-fleshed out version, Ice Cream Sandwich, is just now hitting the market."

    And will never be available for most Android tablets that have already been sold, especially the Kindle Fire, which technically is not an "Android" tablet, as Amazon didn't license Android from Google. (The Fire runs a very old version of Android and can use few--if any!--apps from Google's store.)

  • Report this Comment On March 03, 2012, at 2:17 AM, jdwelch62 wrote:

    Great article, Evan! Spot on. I tend to take what IDC says with a big block of salt, as their track record with regard to predicting Intel's numbers over the past 2+ years has been so poor... :-)

  • Report this Comment On March 04, 2012, at 4:00 PM, mikey0355 wrote:

    A big advantage of Window over Android is that Window will not spy on you. :)

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