Are Microsoft's Tablet Dreams Dying Already?
Mar 6th 2013 11:45PM
Updated Mar 6th 2013 11:52PM
In the following video, Motley Fool senior technology analyst Eric Bleeker discusses Microsoft and how its operating system licensing model may be driving costs of its tablets to an uncompetitive range.
Microsoft pinned its tablet hopes upon its release of the Surface tablet. However, largely thanks to its expensive price ($600 after a keyboard accessory), the Surface has failed to keep up with the momentum of either Apple or Google. The reason Microsoft priced the Surface higher was to leave room open for its partners to profit at cheaper levels.
Yet, there's been little adoption of Microsoft tablets in lower price ranges as Android begins proliferating at the sub-$200 range. In the video below, Eric talks about Microsoft's recent price cut on Windows licensing on tablets. According to The Wall Street Journal, the company is now charging just $30 per tablet device to license Windows, significantly below its licensing of PCs.
As Eric notes, this just proves how little of an advantage tablets are to Microsoft but it's a threat that disrupts their model. He discusses how the company is pressed between low-end Android models on one end and Apple on the other. Apple has less than 30% gross margins on the iPad mini, which means they're collecting less than $100 in gross margin on entry-level tablets. In a way, Apple has become the new Microsoft of the tablet world. It's charging no money for its hardware, but is instead charging consumers for the stability of its industry-leading operating system.
Scared by Apple's plunge? We have expert advice for you.
investors might be overlooking App, but the company still has massive opportunities ahead. We've outlined them right here in The Motley Fool's premium Apple research service, and it may give you the courage to be greedy when others are fearful. If you're looking for some guidance on Apple's prospects, get started by clicking here..
The article Are Microsoft's Tablet Dreams Dying Already? originally appeared on Fool.com.Eric Bleeker, CFA has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Apple and Google. It also owns shares of 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.
Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.