Microsoft Corporation (NASDAQ:MSFT) gave the market something to be thankful for after it released its earnings report on Thursday. Though the company beat analyst numbers, many were still worried about the slowing PC market and its effect on Windows 8 adoption. During the company’s conference call, Microsoft has worked to put those fears to rest, announcing that it would soon offer low priced Windows 8 tablets.
In a move many analysts had anticipated, the Redmond company announced during its conference call that it would be going after a new segment of the market: customers looking for tablets that cost around $300, or less. Currently no Windows 8 tablet is regularly priced below $450.
The budget tablet market is one in which Android has excelled, exemplified by the Amazon.com, Inc. (NASDAQ:AMZN) Kindle Fire, and the Google Inc (NASDAQ:GOOG) Nexus 7. These tablets are very popular, costing around $200, and retain much of the features of full size tablets. The popularity of the low price mini tablet sector caused Apple Inc. (NASDAQ:AAPL) to announce the iPad Mini late last year.
Microsoft Corporation (NASDAQ:MSFT) has now set its sights on the low priced tablet market. If it can replicate the successes of companies like Google Inc (NASDAQ:GOOG) and Amazon.com, Inc. (NASDAQ:AMZN), it could see Windows 8 adoption ramp up quickly in 2013. There is a problem with low cost tablets, however.
The profit margins on budget tablets are almost non-existent. Microsoft Corporation (NASDAQ:MSFT) has an ulterior motive, getting its product into the hands of as many people as possible, but it doesn’t have the same revenue expanding tactics as Google or Amazon just yet. If it expects manufacturers to pay for Windows 8, the devices will be priced out of a market dominated by models with a near zero cost OS.
Google wants people to use its web applications, and Amazon wants people to buy its ebooks and streaming content. Those business models appear to work. Microsoft Corporation (NASDAQ:MSFT) seems to hope that cheap Windows 8 tablets will make people buy the Surface, the Lumia or an ultrabook. If they’re wrong, this could be an expensive venture.
Budget Windows 8 tablets, like many budget Android variants, may be of extremely low quality. If these are the devices that people get their hands on, Microsoft Corporation (NASDAQ:MSFT) might just ruin its reputation. The introduction of the tablets, and competition, should be good for consumers in any case.
