Microsoft Corp. (MSFT) is reducing the price of Windows 8.1 for makers of low-cost computers and tablets by 70% to compete with cheaper products like Google’s Chromebooks, according to a Friday Bloomberg report that references anonymous sources.
Manufacturers will be charged $15 to license Windows 8.1 and preinstall it on devices that retail for less than $250, instead of the usual fee of $50, Bloomberg reported. Any product that meets the price limit will be eligible for the discount, with no restrictions on the type or size of the hardware.
Sales of M’soft’s Windows 8 system, including its latest Windows 8.1 version, is selling poorly relative to Windows 7, with some 200 million licenses sold since Windows 8 was released in October 2012. That compares with Windows 7, which sold 240 million within its first year. This is largely related to a steady two-year decline in PC sales, as smartphones and tablet sales explode.
By slashing the price beyond the imaginary limits of the customers, and more importantly, equaling the rates of rival company products, Microsoft may be able to increase its share of the growing $80 billion tablet market and stave off Chromebooks, and rival low-cost tablets that run Google’s OS.
Global computer shipments fell a record 10% last year and are forecast to continue to decline this year as the popularity of tablets continues to grow, according to data from market research firm IDC. Tablet sales volume — dominated by Apple (AAPL)’s iOS with 35% market share, and Google (GOOG)’s Android with 60% market share — will climb an average 16% through to 2017.
MSFT closed on Friday at $37.98.