Get Ready for a Windows Price Cut: Microsoft Corporation (MSFT), Google Inc (GOOG), Apple Inc. (AAPL)

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Even if it’s good, it’s bad
The whole situation illustrates the structural challenges that Microsoft faces in the mobile transition, even if it’s able to gain traction in market share. The operating system licensing fees that it’s built its business on are under pressure in the face of tablet adoption.

Apple Inc. (NASDAQ:AAPL)’s iPad lineup now starts at $329 for the iPad Mini and $499 for the full-sized model, and most tablet rivals have had a hard time making a dent in iPad unit sales.

Apple Inc. (NASDAQ:AAPL) can charge more because it offers a differentiated package of integrated hardware and software. The OEMs that see any modicum of success prefer to use Android, as it’s open source, and the royalties they end up paying Microsoft are still less than a Windows license would cost them.

On the low end, Amazon.com, Inc.  (NASDAQ:AMZN) and Google Inc (NASDAQ:GOOG) have created consumer perception that small tablets of respectable quality should cost no more than $200, leaving little room for other OEMs to pay for Windows and still hope for margins. Even if Microsoft can spur OEM uptake, it’s still looking at incremental revenue declines per license relative to what it’s used to fetching for PCs.

This next part is going to be hard.

The article Get Ready for a Windows Price Cut originally appeared on Fool.com and is written by Evan Niu.

Fool contributor Evan Niu, CFA, owns shares of Apple. The Motley Fool recommends Amazon.com, Apple, and Google. The Motley Fool owns shares of Amazon.com, Apple, Google, and Microsoft.

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