According to the Wall Street Journal, Microsoft is already discounting Windows 8 in an effort to spur sales. Microsoft's price breaks appear to target those developing "small, touch-enabled laptop computers" with screens 10.8" or smaller. The idea is encourage developers to create ample supply in the marketplace, creating more competition, while pushing costs down for consumers. Slow sales and steep discounts wasn't exactly in Microsoft's Windows 8 roadmap.
Microsoft's desktop success was due in part to offering Windows at discount to developers who could intern build PCs at half the price of competitors, like Apple. In the mid-90's, when the market for desktop computers boomed, cost per unit was a major consideration. Delivering the consumer a price delta of 40-50% was what put Microsoft into the drivers seat.
Today, it's a mobile war, with Microsoft now offering Nokia Windows phones for free (w/two year contract). It's is hard for Microsoft to win with their traditional lowest denominator pricing schemes. If someone has a few bucks for a device, they probably have $50, and more than likely they'll find $100. And for those going with free devices, it comes down to what brand and product offering is the most coveted, and Apple's winning that battle in spades. Moreover Windows 8 has not been able to close the usability and feature gap on the iOS like Windows 95 did for Microsoft against the Mac OS in the mid-90s.
While price is important when selling computer electronics, it isn't the only thing, and this move by Microsoft shows us how far apart the iOS and Windows 8 operating system are in being adopted by the marketplace. People are just choosing Android or iOS. I recently spoke with a former Nokia marketing manager who said, "People don't want or need a third choice. That's why Microsoft and Nokia will eventually fail unless they can show people why their offering is so much better, not just something different."
Microsoft competes best when there is no competing OS vying for consumer attention, and thus Microsoft can pit its Windows hardware makers against one another, driving Windows hardware choice and price to the floor. Those days are long gone, yet Microsoft continues to beat this unviable model into the ground, and the company will soon follow.
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