Microsoft surprised the Tablet industry by giving a preview of their upcoming Surface Tablets with Windows 8 Pro & Windows 8 RT. But Microsoft Surface was not a 7″ Tablet, as predicted by analysts earlier. Therein lies the catch – Is there another surprise waiting for us?
We all know that Microsoft has invested heavily in Nokia. We also know that they have recently made an investment/partnership with Barnes & Noble. What Windows 8 Tablets might these companies be working on?
Can Microsoft Surface Tablet compete with Kindle Fire & Google Nexus 7?
Microsoft has already clarified that there will be two versions of Microsoft Surface Tablets and one will run Windows 8 Pro on Intel chips while another (cheaper) model will run Windows Surface RT on ARM chips. The Surface RT Tablet will include a limited but functional edition of MS Office.
With reports coming out that Microsoft is planning to charge $85 for each Windows Surface RT OS License from the OEM’s and the fact that Microsoft’s strategy has predominantly been to make money from its OS and Office software, it is quite unlikely that Microsoft will subsidise Windows Surface RT for Microsoft Surface. Competing with the free Android OS on price is definitely going to be very difficult for Microsoft.
Looking at it practically, Microsoft Surface with Windows RT might sell at around $250 – $350.
However, it is possible that Microsoft may subsidize the hardware cost and make a digital content/Cloud Office 365 monthly subscription mandatory.
Can it then beat either Amazon Kindle Fire or Google Nexus 7 and create an impact in the entry-level tablet market?
There’s a chance. However, it’s very hard for it to compete effectively with $149 and $199 Tablets (assuming Nook Color and Nook Tablet 1 and Kindle Fire 1 will be $149 by end of the year).
Microsoft Surface might be more of a replacement for Netbooks and might compete more successfully with Apple iPad and similar tablets. This is especially true for the full-fledged Windows 8 Pro & Intel based Microsoft Surface. It can run all x86 PC-based applications and can replace the PC/Laptop for certain applications.
Microsoft Surface RT has more of a challenge since the low-price, high-value Tablet Market has lots of competitors willing to sell Tablets at close to zero profits. Competitors who hope to sell books and apps and movies and music down the line to these Tablet owners. This makes it tough for Microsoft’s partners since they only make profits from the device. They don’t have follow-on sales. How can they compete on price?
Microsoft is the only Surface RT tablet maker that can actually compete on price. The question is – Will it?
We think it will. However, it won’t be the only Windows 8 Tablet competing in the high-value, low-price segment.
What does Microsoft’s investment in Barnes & Noble mean for the Tablet market?
The recent partnership between Microsoft and Barnes & Noble mean three things to the Tablet market –
1. B&N’s content (eBooks) can use Microsoft’s global presence (and top billing in Windows 8) to reach a wider audience. This is a much-needed boost for B&N, which the company would have struggled to achieve by itself. This in turn will feed back to the Nook hardware side and lead to stronger Nook Tablets (probably).
2. Windows 8/RT will be the OS of choice for future B&N Tablets. It’s going to happen sooner or later. B&N has its own app store but it’s small. Future Nook Tablets can use Windows 8 Store and get 50,000 to 100,000 Apps.
3. Microsoft now has access to future B&N Nook Tablet customers to sell its digital content/subscription services. This is a big deal. Microsoft already has the most dangerous horse in the race with Xbox (almost as dangerous are all the existing Windows PCs). As it adds more channels (Surface RT, Surface Pro, Nook Tablets, Windows 8) it will grow stronger and stronger.
What is Nokia doing?
Many were surprised and puzzled when Nokia did not figure among Microsoft’s preferred OEM list for manufacturing Windows Surface Tablets. Given its billion dollar investment in Nokia, it would have made a lot of sense for Microsoft to involve Nokia more.
Many people think Nokia will be offering Windows 8 Tablets.
We think this is very likely. Nokia specializes in making phones for both rich people (relatively) and for the people who can’t afford smartphones. Why wouldn’t it do the same for Tablets?
Microsoft and Nokia would sell their Tablets in parallel
Nokia is not manufacturing the 10″ Surface tablets because it is probably working on its own 6/7″ Windows Tablets. Nokia and B&N are probably going to be the Windows 8 Tablet makers that compete with Google Nexus 7 and Amazon Kindle Fire. Perhaps using a Mobile+Tablet hybrid model.
This hybrid device may not feature Windows 8 RT Tablet OS. It might feature Windows 8 Mobile version, which would cost considerably less ($15-$25 per license). Nokia might even release a foldable tablet that can be carried in one’s pocket but can be unfolded to become a tablet!
Nokia and B&N might be the Windows 8 Tablet Makers (along with perhaps a few others) that compete in the low-price, high-value Tablet Market.
Microsoft then would not have to subsidize Surface Tablets to compete in the low-end tablet segment.
It is possible that we can expect a 7″ Tablet from Nokia with voice and 3G capability based on Windows Phone OS 8. It might have Barnes & Noble services integrated into it. Nokia can include a 1080p screen and Qualcomm Snapdragon S4 chip inside. It could still ship the device at a very competitive price.
Switch’s Thoughts: This is a very interesting idea. Personally I feel Microsoft would be doing both. It will let Nokia and B&N ship their 7″ Tablets using Windows 8. It will also ship Surface RT for $199 with some sort of subscription baked in. The whole idea of Windows has been that you can get one standard OS you’re familiar with (Windows) in ‘a device of your choice’. Choice is great for users. There are people who’d prefer a 10″ Tablet with a keyboard. There are people who would prefer a 7″ Tablet from Nokia or B&N. Microsoft wants all markets.
Surface RT is going to bring a lot of surprises to the market. An old Romanian saying goes – When two fight, a third wins. Perhaps that’s what’s about to happen as Steve Jobs’ ThermoNuclear War from the Grave keeps Apple and Android OEMs busy arguing about rectangles and icons.