Wednesday, March 30, 2011

Can Microsoft Own the High-End Range of the Tablet Market? It May Have No Choice But To Try

In a role reversal, are we looking at Microsoft and friends switching spaces with Apple in the tablet market as they now occupying in the PC market?  See if you follow me.

Apple is known for its "premium"Macs in the PC market where Microsoft and Windows PC makers generally own the low-end and mid-range parts of the market.  And despite Apple with only about 7-8% of computer market, it owns a large chunk of the revenues and profits.

In the tablet market, iPad competitors are struggle to compete with Apple on prices, often opting for the 7" screen sizes, versus the 10" iPad, subsequently with a much smaller screen real estate.  With a smaller form factor, rivals such as RIM are able to compete with the low end iPad.

But now, with Barnes and Noble's Nook Color doing very well at $250 and Amazon looking to jump into that market, possibly with its own Android tablet, may of the sub-$499 tablet market will be owned by Android.  

Where does that leave Microsoft?  Apple quite possibly will own a large chunk of the tablet market with models priced between $499 to $829.  I don't see Windows going anywhere lower than that.  And the tablet market isn't like the PC market.  If anyone thinks that, they are in for a rude awakening.  For the foreseeable future, Redmond's partners just doesn't have what it takes to take on Apple with a competing ecosystem and a natural ease of use.  

This is why HP bought Palm so that it can try to use Web OS to create its own market.  

That only leaves Microsoft to try to position the Windows tablets at the high-end, where there is quite a smaller market but potentially higher margin for device makers.  And until Windows 8 can run on ARM chips like the iPads and Android tablets, size, battery life, and specs will not be able to measure up with the low-end to mid-range tablets.  

There will be a market for the $800 and above range but it will be small.  Near term, that's the only part of the market that Microsoft can go after.

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