Don't Underestimate the Power of a $200 Windows 8 Tablet

Thanks to a recent announcement to reduce tablet screen specifications, Microsoft (NASDAQ: MSFT  ) has effectively green-lighted Windows 8 tablets to be made in the in the 7- to 8-inch form factor. This is a major development for investors since about half of all tablets shipped today are of the 7- to 8-inch variety. Besides the added portability, a smaller-sized tablet is bound to make Windows 8 tablets more price-competitive against the sea of low-cost Google (NASDAQ: GOOGL  ) Android tablets.

What Android never was
Until now, Android hasn't seen much in the way of competition in the low-end tablet segment, allowing it to capture nearly 49% of the market last quarter. Since Android wasn't originally intended to be a tablet operating system in the first place, affordable Windows 8 tablets could easily be perceived as more productive mobile computing devices that better suit users' needs.

The icing on the cake
For all intents and purposes, Windows RT is a bridge product until Intel (NASDAQ: INTC  ) releases a processor that's better suited for mobile computing. When Chipzilla releases its quad-core Bay Trail processor later this year, not only will it be the world's first 22-nanometer tablet computing processor on the market, it will allow Microsoft and its OEM partners to offer tablets with the full version of Windows 8- in a 7 to 8-inch form factor. In other words, it's all but certain that $200-$300 full-blown Windows 8 tablets become a reality. In fact, such a device would likely score very high on the "price versus function" scale against conventional tablet operating systems, potentially mitigating the threat from mobile computing.

Searching for hidden threats
Google Search has largely benefited from increased mobile computing usage, which has inadvertently driven higher volumes of search. If Microsoft and its partners can successfully infiltrate the low-end tablet market, Bing would become poised to steal search queries away from Google Search. With the prospect of a $200 Window 8 tablet now in the mix, it's entirely possible that Google's search growth in the mobile realm may not prove to be as robust as it once was.

If consumers were presented with a $200 to $300 tablet that runs the full version of Windows 8, would they opt for it over a similar Android device? I wager Android wouldn't stand much of a chance.

It's been a frustrating path for Microsoft investors, who've watched the company fail to capitalize on the incredible growth in mobile over the past decade. However, with the release of its own tablet, along with the widely anticipated Windows 8 operating system, the company is looking to make a splash in this booming market. In this brand-new premium report on Microsoft, our analyst explains that while the opportunity is huge, the challenges are many. He's also providing regular updates as key events occur, so make sure to claim a copy of this report now by clicking here.


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  • Report this Comment On April 03, 2013, at 2:06 AM, symbolset wrote:

    The new lower rez requirement is going to compete with dual-core Android 4.2 7" tablets with 1GB RAM, 8GB storage and sdhc at that rez coming out of Shenzhen priced at $60 retail this summer. Those tablets hit the market with Google Play and 250,000 apps. With shipping and local markup that's going to come to $70 on eBay and $80 on Amazon into the Fall and holiday buying season. Walmart.com will have them with free site-to-store, as will Best Buy, Target, Radio Shack, Fry's, K-Mart, Rite-Aide, Newegg, Walgreens - probably even 7-11.

    This is all over but the crying.

  • Report this Comment On April 03, 2013, at 2:35 AM, vernr75 wrote:

    All of that conjecture is well outside the realm of reality. You haven't take into account the significantly higher cost of Windows licenses relative to open sourced Android. Several news outlets have reported that Windows RT costs manufacturers nearly $100 per license. That means a $200 tablet would have to be constructed from components costing less than $100....and Windows itself will be the most pricey part of the device. And Intel's hardware is not going to be as inexpensive as ARMs either. Take those same parts and put Android on it and you're likely to get a device that costs nearly $100 less.

    Then there's the fact that the cost of the most affordable high-end 7 inch Android tablets are increasingly being subsidized by sales made via the device. Manufacturers using Windows on tablets will never be able to compete with that sort of strategy because they can't simply sell the hardware below cost.

    The bottom line is that if Microsoft continues to use the same old business strategy of selling their OS licenses at high prices, they'll never be able to compete with the likes of Android, no matter how they adjust their hardware support specs.

  • Report this Comment On April 03, 2013, at 7:31 AM, RandomMeaning wrote:

    On April 03, 2013, at 2:29 AM, mylove4life45 wrote:

    "symbolset ... you did read the FULL Win 8 did you not... I think the 250k apps is a joke... Win 8 has MILLIONS that will work with it.."

    "Full" Windows on a 7" touch screen. Sure. That'll be productive and not the least bit frustrating. You betcha. Why not add DOS programs to your app count? They'd probably be easier to run!

    Seriously, the only way tablets by any company can be useful is through solid software designed for touch and screen size. Good luck running legacy software designed for keyboard and mouse on a 7" touch screen.

  • Report this Comment On April 03, 2013, at 11:06 AM, ArtG56 wrote:

    All concerns with Windows 8 vs Google Android and OS pricing aside, and I think these are valid concerns, (and don't let's forget the ever-present virus attacks and patches wasting time and sucking up RAM) there is the MSFT stock legacy itself. I've owned it over the years, and it has not been particularly profitable. If your timing is good, you might get a 4 or 5 dollar boost in a good year, which is quite respectable for that year, granted, but most years, what you get is news that they've gobbled up yet another company and are currently, as always, "integrating" them, along with 3 or 4% growth year over year, decade over decade. They "should" be a great investment with as much market dominance, cash flow and reserves as they have, but they just aren't, in my experience. Even for those with a "better safe than sorry" approach to investing, I believe there are far better stocks out there.

  • Report this Comment On May 01, 2013, at 6:59 PM, brentpdx wrote:

    Randommeaning: ""Full" Windows on a 7" touch screen. Sure. That'll be productive and not the least bit frustrating. You betcha. Why not add DOS programs to your app count? They'd probably be easier to run!"

    Good point. Legacy mode is barely usable on the 11" Windows tablets. However, I'm sure these smaller 7" tablets will include an HDMI port, along with USB/Bluetooth. So you'll have your 7" Windows tablet, PLUS you'll have the option of docking it when you need a big monitor, mouse, keyboard and external storage.

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