Microsoft slashes Windows 8.1 pricing 70% to make way for cheaper devices

Microsoft has reportedly cut the price of Windows 8.1 for OEMs to help spur on development of sub $250 devices. Previously, Microsoft was charging $50 per licenses but now is only charging $15 and that will help OEMs cut the prices on their devices.

Microsoft recently announced that they had sold 200 million copies of Windows 8 which means that based on the current rate of sales, from launch to today, Windows 8 is selling at a rate of about 420,000 licenses per day.  For reference, Microsoft sold roughly 240 million license of Windows 7 in a 12 month time period but it has taken Windows 8 15 months to hit 200 million sales. It’s quite clear that, while 200 million is a massive number, it is at a slower pace than Windows 7.

The cut in price will help to accomplish several goals. First, it will help OEMs shave more dollars off their products and that will help them to lower to price of consumer products. Second, it should help to move more Windows 8.1 licenses and while it will help Microsoft’s bottom line, albeit to a lesser degree, it should help Microsoft gain more market share with it’s latest version of Windows. Finally, it will help Microsoft compete against ChromeOS products that are pushing hard on the floor to lower prices for entry-level products.

According the report by Bloomberg, larger OEMs were paying licensing fees closer to $30 when marketing incentives were included. So, yes, the cut is quite large and if true, which we have no reason to doubt based on the track record of the source, we should soon see the trickle down affect make its way to retail shelves.

As the competition for What about Windows RT? next generation devices continues to heat up, especially in the tablet space, this price cut will go a long way to help assert Microsoft’s presence in this space. Microsoft has recently shown that low cost Windows Phone devices are critical to helping the platform grow and this cost cutting move could be a move by the company to extend that trend to Windows products.  

Another interesting perspective comes up too with the lower price point. If Microsoft is selling proper Windows 8.1 to OEMs at $15 a license for low-end devices, what does this do for Windows RT? Think about it, from a vendor’s perspective, if RT and 8.1 licenses are close in price, unless ARM chips are considerably less expensive than Intel silicon, the value for OEMs is not there. More so, it is easier for OEMs to market devices running Windows 8.1 as they don’t have to educate the consumer on the differences between Windows RT8.1 and Windows 8.1

Source: Bloomberg

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After reading the comments above, it's clear that almost NO ONE ready even the first line of the story

Microsoft has reportedly cut the price of Windows 8.1 for OEMs to help spur on development of sub $250 devices.

This has NOTHING to do with RETAIL copies of the OS or how good/bad 8.1 is selling in the market.. This has EVERYTHING to do with helping OEMs keep low cost devices at or below the cost of Chromebook prices so they can be just as appealing to the consumer while shopping for a new low-cost device.

TsarNikky said,
The new pricing for Windows-8 is now more reflective of its value.

Same tired argument from you. Give it a rest and let others enjoy Windows 8.x. If you don't like it, fine, but nobody else cares.

Most folks I know with 8 don't upgrade to 8.1 because they have to go through the Windows Store. I bought mine with it installed. or I wouldn't be running it either. That said I thought the software itself would be greatly reduced in price and possibly made available non gratis to the lowly consumer. Linux is going back on the old XP laptop in the near future. Good to see the folks in Redmond finally decided on a new CEO, sure hope the old boy has a clue.

Android licenses are more expensive. Just remember that Microsoft gets 8$ for every Android device sold. And together with Googles store tactics, the device manufacturers will slowly use Windows more often than Android.

Not sure why the author thinks this has any bearing on the Windows RT version.

Windows RT = compiled for ARM aka WOA
Windows 8 = compiled for x86 or x64

They are the same OS. (Microsoft artificially restricts non-WinRT Apps, but that is a operational policy.)

Vendors that want to build ARM based Windows devices will continue to use Windows RT. As the ecosystem continues to grow, the usefulness of these devices will gain popularity, even if Windows RT is not seen as a success for several years.

Dane said,
Can consumers get it cheaper now?

I would imagine that if it is cheaper for the OEMs, the OEMs would pass the savings off to the consumers. Doesnt always work that way tho.

THE_OBSERVER said,
this is true. MS should give the saving direct to customers!

Considering most sales of Windows are with ones that cone with a new PC, and has been since Windows 95, there is no point in dropping the price of the standalone disc. The OEM price has dropped so that already benefits virtually all consumers.

ComputerWorld recently did a report indicating out of those 200 million licenses sold, 170 to 184 million are active users of the software, while the rest might be downgraded to earlier versions of Windows or in warehouses. No matter how you look at it, 170 to 184 million is still astounding. This does not account for Volume License either. In essence, Windows 8 is not a flop, but it is not well received either.

Raa said,
Or maybe they're just cutting the price to try and increase sales of Windows 8.x?

Microsoft cut XP licenses for netbooks to kill Linux. Rinse. Lather. Repeat.

Dot Matrix said,

Microsoft cut XP licenses for netbooks to kill Linux. Rinse. Lather. Repeat.

It worked surprisingly good too. Before that the large majority of netbook ran Linux

Dot Matrix said,
Microsoft cut XP licenses for netbooks to kill Linux. Rinse. Lather. Repeat.

Linux never was a threat. During that time, most distros were a PITA to use. It never had a chance. Linux is much easier now but it will never be more than a 3rd option. I like it, I use it...but I cant see it as my daily driver. Things are different now. Competition is more fierce.

Edited by techbeck, Feb 22 2014, 5:37am :

I disagree. I am not a Linux fan by any means, but I could easily switch to Elementary OS if it didn't mean that I wouldn't be able to run my Windows games well or at all. To people who actually want to be productive on their computers and don't care about playing, Linux could potentially be a viable Windows replacement. It has already infiltrated most of the world in the form of Android, which has become quite a capable OS, and frankly I'm not sure why they don't just put it on Chromebooks instead of ChromeOS.

Darrian said,
I disagree. I am not a Linux fan by any means, but I could easily switch to Elementary OS if it didn't mean that I wouldn't be able to run my Windows games well or at all. To people who actually want to be productive on their computers and don't care about playing, Linux could potentially be a viable Windows replacement. It has already infiltrated most of the world in the form of Android, which has become quite a capable OS, and frankly I'm not sure why they don't just put it on Chromebooks instead of ChromeOS.

Because chromeOS has more lockin than using android does, sure you can use other web services on it but no apps and odds are those who get one will just use the Google services that are already set up on it and not bother with alternatives. With android you'd be able to take much of that control away from Google through apps and rooting and other custom tinkering.

Seems like a good idea, the budget market seems to attract the most numbers and the store on w8 will benefit from more numbers = the main objective is to get more W8 devices 'out there' and this promotion cant hurt.

It won't require products that use the cheaper licensing to complete logo certification, a process that verifies hardware compatibility, one of the people said. Devices aren't required to be touch-screen compatible, they said.
More Win8 devices perhaps, but what will the quality be like? A flood of cheap badly built devices is not going to reflect favorably on the OS.

Romero said,
More Win8 devices perhaps, but what will the quality be like? A flood of cheap badly built devices is not going to reflect favorably on the OS.

It doesn't seem to have hurt windows in the past, look at the budget end of the laptop market, its a sea of crap.

duddit2 said,
It doesn't seem to have hurt windows in the past, look at the budget end of the laptop market, its a sea of crap.
Given how the PC market is shrinking, OEMs are disappearing, MS is relatively new to the tablet market and the (overblown) reaction to Windows 8, adding to the sea of crap might not be a wise move right now.

I wonder if Windows 8.1 Update 1 will bring a price cut to the retail licenses? BUILD is coming up what better way to promote the platform but announce a change in price? Its a little early to announce anything for Windows 9, so I don't expect that, but Microsoft has to considering doing something with the price. If they are going to be a device, software, and services company they have to consider doing something different.

TheGhostPhantom said,
I wonder if Windows 8.1 Update 1 will bring a price cut to the retail licenses? BUILD is coming up what better way to promote the platform but announce a change in price? Its a little early to announce anything for Windows 9, so I don't expect that, but Microsoft has to considering doing something with the price. If they are going to be a device, software, and services company they have to consider doing something different.

The Bloomberg article says this is only for OEMs and for devices that meet the specified retail price point. It doesn't mention retail. They do need to do another discounted upgrade offer at least, though.

Eric said,

The Bloomberg article says this is only for OEMs and for devices that meet the specified retail price point. It doesn't mention retail. They do need to do another discounted upgrade offer at least, though.

Yeah, I'm surprised they didn't do it for 8.1 like they did for 8.0 to get people from older versions to upgrade. With a quicker release cycle going on in a sense they can do more of these limited time upgrade offers and actually make more I bet. It's always been the case that few people even upgraded and only got a new version with a new PC which is happening less and less since they're lasting longer.

Hopefully that means the next generation of 8" devices in particular see massive improvements while maintaining their price points. Higher resolution successors to the Venue 8 Pro and Thinkpad 8 would be nice.

Windows RT/Phone OS should be licensed for free to OEMs (so long as the hardware meets the requirements). This would actually make it cheaper for OEMs to build Windows RT/Phone devices than Android--since OEMs have to pay a licensing fee to Microsoft (yes, Microsoft) to use Android.

This would allow OEMs to make (more) money off of Windows Phones and offer them for lower prices. Lower prices would lead to more sales. More sales would lead to more developer mindshare. And all of this would build more momentum for the platform. Microsoft would then make up the money lost on licensing fees from their 30% cut of app sales (assuming they gain significant market share). Suddenly, Microsoft would be a real player in mobile. Or so the theory goes.

cybersaurusrex said,
Windows RT/Phone OS should be licensed for free to OEMs (so long as the hardware meets the requirements). This would actually make it cheaper for OEMs to build Windows RT/Phone devices than Android--since OEMs have to pay a licensing fee to Microsoft (yes, Microsoft) to use Android.

This would allow OEMs to make (more) money off of Windows Phones and offer them for lower prices. Lower prices would lead to more sales. More sales would lead to more developer mindshare. And all of this would build more momentum for the platform. Microsoft would then make up the money lost on licensing fees from their 30% cut of app sales (assuming they gain significant market share). Suddenly, Microsoft would be a real player in mobile. Or so the theory goes.

Keep in mind a) you don't *have to* pay MS anything other than your dev license fee to sell anything on their platform. b) After you hit a certain amount MS's share goes down significantly.

Not saying you are wrong, in fact I agree with you. But people need to realize that, unlike Apple, you can completely cut MS out of the app revenue if you choose to roll your own solution.