Microsoft Pulls Last Lever, Discounts Windows 8 to OEMs to Spark Sales

Computerworld —

Both the Wall Street Journal and the Asian electronics supply chain publication DigiTimes published reports claiming that Microsoft has cut prices of Windows 8 and Office 2013 in an attempt to spark sales.

"They've always held [pricing] close to the vest," said Allan Krans, an analyst with Technology Business Research, in a Wednesday interview. "They've always been insistent on maintaining that pricing, but a discount makes sense, given the holiday season, the back-and-forth with the OEMs and the slow start to the Surface."

Windows 8, which launched in October, has struggled to gain traction, and failed to trigger a boost in PC sales, as new editions have done in the past.

Earlier this week, for instance, research firm IDC said global PC sales would contract 1.3% this year, a drop atop 2012's even-larger slump of 3.7%. IDC cited an "underwhelming reception" to Windows 8 as one of several factors that will lead to a second-consecutive year of declining PC sales.

A Windows price cut would also mollify long-time OEM partners, who have been increasingly at odds with Microsoft since the Redmond, Wash. developer announced its own hardware -- the Surface line of tablets -- last summer.

The Wall Street Journal, citing unnamed sources, said Microsoft was slashing the price of a combo deal for Windows 8 and Office 2013 to $30 from around $120. The discount applies to OEMs for PCs and other devices with touch screens smaller than 10.8 inches, said the publication.

DigiTimes had a different tale, saying the Windows 8 discount was just $20 off the usual $80 to $90 per PC, and that the cheaper price was applicable to PCs, tablets and hybrids -- hardware that mixes elements of traditional laptops with tablets -- equipped with screens 11.6-in. or smaller.

Discounts on Windows 8 could result in lower-priced touchscreen PC and tablets, perhaps as early as this summer when back-to-school sales kick off.

"If you think about the components in a PC, almost every one has dropped off a [price] cliff," said Krans. "Except for the OS. Microsoft's pricing is their one lever left, the last where it can have a big impact on PC prices."

While touch-enabled hardware has been among the few bright spots for Windows 8, many buyers, used to shopping for cut-rate computers, have balked at their higher prices.

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