Microsoft to drop price of Windows 8 licenses 70% for low-end devices, report says

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In a bid to stave off competition in the low-end tablet and notebook market, Microsoft will be reducing what it charges device manufacturers for its Windows 8.1 licenses, according to a Friday Bloomberg report that references anonymous sources. For devices that retail for less than $250, the cost of a Windows 8.1 install will drop from $50 to $15, with no restrictions on the type or size of the hardware, Bloomberg reports.

It’s a move that could inspire manufacturers to make super-low-end Windows tablets, but might have even greater impact in the notebook space, where manufacturers are moving toward sub-$250 Chromebooks running Google’s free Chrome OS. Take, for example, Samsung’s Chromebook 3, which retails for $230. If that machine were running Windows, a huge chunk of its build-out costs would be going to Microsoft—and the notebook probably wouldn’t cost price-conscious consumers just $230.

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Notebooks like the $230 Samsung Chromebook 3 are putting pressure on Microsoft at the low end of the PC market.

Windows 8 is selling poorly relative to Windows 7, with some 200 million licenses sold since Windows 8 was released in October 2012. For comparison’s sake, Windows 7 sold 240 million licenses within its first year.

Obviously, the traditional PC market is losing a battle of relevance to tablets. The public’s poor reaction to the Windows 8 interface doesn’t help. Nor does the dearth of rock-star-caliber apps in Microsoft’s Windows Store. But the currently high pricing of Windows 8 only impedes Microsoft’s efforts to place Windows in inexpensive, commodity-caliber devices. Successful sub-$250 Android tablets tell us there’s a market of interested consumers who don’t want to spend $299 on an iPad mini.

On Friday, The Verge reported that the 70 percent price reduction is part of larger revision of licensing policy, according to anonymous sources familiar with Microsoft’s plans. The most intriguing change: Microsoft would automatically boot Windows to its desktop on non-touchscreen hardware.

Score another win for traditional PC users. Microsoft is clearly getting the message.

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