Low-cost devices could help Microsoft gain share in hardware

Jun 9, 2015 07:48 GMT  ·  By

The word on the street is that Microsoft is working with partners to bring cheaper devices to the market, including a laptop that would be available for around $169 (€145) and would be specifically designed to slow down the growth of Google Chromebooks and boost adoption of Windows 10.

Undoubtedly, such a device would really be a great opportunity for first-time Windows users or for those upgrading from Windows XP and looking for a new laptop to work and stay in touch with friends and family on the go, but its limited hardware capabilities would obviously be somewhat limited.

And yet, a $169 Windows 10 laptop can be a hit in schools, where teachers and students are still looking for affordable tools to make the teaching and learning process easier and more effective, but what if Microsoft wants to go even beyond that and launch a cheaper Windows laptop?

What a $99 laptop can do

Basically, $99 is the lowest price that Microsoft can go for a Windows 10 laptop, although the company would still be losing money with it, obviously depending on manufacturing costs and the used hardware.

But Microsoft doesn’t necessarily need to make money with such a laptop, but instead keep the costs/price ratio flat and still have a lot of benefits from a $99 Windows 10 notebook.

Basically, such a project would have three major immediate results.

First of all, a $99 laptop would greatly boost short-term Windows 10 adoption. Microsoft needs that, and that’s one of the reasons Windows 10 is offered as a free upgrade for those who are currently running Windows 7 and 8.1 on their devices.

Such a cheap device could bring Windows 10 in every house out there, as an extension to Bill Gates’ dream (which in the meantime came true) to bring a PC on every desk. Almost everyone would afford such a laptop, and as a result, everyone would be using Windows 10.

Second of all, it can slow down the growth of Google Chromebooks, which are skyrocketing these days because of their low price.

It’s no secret that Microsoft sees Chromebooks as an important rival to its Windows lineup of devices, so going for a price like $99 can easily address this problem in the long term. It takes time for Google and others to develop similarly priced products, and meanwhile, many would switch to Windows 10.

And third of all, it can help Microsoft expand into the hardware industry, where the company is still lagging behind rivals. Microsoft attempted to become a hardware player for the first time in October 2012, when it launched the Surface RT, and although several other devices have launched since then, the Softies still have a long way to go to become an important name in this side of the industry.

Why it’s not yet possible

While many think that it shouldn’t be too difficult for a company the size of Microsoft to build such a device, there are several factors that do not allow the Redmond giant to go in this direction right now.

Microsoft launched the Surface RT in October 2012 together with Windows 8
Microsoft launched the Surface RT in October 2012 together with Windows 8

First of all, a $99 Windows 10 laptop would harm competition and the Windows ecosystem. Back in October 2012, when Microsoft launched the Surface RT, many companies that were previously considered to be partners got upset because, with such a tablet, the Softies became a rival and competed for the very same customers in the same world.

Then, Microsoft has always been a premium device manufacturer, and the quality of the Surface tablets is living proof. This is actually how things have always been in the relationship between Microsoft and partners in the hardware industry: Redmond focused on premium devices, while its partners released more affordable laptops and tablets running Windows. So Microsoft might not yet be ready to change this direction and switch to low-cost devices.

And last but not least, it’s the price of the device. Microsoft would lose money with a $99 laptop, so it must find a way to cut its cost as much as possible.

That shouldn’t be too much of a problem, though, as the Bill of Materials and the manufacturing costs of each device are often less than half of the MSRP. In Surface RT’s case, for instance, the BOM was $271, while the manufacturing cost accounted for only $13, leading to a total cost of $284. The Surface RT was available for $599 when it hit the market.

But in the end, if Microsoft finds a way to create such a device, Windows 10 has all the chances in the world to be a hit. Who’d buy a $99 Windows 10 laptop?

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$99 is the lowest price a laptop can go
Microsoft launched the Surface RT in October 2012 together with Windows 8
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