With the traditional PC market in decline, largely due to the mass adoption of tablets, both Microsoft and Intel find themselves in a fierce battle to get their respective products into mobile devices. Until now, tablets have been powered almost exclusively by ARM-based chips, running either Android or iOS. But, with Windows 8 updated to version 8.1, and Intel releasing its inexpensive Bay Trail mobile chips, Windows tablets are quickly becoming competitive.

This holiday season will be a big test for Microsoft and Intel. A slate of new Intel-powered Windows devices are set to debut in the next month, and Microsoft is ramping up marketing spend with the goal of selling 16 million Windows tablet sales this holiday season. This may seem ambitious, but a recently released Windows 8 convertible device from Asus shows the true promise of a Windows tablet.

The evolution of the netbook
Before tablets became popular, the netbook had a short, but prosperous run. A netbook is a small, inexpensive laptop aimed at light usage, such as web browsing. The Eee PC from Asus was one of the most popular, and the device was very good at what it was meant for. Netbooks were cheap, often only a few hundred dollars, and they created an inexpensive alternative for consumers who didn't need a more powerful laptop.


The netbook category died as cheap Android tablets stormed the market. But, tablets are inherently less versatile than a laptop, and they're best suited for viewing content. For those wanting the best of both worlds, a full tablet and laptop experience all in one package, consumers only had expensive options like the Surface from Microsoft.

But, this situation is rapidly changing. Asus released the Transformer Book T100 last month, and in many ways it is the spiritual successor to the Eee PC. The T100 is a full 10.1" Windows tablet with a detachable keyboard, allowing for use as both a tablet and a laptop. The device is powered by a Bay Trail processor from Intel, and reviews have put the battery life around 12 hours.

Source: Asus

The T100 comes with a copy of Microsoft Office, and it costs between $349-$399, depending on the amount of onboard storage. As of this writing, the T100 is sold out on both Amazon and Newegg, and reviews have been generally good. More devices like this from Dell, HP, Lenovo, and other manufacturers are set to be released this holiday season.

What this means for Microsoft
Windows 8 is now over a year old, and it was designed for both touch devices and traditional PCs. So far, however, the OS has failed to meaningfully penetrate the tablet market. The Windows 8 tablets that have been released thus far have been expensive, typically powered by Intel's more powerful Haswell processors. The Surface Pro 2 from Microsoft, for example, costs $899, and the attachable keyboard costs extra.

The T100 is a big step in the right direction, bringing the full Windows experience for less than the cost of the most recent iPad mini. Devices like this bridge the gap between the tablet and the laptop, and should appeal to a large number of consumers.

This type of device is what Windows 8 is made for. As more of these convertibles are released, the growth of Windows 8's market share will begin to accelerate.

What this means for Intel
With Bay Trail, Intel finally has a mobile processor that allows for inexpensive tablets with good battery life. Because the full version of Windows 8 requires an x86 processor, Intel has only AMD to compete with in the full Windows tablet space. Bay Trail can also run Android, and a series of Android tablets powered by Bay Trail are set to be released this holiday season.

The next iteration of Intel's low-power processor, Cherry Trail, is set to be released in the third quarter of next year. While Bay Trail is based on a 22nm process, Cherry Trail will be based on a 14nm process. This more advanced manufacturing process will allow the next generation of chips to achieve greater performance, while still providing solid battery life. The most advanced ARM-based chips, like the Snapdragon 800 from Qualcomm, are built using a 28 nm process.

These low-cost processors are much less expensive than desktop and server chips, meaning that Intel needs to sell big volumes to make up for the declining PC market. This will take time, but devices like the T100 mark the beginning of Intel's entry into the mobile market.

A boon for Best Buy
Consumer electronics retailer Best Buy is set to greatly benefit if Windows 8 tablets take off. Earlier this year Best Buy agreed to build Microsoft Stores within hundreds of locations, effectively replacing the PC department. This gives Microsoft a huge retail base, with trained associates available to tout the benefits of a Windows 8 device.

With Best Buy's price-matching program, as well as competitor Amazon increasingly charging sales tax, Best Buy has greatly reduced the effect of showrooming in its stores. Therefore, expect that a significant fraction of Windows 8 tablets sold this holiday season will come from Best Buy, and devices like the T100 could give the retailer just the jolt it needs to post solid same-store sales growth.

The bottom line
Windows 8 tablets and convertibles are finally price-competitive with Android devices, while providing greater functionality. At $349, the T100 offers a solid tablet and laptop, running a full version of Windows, for less than the cheapest iPad available. I expect these devices to be popular, much like the original netbooks were, as they fill the gap between a tablet and a laptop. Intel has finally broken into the mobile market, and Windows 8 should see greater adoption because of it. It may have taken a year, but Windows 8 is finally realizing its full potential.

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The article The Second Coming of Windows 8 originally appeared on Fool.com.

Timothy Green owns shares of Microsoft and Best Buy. The Motley Fool recommends Intel. The Motley Fool owns shares of Intel and 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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