lunarworks
Member
Yes, but here's the key difference: Apple makes a healthy profit on everything they sell.
Microsoft Surface Tablet announced
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Yes, but here's the key difference: Apple makes a healthy profit on everything they sell.
Better for Microsoft to 'sabotage' their platform than watch Apple destroy it.
lunarworks
Member
Step 1 - Sell tablet at a loss.
Step 2 - Severely undercut all your important hardware partners on it.
Step 3 - ???
Step 4 - Profit.
Apple doesnt make a healthy profit, if any at all, on their software
Well it's a bit different than Xbox, they won't want to piss off their OEM's by vastly under-cutting them.
Their app store, by design, will give them lower margins than Apple or Google, and neither Apple or Google are raking it in in huge numbers despite healthier app stores.
The RT gives away their moneymaking software, Microsoft Office, for free.
lunarworks
Member
You have to buy* their profitable hardware to get their software.
(*Hackintoshes excluded.)
yn-neko hates a cat
Banned
It's office lite.
Also remember that MS has been transitioning to selling services for a while now. People will use Skydrive space, will want to run processing off their tablet in the cloud if given the opportunity and will pay for Xbox live video, music, gaming, etc...
They've been trying to find alternate revenue streams that involve bringing down the initial cost of ownership.
It also bears repeating: The potential windows user-base will be at least a factor of 5 of these other platforms.
Well that's true. Though I can't imagine them looking at their xbox division and not being influenced by that model's success.
And... how does that change the fact that Apple doesn't sell all their products for a healthy profit?
What're the OEM's gonna do? Flee to ChromeOS or Linux? :lol
It will kill a lot of oem sales which are a big profit driver for MS to instead sell surfaces at a loss. Where will the money come from? It's not like Xbox where they can make up for it with software sales on their loss leading hardware. Surface comes with Microsoft office for free. Which is literally the only software most consumers ever buy.
MS under this plan would then be selling the hardware at a loss and giving their only software most people ever buy (Windows & MS Office) away for free. There is literally nothing for MS to make money off these people.
The Xbox model doesn't work if there isn't any software to sell these consumers.
Apple and Google also sell video, music, games.
Apple even is more of a global platform, selling music and video in more places than Microsoft sells content.
I question whether RT is going to have 5 times the platform share of iOS+Android, and even at that point, I don't think a loss leading model works--they don't sell any content in China, and a lot of the world, for instance.
Most Windows users will continue to use iTunes for Windows as their main music/movie/tv digital store. It will take many years for Microsoft to match the library and global presence of iTunes.
lunarworks
Member
You're going down an irrelevant path of argument on this one based on my use of the word "all".
Apple uses software as an incentive to drive highly profitable hardware sales. All the physical products they sell carry a healthy profit. It's almost like, but not quite like, saying "But McDonalds doesn't make profit off their seating, napkins, and straws!"
Now, Microsoft makes the majority of their money from software. Hardware partners are the key to driving OS sales. Undercutting their hardware partners by selling their own hardware at a loss is a good way to cut off a good portion of their OS sales.
The point is, Microsoft will use their hardware (Surface, Xbox etc.) to sell their software/services, basically coming from the opposite direction of Apple.
No, their source was someone who was at a session at the TechReady15 conference. Which could equally be bollocks.
engadget said:
What software? That works for Xbox but not Windows. MS only have two pieces of software consumers buy for PCs. Windows and MS Office. Both are free with Surface.
lunarworks
Member
So they're gonna rake it in on their cut of 99¢ app sales? Because the hardware comes with their major software (Windows and Office) included, and few people upgrade their OS and are loathe to upgrade office suites.
But outside of $60 video games, Apple sells more content in more places, some say that iOS/OS X devs charge more than PC counterparts, and Apple will be getting a higher margin on third-party app sales. Microsoft is also reducing the cost of OS upgrades and giving Office out for free on RT.
I also don't see how an injection-molded magnesium casing comes cheap.
Microsoft is trying to build up an ecosystem around the Windows app store, a place MS takes 20-30 percent of every app sold. They may decide to subsidize the Surface if it gets the Store into as many hands as possible.
Btw, I'm not saying this is what's going to happen. I'm merely suggesting that this is what someone at Microsoft may be thinking.
lunarworks
Member
It's the same thinking that values Instagram at $2,000,000,000.
Oh, and are they going to subsidize all their partners' tablets?
Android managed to surpass iOS in marketshare without any media store worth speaking. I question the value of any media store in piracy-haven China. This is all a moot point because the Surface is supposedly USA only
It's the same thinking that values Skype and Yammer at almost two-figure billions. But Microsoft would never do that, right?
Shogmaster
Member
This is relevant in a discussion about losing money on hardware and making profit on software and content?
There will be no 99¢ apps on the marketplace.
Not targeted at you, but it was mentioned that the Surface team has to procure licenses in the same way that OEMs do.
Shogmaster
Member
Penis bet is the new ban bet.
Steelyuhas
Member
I'll believe $200 when I see it, but that is awesome if it ends up being the case.
First of all. iSuppli put the iPad 2 material bill at 335-ish (including a $18 radio/baseband). And even Acer has sold its 10" tablet as low as $350. I think it cost minimum $300 to make a 10" ARM tablet of anything.
OTHO I was going to say "at 199 I will surely buy one." And then I remember my $99 TouchPad wasn't good at anything until CyanogenMod got ported. If the RT tablet go on sell for $199 I will still wait for the hack come out first.
The product is only going to be sold in the USA where MS has a decent media store and Apple's worldwide 'advantage' doesnt really apply
Those are very decent...
I am pleased.How does that make the potential user base 5x iOS and Android then?
Apple's worldwide advantage still applies when competing against single-market products.
Those aren't launch specifications, those are "Early production range" numbers from here:
http://blogs.msdn.com/b/b8/archive/2012/08/13/collaborating-to-deliver-windows-rt-pcs.aspx
Surprised that Anandtech didn't read that correctly.
-Pyromaniac-
Member
lol 199? Yeah right. If that ends up true I will cut off LQX's penis and feed it to him.
This $199 rumor is pretty brilliant on Engadget's part. Even if it's blatantly made up out of thin air.
Right now, they get a tremendous number of hits.
If it ends up being right, they can tout how amazing their sources are and boost their credibility.
If it's wrong, "oops, our sources were incorrect, but we said it was a rumor all along", and they still get all the hits.
And it also ignores the fact that many of the revealed Windows RT devices aren't iPad competitors in the first place, being more like full laptops with detachable screens.
Right now, they get a tremendous number of hits.
If it ends up being right, they can tout how amazing their sources are and boost their credibility.
If it's wrong, "oops, our sources were incorrect, but we said it was a rumor all along", and they still get all the hits.
And it also ignores the fact that many of the revealed Windows RT devices aren't iPad competitors in the first place, being more like full laptops with detachable screens.
Dreams-Visions
Member
You guys can't be serious about $200.
You just can't be.
You just can't be.
It's a preview version at launch, since the full version will only release months after Windows. Additionally, it lacks Outlook.
But other than that, there's really nothing 'lite' about it. Full Word, full Excel, full Powerpoint, full OneNote.
bad move by Microsoft. There shouldn't be a minimum. Unless their fees are causing this to occur.
Confidence Man
Member
You also have to buy things with Surface Coins.
bad move by Microsoft. There shouldn't be a minimum. Unless their fees are causing this to occur.
There needs to be a minimum to account for credit card processing fees. Still, they should have stuck to $.99 like Apple.
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