1. How to use GuruFocus - Tutorials
  2. What Is in the GuruFocus Premium Membership?
  3. A DIY Guide on How to Invest Using Guru Strategies
Rahul Chattaraj
Rahul Chattaraj
Articles (59) 

Apple and Google to Make Microsoft Windows Cheaper

February 23, 2014 | About:

Things have not been the same for PC makers or anyone in the supply chain, and this applies to the mighty Microsoft (NASDAQ:MSFT) also. The company has been witnessing slumping sales for Windows operating system for a long time now. Even the introduction of the Windows 8 touch enabled OS couldn’t change the on-going trend. Windows 8, in both PC and smartphone variants, hasn’t received what we can call a widespread acceptance.

While Apple (NASDAQ:AAPL) and Samsung (SSNLF) keep on expanding their markets, Nokia (NYSE:NOK) powered by the Windows Phone 8 OS continues to struggle for market acceptance. However, with Windows Phone 8 OS Microsoft still has some developments going on. But, as far as the PC OS goes, the company is in trouble.

IDC’s recent report on the fourth quarter 2013 PC shipments and market share sheds some light on what can be called the downfall of the PC market. In my latest report on the topic I have discussed how the technology space is changing and how have the biggies of smartphone and PC space performed. In the words of Loren Loverde, Worldwide PC Tracker VP of IDC, “Total shipments (for PCs) have now declined for seven consecutive quarters, and even the holiday shopping season was unable to inspire a turn in consumer spending”.

Apple and Google (NASDAQ:GOOG) and have totally revolutionized technology with the iOS, Android, and tablets. The industry was very happy with PCs and didn’t even know something such as a tablet can ever exist or an OS other than Windows can be so user friendly and gel so well in everyday life. Tablets and smartphones make PCs look like ancient creatures, replacing almost all daily tasks that were earlier performed from computers. All this has resulted in massive losses for PC makers and players in the supply chain. May be this is the reason why the new Microsoft CEO Satya Nadella has decided to cut pricing of the Windows OS and bring in a few more changes that might just help in resurrecting the PC market.

There are rumors that Microsoft is going to cut Windows licensing fees by 70% as a measure to regain market share lost due to the growing popularity of smartphones and tablets. According to the rumors, the Windows maker will be charging $15 only from OEMs manufacturing cheap laptops for pre-installing Windows OS as against the current $50 fee, giving them the 70% rebate. Furthermore, it will also allow smaller manufacturers to skip logo certification, and allow the use of the Windows 8.1 OS in cheaper laptops which are not touch enabled. Apart from these, Microsoft will also remove its restrictions on hardware capabilities, size and form factor as long as the devices conform to the minimum requirements of the operating system and can be made available at the required cheaper price.

Looking at the way the consumer electronics market has been behaving lately, we can say this is a much required move on Microsoft’s part if it really wants to change the gradual loss of market share of personal computers. If smaller and cheaper laptops are available at further cheaper rate due to the Windows licensing price cut, there will surely be several takers for them.

What even the consumers realize is, while smartphones and tablets can replace PCs in daily life needs, there are several tasks that are better performed and can only be performed in PCs. However, PCs become high involvement products and thus the general consumers had been opting for low cost Android tablets and smartphones. If the rumors are true, we can expect better PC shipments in the coming quarters.

Rating: 4.2/5 (6 votes)


Please leave your comment:

GuruFocus has detected 8 Warning Signs with Apple Inc $AAPL.
More than 500,000 people have already joined GuruFocus to track the stocks they follow and exchange investment ideas.

Performances of the stocks mentioned by Rahul Chattaraj

User Generated Screeners

jont017Low Ebitda/EV
pbarker46PB & PS
jjcarlin99Utilities - non-regulated
jjcarlin99MidStream Oil & Gas
pbarker46EV/EBITDA & P/Med PS
pbarker46High short
Taekgyun Kopbr
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)