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$200 Tablets: Amazon Started the Battle, Microsoft Will Enter, But Apple Will Win It

Tablet War - Amazon, Microsoft, Apple

Amazon exploded onto the tablet scene with the instantly popular Kindle Fire. The tablet was a runaway success, not only because Amazon has a complete ecosystem that includes music, ebooks, videos and more, but because it came in at a $200 price tag. It quickly attracted every would-be tablet buyer away from more expensive $500-$600 tablets and gave them a travel-friendly 7-inch device that, for the most part, offered a compelling experience for a fraction of the price.

Other firms quickly dropped tablet prices to complete. Barnes & Noble’s NOOK is another option, as is Samsung’s $249 Galaxy Tab 7 2.0 and even RIM’s BlackBerry PlayBook. Google’s Nexus 7, however, is much more powerful than the Kindle Fire, thanks to its quad-core processor, and offers a very similar ecosystem of multimedia content. The $200 tablet wars are just starting, and Microsoft and Apple are about to enter with guns’a’blazing.

In fact, news surfaced on Tuesday that suggests Microsoft’s Windows RT ARM-powered Surface tablet will cost just $199. We originally thought the device be priced in the $600 range, so this is an incredible rumor, if true. Microsoft will not only go toe-to-toe against Barnes & Noble, Amazon, Samsung and Google, but also against its own OEM partners. Acer has already expressed outrage at Microsoft’s decision to create its own hardware and has warned the company to “think twice” about trying to control both hardware and software.

“It will create a huge negative impact for the ecosystem and other brands may take a negative reaction,” Acer CEO JT Wang warned. “It is not something you are good at so please think twice.”

Toshiba also said recently it decided to bail on plans to launch a Windows RT tablet and will instead focus on Windows 8 devices. The company blamed component shortages, but we’re willing to bet it’s also not too pleased with Microsoft’s entry into the hardware scene. HP also ditches its plans to launch an ARM-powered Windows RT tablet. Something must be awry here if Microsoft’s own partners don’t want to spend money building Windows RT tablets. It’s not just about seemingly uninterested partners, however.

Here’s the problem with Microsoft’s approach: unlike Apple, which already dominates 69.6 percent of the tablet market, according to recent figures from IHS iSuppli, Microsoft doesn’t have a complete ecosystem. It has a partial one that includes an app storefront and its Zune music and video store, but neither are as robust as the iTunes App Store, Amazon Appstore or Google Play. Sure, it’s courting developers, but RIM ran into the same problem with PlayBook apps.

The Windows Phone Marketplace is another example where we’re not quite seeing the level of apps that Android and iOS offer yet. You can get hundreds of great apps (out of the thousands available), but the real juicy ones that people care about aren’t available. Instagram isn’t there, the game offering isn’t near up to par and you can’t buy books, magazines or rent movies directly from your device. These are all things that consumers value, otherwise you can’t really do much with the tablet and it sits on your coffee tablet gathering dust. Microsoft could target the enterprise with Windows RT, but even its new Office 2013 software will come with a limited feature set on Windows RT, even if it is free. That’s why it’s going to lose the battle to already established players.

Apple’s going to succeed with the iPad mini. We don’t know how much it’s going to cost yet, but it’s expected to sell for much less than the $499 iPad. It will steal consumers away from $200 tablets even at a $300 price point. Apple already has a robust app store and has already proved to consumers that it’s capable of creating a first-class tablet… three times over. It knows how to create hardware, its iOS 6 operating system is easy to use and is the most consumer friendly mobile operating system on the market. Windows RT, however, is going to confuse consumers.

They are going to walk into stores and wonder what the difference between Windows RT and Windows 8 is. Microsoft is going to have to spend millions educating consumers on the differences between the two operating systems because, let’s be honest, when you walk into a store you just see tablet A, tablet B, tablet C and the iPad. Consumers already know what to expect from the iPad, but how will they understand what Windows RT will offer? The whole situation reminds me how Microsoft had to make a huge push for the Lumia 900 and spend millions on educating sales teams about the mobile OS because, originally, many still thought it was as low-powered as Windows Mobile.

I still believe Microsoft can succeed in some regard, especially as we learn more about how consumers with Windows Phone 8 devices will be able to interact with its Surface products. I think Windows 8 should be Microsoft’s focus. It’s a super compelling operating system, especially on a tablet outfitted with USB ports, HDMI-out and more. But those more powerful devices will cost much more than Windows RT, apparently, and will compete outside of the $200 tablet market.

I don’t understand why Windows RT needs to exist in the first place. Microsoft should focus on what it’s good at: providing first-class software to its hardware partners. Apple, Amazon and Google are already fighting in the $200 tablet space with nuclear warheads and Microsoft’s going to come in with a nerf gun.


Todd Haselton

Todd Haselton has been writing professionally since 2006 during his undergraduate days at Lehigh University. He started out as an intern with...

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