Home > Windows > Is Microsoft’s Venture in to Hardware Tablet a Good Move ?

Is Microsoft’s Venture in to Hardware Tablet a Good Move ?

June 20th, 2012

By entering the hardware market directly, Microsoft will be competing with its OEM partners, who are no doubt unhappy about seeing Microsoft in their business. Microsoft will be selling its hardware through its own on-line and retail stores, so we think it is important to note that they won’t be competing directly with its OEMs for shelf space, at least not initially.

Microsoft’s move to launch Surface tablets should help to increase attraction and enrich ecosystem for Windows users. This should also encourage more PC OEMs to develop Windows RT tablets in the future if market demand starts to rise.

It is important that Microsoft drives innovation on a timely basis in the systems business to leverage market traction for Windows 8 on new touch-hardware form factors optimized for content consumption and creation. The launch Surface tablets should help to increase attraction and enrich ecosystem for Windows users in Corporate and Small Businesses.

Profit Margins
The hardware business is dampening to overall margins, it will be important to determine whether Microsoft’s strategic initiative will be accretive to overall gross profits and earnings. Back of the envelope calculations suggest that they will make their normal margin on Windows and perhaps a 5% GM on the hardware and probably capture the whole retail margin when sold through its own on-line and retail stores.

Overall, Windows 8 family of devices are on a new generation of touch enabled hardware designed for mobility, which implies a premium for thin, lightweight, longer battery life and instant on functionality embraced in Surface design and Metro UI.

Categories: Windows Tags:
Comments are closed.