Microsoft OEM VP on tablets: wait and see, could flop like netbooks

Giving Android the green light:

In addition, for the time being, Microsoft will not offer new Windows versions to support non-Intel architectures that are targeting tablet PC development, noted Guggenheimer.

The formation of a market segment for a new product category necessitates the existence of a supporting ecosystem made up of a complete industry supply chain, Guggenheimer emphasized. He cited the netbook market as an example; units were selling well initially and people believed that the market was going to be established as a new segment, but recently market growth has slowed down considerably, Guggenheimer pointed out.

via Whether tablet PCs can become market segment is still uncertain, says Microsoft VP.

I remember when Microsoft used to be paranoid.

  • kevin

    Seems to me that Microsoft thought netbooks were going to be a solid segment; didn't they work to make Windows 7 work well on Atom-based netbooks?

    Apple, on the other hand, has consistently said it wasn't a market worth entering. And has MS not yet made a link between slowing netbook market growth and the iPad? Apple's view is being validated now that there is a product that clearly exposes the netbook's weakness.

    • Microsoft did try to make Windows 7 work with netbooks because Vista didn't and they could not keep selling XP. Microsoft however never liked netbooks. At a certain device price point the cost of the software license becomes the largest part of the bill of materials. Think about the BOM of a (retail priced) $200 netbook. It would probably cost less $100 in parts. Now the *software* part itself could cost as much as $40. If the OEM takes that out and puts in Android, he gets to create a far higher gross margin.

      This is why at such low prices, Windows franchise becomes very difficult to maintain. It's in Microsoft's interest to keep device ASPs "reasonable".

      The impact of iPad on netbooks has been cited by Morgan Stanley but it's not yet a consensus opinion.

      • kevin

        Agree, but what I was saying was that MS could've ignored or criticized netbooks (like Apple), and dared those mfrs to succeed with Linux. MS could've made it unprofitable to use (or blocked the licensed use of) Windows XP/Vista/7 on netbooks. But I believe Microsoft chose the other path because they thought that netbooks might succeed against Apple.

        As for the original point, the real reason "Microsoft will not offer new Windows versions to support non-Intel architectures that are targeting tablet PC development" is simply because Windows isn't able to do so today, and Microsoft won't and can't get it done anytime soon.

        Anyway, I think you're doing a good job with your blog. You've highlighted some interesting stuff and added to it with insightful comments.