2013 will undoubtedly be an “interesting” year for consumer technology. While devices like tablets and smartphones go from strength to strength, PC makers and traditional CE makers in TV, audio, and cameras continue to struggle to turn a profit . . . and that’s before you factor in high-street retail woes and no end in sight to recession-driven belt-tightening. Aside from ongoing evolutionary trends, what will really break through in 2013?
Kickstarter-funded projects need to deliver. One of the breakout successes of 2012 was Kickstarter. Although started in 2009, it was only in 2012 that high-profile projects started to appear and get funded. The downside of this popularity is that more and more projects from inexperienced business startups are appearing. This has led to some high-profile disasters, such as the Code Hero debacle, and a number of projects (particularly games) being abandoned following funding success. Delays are even more endemic: CNN Money compiled a excellent list of the top 50 projects, and just eight shipped on time. In 2013, some of the larger projects, such as the Pebble Watch or Oculus Rift system, need to reach consumers if Kickstarter is to maintain its reputation; the increasing recognition that giving money doesn’t entitle the donor to much if a project goes pear-shaped doesn’t help here.
Tablets will really take off, with multiscreen becoming a focus. After a slow start at the beginning of 2012, tablets from Apple, Amazon, as well as Google and partners were flying off the shelves by year end; this was less true for RIM and Windows RT devices. Predicting that this category will grow in 2013 is like predicting that gravity will keep working at this stage. But what other trends will the success of tablets lead to? Probably the most important is the rise of multiscreen behavior particularly when looking at consumer media. Techies have been networking and syncing devices for years, if not decades, but it’s only with the rise of the iPad, Nexus 7, Surface RT, and Amazon Fire HD that normal folks have a device that is seamlessly synced to their media libraries, browsing history, and AV equipment. This allows new behaviors such as a) two-screen movie/TV viewing (see Microsoft’s Smart Glass); and b) bookmark portability — both for browser bookmarks and eBooks — meaning that you’re always able to pick up where you left off.
Cloud services and streaming will improve. While enterprise cloud investment continues to be the “next big thing” (as per IDC, Gartner et al), consumer cloud services are going from strength to strength. Apple, Google, and Amazon will now store nearly your whole media library in the cloud, facilitating even more of the multiscreen behavior described above; and Dropbox, SkyDrive, and Google Drive make sharing files between devices and friends easier than ever. Streaming services like Spotify, Pandora, and Deezer are gaining momentum as broadband connectivity becomes more reliable and usage caps get higher.
Gaming will reach a crossroads. 2012 was not a good year for videogaming; a number of developers and publishers closed, and retail was hit hard. Aside from the obvious reasons for this (recession spending reductions and home consoles getting long in the tooth), the rise of both tablets and free-to-play (F2P) games has changed the gaming landscape enormously. 2013 will see the release of new consoles from both Microsoft and Sony, but those publishers that fail to adapt to the new realities of the marketplace may well follow THQ into bankruptcy.
Smartphone proliferation will put new functionality in consumers’ hands. As with tablets, it’s pointless to cite a trend of greater smartphone adoption. It’s far more interesting to look at what new functionality will reach critical mass because of the rapid life cycle of phone development, fuelled by rabid consumer demand. 2013 will see:
NFC and mobile payments reach early-stage critical mass. Whether you’re looking at embedded NFC applications or add-on dongle payment services (like Square , Bank of America , or ROAM), the rapid adoption of new smartphones means many consumers will have access to mobile payment technology sooner rather than later; of course, whether they then feel comfortable making payments this way is a more complex question.
Wireless charging. While 2009’s Palm Pre was one of the first consumer smartphones to offer built-in wireless charging, that device sank along with the rest of Palm (thanks HP!). Now, though, devices from Nokia, Google, Motorola, HTC, and Samsung allow for wireless charging; some, like Nokia’s Lumia 920 and Google’s Nexus 4, include the phone end of the technology by default. Even better news is that most of the devices use the Wireless Power Consortium’s Qi standard, so one charging mat should serve for multiple devices.
The return of Bluetooth for non-headset devices. After a huge explosion in the availability and usage of Bluetooth headsets and hands-free speakers back in the mid-noughties, it seemed that Bluetooth had pretty much had its day; Wi-Fi and high-bandwidth communication protocols like WHDI seemed like the way forward. However, newer versions of Bluetooth (v4) offer better data rates and lower power usage. More importantly, as tablets have grown in popularity, a swath of new accessories has emerged: game pads, keyboards, and portable speakers all trade high data rates (or sound quality) for ease of use. 2013 will see even more of these accessories combined with new usage models — just look at a bunch of those popular Kickstarter projects. In many cases, they pair up nicely with wireless charging — see JBL’s Wireless Charger Speaker for the Nokia Lumia.
These technologies will make an impact in 2013 but won’t reach critical mass:
3D printing. Consumer 3D printers are a tremendously exciting field for tinkerers and hobbyists; the ability to print small but complex objects in a variety of materials has the potential to revolutionize many aspects of our lives (distribution, repairs, art, etc.). But it’s all just “potential” at the moment: Consumer 3D printers are messy, are difficult to set up, and struggle with certain shapes (depending on the technology used). Expect lots of stories in 2013 about 3D printing (3D print shops, IP theft, etc.) and significant advances in the quality versus cost of devices from Makerbot, Ultimaker, and Fab@home, along with better software tools . . . but don’t expect to see millions of these devices in consumers’ homes. The 3D print bureau service (like Staples or 3Dprintuk) seems more likely to grow in the short term, in the same way that Kinko’s provided printing and duplicating services for consumers before cheap multifunction printers arrived.
Augmented reality and 3D headsets. High-profile announcements from Google and the increasing power of smartphone and tablet platforms have reignited interest in augmented reality. Similarly, Kickstarter Oculus Rift has created buzz around 3D headsets. Both of these technologies will offer more immersive experiences, better UIs, and more natural engagement with technology in the future, but component costs, portability, and limited processing power mean that 2013 will not be the year of “X reality” — be it augmented or virtual.
Streaming video to smart TVs and the death of traditional ‘broadcast’. It seems strange that when we’re talking about multiscreen viewing and cloud services taking of we are still some way off of Smart TVs and TV-based internet video services becoming successful. 2013 will see this space ramp up significantly – with potentially Apple, Sony and Intel getting in to the space (news from CES may offer some insight) – but rights issues, complexity, long replacement cycles and mainstream consumer apathy means it will be some time before traditional sources for TV content (ie pay TV providers) see significant threats emerge. The exception to this rule may be emerging markets where broadcasters don’t yet have sports and movie rights tied up and lack a critical mass of signed-up consumer households – Smart TV video services could make real inroads here – but hardware prices will stymie much of this.
Oh dear: I had such high hopes of Microsoft’s Surface tablets — particularly when those rumors of an extremely aggressive price of $199 started circulating. Even the speculation around a $299 to $399 price point left some hope of success. Now that the pre-order service has gone live, it’s apparent that the price point Microsoft has chosen will restrict its sales to the usual fervent tech buyers and Microsoft staff (although they don’t get one free from the company, which is actually quite a good way to improve unit shipments).
Priced at $499 for a 32 Gb version — plus an additional $100 for arguably its best innovation, the keyboard cover — the Surface RT simply isn’t competitive. Sure, it’s a similar price to an iPad (but probably around twice the price of an iPad Mini) and may be similarly priced to the (unseen) 10-inch Nexus when released (but more than twice the price of the Nexus 7), but this ignores the installed base and apps ecosystem for the Android and iOS devices — and you don’t even get a full Windows experience on this ARM tablet. A cut-down version of Office is nice, and may be worth up to $50 for some consumers, but an Intel-based Acer Iconia W510 can be had for the same money. And arguments about differences in on-board storage make less an less sense as these devices increasing tap into iCloud, SkyDrive etc.
Microsoft is also ignoring the stage of development of the tablet market. We are now seeing third- or fourth-iteration tablets on rival platforms, and firms like Amazon are lowering costs by using differing business models. This isn’t like Xbox, where Microsoft could jump in at the start of a new generation because each generation effectively started from scratch; it’s not even like Internet Explorer, where the firm was late to market but used its sheer critical mass to drive the browser to No. 1.
It’s a depressing illustration of the position that Microsoft finds itself in – keen to be a “devices and services” company but tied to a variety of OEMs that it is desperate not to offend (at least in the short term). It has to price high and build hardware to “inspire” partners, but the trouble is that few are inspired by devices that fail to sell. Ironically, after all the efforts to port Windows to ARM architectures, Microsoft may have been better served by waiting a year or so until x86 tablets had established an ecosystem and then releasing the ARM device with better battery life and a more competitive price (as component costs fall).
As more and more OEMs release details of their Windows 8 touch devices, pricing trends are starting to become apparent: $499 to $649 for an x86 tablet (Acer, Lenovo); $500 to $800 for a touch-enabled laptop (pretty much all the OEMs); and premium pricing for large all-in-ones and innovative form factors (Asus TaiChi, Sony Vaio Duo 11, Dell XPS 12). All in all, this pricing is reasonable and demonstrates where OEMs are focusing: touch-enabling traditional form factors and sticking with x86 architectures. It will be these devices (with perhaps a couple of cheap OEM RT tablet) that businesses start to experiment with and that consumers buy as their “next PC” — not the failed attempt to jump on the ARM bandwagon that the Surface RT represents.
Don’t get me wrong: I think the Surface is a beautifully designed tablet with some excellent engineering and a novel UI — better than most of the existing competition. Doubtless, the couple of hundred consumers who buy them will love them to bits. Unfortunately, this all sounds depressingly familiar; perhaps Microsoft should have called it the Zune HD Surface.
In what is likely to become a trend in the next month, two OEMs announce their Windows tablet pricing pretty much at the same time. Acer has bagged the “first!” title for announcing and getting journalist/blogger hands on its Windows 8 tablets; (I’m assuming, of course, that those leaked ASUS prices were simply a joke/placeholder). Shortly after, Lenovo unveiled the pricing for its raft of tablets. My initial impressions: not bad, some interesting innovation, still a bit pricey for consumers (particularly for an Acer), and it throws Microsoft Surface pricing into even more doubt.
As of November 9, you will be able to buy a Windows 8 tablet for less than $500. That price will get you the 10.1-inch, 32 Gb Acer Iconia W510, fully $100 cheaper than the equivalent iPad (although the screen resolution is much lower). But, disappointingly, to get a keyboard dock included, you need to get the more expensive 64 Gb version with a $750 sticker price; as yet, there’s no price for buying the keyboard dock separately.
Interestingly, Acer also plans to sell the Iconia W700 for $799 to $999. Wait, what? An 11.6-inch tablet using a “proper” Intel CPU, with a better resolution screen, twice the storage, a dock, and a Bluetooth keyboard will be within $50 of the keyboard version of the W510?
Lenovo seems keen to cover every conceivable base with its Windows tablet offerings:
The ThinkPad Tablet 2 is broadly similar to the Acer Iconia W510 and starts at $649 ($799 with a keyboard dock). The ThinkPad name clearly indicates that this is a business-focused device.
The ThinkPad Twist is another business-focused machine and is really a convertible laptop rather than a true tablet. It starts at $849 — a fairly aggressive price for a true laptop replacement.
Similarly, the IdeaPad Yoga 13 is a convertible 13-inch that starts at $1,099 (yikes!). There is also an 11-inch IdeaPad Yoga 11 that — most interestingly — is a Tegra-based Windows RT device starting at $799.
Finally, the IdeaTab Lynx is the consumer tablet (and a close relative to the Acer Iconia W700). It has an 11.6-inch display with a Clover Trail processor and starts at $599 (plus $150 for the keyboard dock).
What this means:
We’re unlikely to see x86-based OEM Windows 8 tablets for less than $500 — or $750 for keyboard versions. While it is trying its utmost to shed its cheap-and-cheerful image, Acer still tends to come in at the low end of the OEM pricing spectrum. Similarly, Lenovo’s consumer PCs tend to emphasize value, while the ThinkPad business range focuses on solid reliability. Here, we can see the two OEMs with probably the lowest prices. Sony, HP, Samsung, and ASUS will almost certainly charge more for their equivalent tablets, and even Dell is likely to be on par at best.
The low-end Windows tablets aren’t a great replacement for laptops. We must also remember that the Clover Trail-based tablets are basically rocking an optimized netbook processor. While this should guarantee good battery life and a cooler running temperature, we’ve yet to see how well this tablet configuration performs in real-world, multitasking use; it’s likely to be as good as other tablets, but it certainly isn’t a replacement for a decent laptop. True PC replacements will probably need: 1) Intel Core i3/i5/i7-based CPUs, which will likely be markedly more expensive (I did mention what a bargain the Surface Pro is looking to be!), and 2) systems based on the newly announced AMD Z-60, which will carve out a middle ground between the two Intel platforms.
Is the Windows Surface Pro really “only” $800? This pricing also makes Ballmer’s $300 to $800 price range for Microsoft Surface devices look shaky. The x86-based Surface Pro will be at the top of that super-wide range — but has a high-resolution display, 64 Gb or 128 Gb of storage, keyboard / cover and a Core i5 processor instead of the weedy Clover Trail Atom processor that’s in both the Iconia W510 and IdeaTab Lynx (warning: don’t use it on your lap!). That starts to look like a comparative bargain if it really is only $800. With an extended warranty, the Acer Iconia W700 already runs up to $1,049.
The $199 Windows Surface RT really was just wishful thinking. ARM-based Windows 8 tablets should be cheaper than x86 tablets, but how much cheaper? $299 to $399 or $399 to $499 seem to be the current bets (without keyboards), but we haven’t seen any offerings as cheap as this yet. Lenovo is obviously hoping that the innovative design of the IdeaPad Yoga 11 will command a massive premium! Let’s face it, a $499 Windows RT tablet isn’t going to fly with consumers, particularly when an x86 is the same price (for a lower spec potentially) — thats even assuming consumers can be dragged away from the Apple aisle. Even $350 to $399 is beyond the “impulse buy” price range that might help them fly off of the shelf. I’m not sure Microsoft will need those midnight openings to satisfy pent-up demand.
Obviously BOM (Bill of materials) is restricting how low prices can go. There is already some excellent analysis putting the cost of building a Microsoft Surface RT tablet at $300+, an x86 version would be slightly more. As Android tablet makers discovered, the display & touchscreen elements don’t come cheap – and that was when they didn’t have to pay for an OS! For a new product category without volume supply / manufacturing economies (like Apple has) there is precious little margin to be had if the retail price is to be attractive to consumers.
To be fair, it’s still early days. The Surface Pro isn’t scheduled to be released until early 2013, and Acer or Lenovo could adjust prices down as other OEMs lift the veil on their hardware. The most promising devices so far (that we know the price of) are those PC-replacement convertibles; they match the price of Ultrabooks and offer the best of both worlds, albeit in a more bulky package.
My guess is that by the end of the year, Clover Trail Windows 8 tablets (without keyboard) will be available from $399; “PC-replacement” tablets will be around the $799 mark; and Microsoft will still choose to price the Surface Pro at more than $800 ($899 or $999 seem most likely) to appease its OEM partners.
At various points during the past 24 hours, Nintendo has revealed the release dates and prices of the Wii U console in different geographic markets. Two versions will ship: a basic/White Wii U (Japan: ¥26,250; US: $299; UK/EU: around £200 or €250) and a Premium Black Wii U (Japan: ¥31,500; US: $349; UK/ EU: around £250 or €310). For the extra $50, aside from a more traditional console colour, you get four times more Flash memory (32 GB), charging stands for the tablet controller and console, a bundled NintendoLand mini-game collection, and a three-month pass for the “Nintendo Network Premium” online service. Initially, the games won’t support a second tablet controller (which, when purchased separately, will cost a whooping ¥13,440 in Japan — the only market where they are available separately at launch), but this will come over time. The good news is that almost all the Wii controllers, balance boards, and other random bits of plastic you’ve invested in should work with the new console.
Some initial thoughts:
Is the pricing right? Putting aside regional variations — Japan has always paid more for its consoles, and Europe has variable value-added tax — the price of the new console isn’t too bad. Sure, it’s higher than traditional Nintendo launch prices, but this was partly forced on the company by the competition. It’s certainly cheaper than the last-generation launch prices from Microsoft and Sony. A more interesting question is whether consumers are still prepared to pony up $350 for a new console when they have other compelling options like tablets, smartphones, and social gaming in which to invest. Incidentally, Gamesutra has a very nice comparison of historic console launch prices, even adjusting for inflation, here.
The tablet controller offers some interesting “second screen” game-play opportunities. Many game publishers already complement console/PC releases with companion iPad games or apps (e.g., Mass Effect 3 Infiltrator and Datapad Apps). Nintendo and Sony have also offered console connectivity for their portable consoles in the past. But this is the first time that the second display can be taken as a given for the entire console-owning base. Naturally, the first opportunity is to use the controller screen in a similar fashion to the lower touchscreen on a Nintendo DS. Over and above that, though, developers are pushing the boundaries with asymmetric multiplayer gaming as a real differentiator — i.e., up to 4 ”players” use traditional controllers to interact with the game on the TV, while another player assumes a “God” (or spectator) role with the tablet controller, looking on and driving the overall experience. This effectively takes role-playing gaming right the way back to the original Gary Gygax Dungeons and Dragons tabletop game. Penny Arcade sees some cynical, but probably true downsides to this!
This brings second screen TV entertainment to the rest of us. The Wii U TVii functions look nice, allowing social discussion, deeper program engagement (maybe with advertising?), and a more intuitive program guide integrated with multiple providers . . . all for free out of the box in North America. Not that you couldn’t already do this with an iPad (costing from $399) or with an Xbox 360 and “Project Glass” (provided you have Xbox Live Gold for $60 a year and a compatible tablet costing . . . well who knows!) if you were a geek with money to burn. So it’s a much cheaper solution for what looks like a nice experience. All the major US/Canadian networks are on board, along with Netflix, Amazon, Hulu, etc. It’s not yet clear how much extra effort these content and distribution firms will invest in generating the required metadata, but at least many of the sports stats, trivia and social connections are pretty much already there to be tapped into.
Why is this likely to be Nintendo’s last home console? Even though we’ve watched OnLive crash and burn and Gaikai be absorbed by Sony, this doesn’t mean game streaming is dead — the days of dedicated game consoles are still drawing to an inevitable close. Why? For the same reason that dedicated cable boxes or video-streaming boxes like Boxee will disappear. The technology will be incorporated into other devices; it could be the TV, a wirelessly connected tablet, or eventually a proper functional cloud streaming service. Incidently, Microsoft and Sony also have just one more console in them; by the end of that generation (in five years’ time, perhaps), I’d expect expensive, dedicated console hardware to have run its course.
It has the field to itself for a year. Speaking of the competition, it’s clear that we won’t see new consoles from Sony and Microsoft for at least a year, maybe longer. Nintendo will have the ”next generation” to itself — although Sony and Microsoft will argue, with some validity, that the Wii U is only really comparable with their current generation. Another factor that may help Nintendo in the closing months of 2012 is the delay of several key titles (such as Bioshock Infinite, Tomb Raider, Alien: Colonial Marines, DmC, etc.) to early 2013, leaving core gamers with extra money to spend; some of that may well head Nintendo’s way.
So, can the Wii U succeed? It’s by no means a slam-dunk for Nintendo. Many dedicated gamers — Nintendo’s old core audience — felt let down by the “casual” games that proliferated on the Wii (ironically, the same games that made the console a mainstream success), along with too many Mario ports (no sign of that changing) and mainstream consumers have long since boxed up their Wiis. Add in the rise of social gaming on PCs and tablets, and the appeal of a dedicated console that doesn’t even play DVDs, let alone Blu-ray discs and with just one (albeit innovative) controller seems tough. But Nintendo needs this to work. Unlike Sony and Microsoft, it doesn’t have a fall-back business model or ”multidevice living-room strategy” from which to recoup its investment. And the additional pressures in the portable gaming space from smartphones and tablets mean that Nintendo really has a battle for survival on its hands.
My take: At this stage, I’m prepared to give Nintendo the benefit of the doubt. The hardware looks good; it has strong support from publishers and TV content/distribution owners in North America; and backward compatibility with Wii titles means that there is an extensive collection of games out there in addition to the launch window titles. By the end of Q1 2013, we’ll have a better idea of whether Nintendo will survive as a home console platform owner or follow Atari and Sega down the software-only route.
As expected, Jeff Bezos announced new Kindle products yesterday in Santa Monica — and what an interesting range of products these turned out to be! While the updated Kindle eReaders offer better performance and a lower price point for those dedicated eBook lovers, it’s the Fire range that really impressed.
In place of the low-powered, fairly low-spec, North America-only original device, there are now three to four devices — running the gamut from version 2 of the original all the way up to the 4G-enabled 8.9-inch Kindle HD with its own data plan. The pricing of the devices is even more intriguing — at $159 for the lower-end 7-inch tablet, $199 for the 7-inch HD tablet, and $299 for the 8.9-inch HD tablet (Wi-Fi only), these represent a new challenge to other manufacturers’ Android devices and Microsoft’s upcoming Windows 8 tablets. Additionally, European markets (the UK, Germany France, Spain, Italy) will get to see the 7-inch Fire devices (both version 2 of the original and the HD device) at more or less the same time as the US – no sign of the larger device, but that’s probably reserved for the US market while supply ramps up.
What does this mean?
Android tablets (aside from the Nexus) are dead in the water. With Google and Amazon both squeezing the price of Android tablets, its difficult to see how Samsung, HTC, etc. can compete in this space, especially given that they don’t have Amazon’s and Google’s alternate revenue streams to supplement loss-leader hardware. The Verge published a very good article on this prior to Amazon’s announcement.
Microsoft finds itself at a crossroads. Microsoft now has two options for the Windows 8 RT tablets:
Stick to its “The Kindle Fire and the iPad are just for content consumption; Windows RT tablets will be for so much more” message that has been its mantra for several years and try to price high — a strategy that’s almost certainly doomed to failure if it relies on retail and mainstream consumers to understand the difference.
Price the Microsoft Surface (RT version) competitively to hit Google and Amazon head on and undercut Apple. The downside here is that it means alienating those already-alienated Android OEMs as well (on the ARM platform at least). Also, Microsoft has very little content or advertising revenue to make its money back on hardware subsidies. So as previously mentioned, the $199 Microsoft Surface RT seems unlikely.
Apple needs to adjust its medium-term strategy. The iPad, iPhone 5, and (probable) iPad Mini will naturally continue Apple’s policy of premium pricing: Why would it slash margins when the competition hasn’t really made an impact? But it’s more important for Apple now to look at what price its tablets will be in 12 to 18 months’ time — a time frame that allows for Amazon Fire, Google Nexus, and even Microsoft tablets to establish a decent market share and application ecosystem. In a market of similarly designed — lawsuits allowing! — well-built devices with active developer support, Apple will need to adjust its pricing accordingly; consumer ties to the iTunes ecosystem can only be stretched so far.
For consumers, it’s win/win (after six months of pain). The upshot of all of this for consumers is that there will be much more choice in the tablet space, more competitive pricing, and a wide variety of capabilities and ecosystems to choose from. This won’t happen overnight, though. To get to this tablet heaven, we’ll need to go through a glut of dismal Android tablets dumped on the market by those OEMs boxed in by Google/Amazon; Windows RT tablets arriving with their confusing “It’s a proper PC, but not really a proper PC” messaging; and endless discussions about poor battery life, built-in obsolescence, and app stores.
What’s next? Apple’s iPad Mini announcement will mix things up again in the next month, and we’re still waiting on pricing details for Windows tablets.
For once, IFA in Germany was quite interesting, with many OEMs taking the opportunity to unveil their next generation of tablets and smartphones – the majority of which ran versions of Windows 8.
Both Sony and Toshiba offered sliding-keyboard Windows tablets, with Sony also showing a 20-inch tablet. Dell had a good-looking update of its “flip-screen” Dell Duo device — the Dell XPS Duo 12 — along with a 10-inch Windows RT device. .
Samsung labelled its family of Windows 8 devices “ATIV” — announcing both ARM and Intel tablets as well as a smartphone.
Several OEMs also showed touchscreen ultrabooks — HP, Samsung, and Acer among them. Asus revealed a hybrid laptop (the Taichi) with two screens, effectively putting the tablet screen on the outer lid of the laptop. Samsung has a similar prototype. A bunch of all-in-ones also sported a Windows 8 update, which should be a shoe-in for one of the few PC categories that’s still shown growth over the past couple of years (admittedly from a tiny base).
Of course, while this is interesting to analysts and the kind of obsessive tech fans who read Engadget and Gizmodo, none of this will feel real to consumers until they see devices on sale in Best Buy or Carphone Warehouse.
Naturally, pricing details are still fairly thin on the ground. This is not too much of an issue normally; you can usually guess a price point based on existing products. But the spectrum of potential prices is particularly wide here, especially for the Windows RT tablets; we still don’t know if the Microsoft Surface RT tablet will really be priced at $199, and so the price of the rival RT tablets could be all over the place. Google’s Nexus 7 and Amazon’s Kindle Fire come in at $199 (should you manage to find stock of the latter), but these are just mid-level 7-inch devices. Will a 10-inch Windows RT tablet command a premium? Probably, but only $100 to $150 at most. Hopefully, manufacturers won’t make the “same price as an iPad” mistake again! It’s clearer where pricing will go for Intel-based tablets, both the low-power units and the true PC tablets; they are going to come in at around $600 to $800 for entry-level devices and will head up from there as they become hybrid ultrabooks.
Another reason that OEMs (and Microsoft) may be keeping their powder dry on pricing is the impending announcements from the rival camps. Amazon is expected to announce new Fire devices on September 6 — including a rumoured ad-supported tablet — and potentially a wider geographic reach than just the US. And, of course, Apple is on the verge (maybe) of announcing the ”iPad mini.” Nokia may even get in on the Windows tablet action when it announces new smartphones on September 5; after all, it did release a lovely looking premium netbook (albeit with sales as near to zero as worth measuring).
With the likes of Sony, Samsung, and Lenovo also showing new Android tablets and smartphones at IFA, the tablet war is finally kicking off!
The inter-web is awash with rumours that the Microsoft Surface tablet (ARM version) will launch in October at a price point of $199. This is less than half the price many people were expecting on the assumption that Microsoft was following the more usual “price it the same as an iPad and see if it sells” strategy (it won’t).
Is it plausible that this is the target price? If so, and I have no deeper insight into the validity of the rumour than anyone else, what does it tell us about Microsoft’s state of mind?
Suddenly, it’s a two-platform strategy: Windows RT is for media consumption. One of the main concerns around both ARM and x86 tablets was the potential for consumer confusion – particularly if they are similarly priced. Putting the Windows RT surface device out at $199 does away with much of that confusion and puts the device squarely in the affordable “media consumption” tablet space (something for which Microsoft has continually derided the iPad and Android tablets). It could be the best device in this category – blowing away the Kindle Fire. Of course, this low-functionality positioning is a bigger risk if the breakeven model relies on the upsell of productivity apps (its unclear what version of Office will ship with the Surface) or a vibrant apps marketplace – you don’t need either of these to surf the Web or watch videos.
It’s a recognition that this is the only way Windows RT will gain traction. As I said when ARM-based Windows was announced back in early 2011, this seemed like a major coup. Since then, though, it has looked more and more like the Windows RT tablet would be DOA given its lack of backwards compatibility, improved x86 performance, and a price point similar to the iPad. But, $199 for a very compelling-looking device would mean that all bets are off; this is a sweet-spot price for impulse consumer electronics purchases and would guarantee very healthy sales (stock allowing). It would also have the added benefit (to Microsoft) of killing off the premium Android tablet market; then again, Google’s Nexus 7 is doing a pretty good job of this already.
It’s a massive internal shift in Microsoft’s strategy. If bringing out its own tablet and disenfranchising OEM partners wasn’t enough, a major Microsoft division is now looking at taking a bath on each unit sold. Bear in mind that this is one of the divisions that has always looked down on Xbox and the consumer businesses for haemorrhaging money. Sure, Microsoft sold Xbox hardware at a loss, but game consoles are recognized industry loss leaders and have shown that the razor/razor-blade model works. Selling enough software, content, or advertising (ha!) for a tablet that may cost you $100 more than the asking price to get out the door is a different matter altogether.
It’s an explicit statement of intent: OEMs will only be able to compete with x86 devices. OEMs are already hurting from a declining (traditional) PC business with razor-thin margins; they can’t afford to subsidize their own Windows RT tablets in the same way that Microsoft can. And nobody is going to pay a significant premium for an HP, Lenovo, or Dell device over Microsoft’s own Surface tablet. So if the price point is real, Microsoft is basically carving out the ARM tablet market for itself.
It’s an interesting time for Microsoft. It desperately needs a successful tablet launch to stay relevant — and for that reason, the first three points above are at least plausible. The final point though is more far-fetched. Kicking the OEMs when they are down is one thing; letting them announce Windows RT devices and then bringing your own to market at half the price is more akin to robbing them at knife point. For this reason, my opinion is the $199 price is bogus or contains contractual telco smallprint.