Cutting down prices - a solution to gain market share In the wake of the recent spurt in computing operating system competition, cheaper computers and tablet sales will be getting a much-needed boost with Microsoft deciding to cut the price of the license fee of its Windows 8.1 operating system by almost 70%. With the recent emergence of Google operating system based Chromebooks as well as aggressive pricing by Apple for devices in the similar range, it does not come as a surprise that Microsoft has taken this crucial step, which could decide how much it can protect as well as increase its market share.
Such changes will keep occurring, especially with the change of guard at the helm of Microsoft, most notably with the resignation of Steve Ballmer, ex-CEO and the appointment of Satya Nadella to take his place recently. Nadella's strategy for the way forward is to focus more on research and development, besides foraying into introducing new devices regularly. These new devices will neither require a logo certification, something that filters, hardware compatibility, nor touch screen featured, thus implying that these devices will be more on the cheaper side of the catalog. Thus, Microsoft can contend with the price cut, which directly translates into $15 for a manufacturer to license Windows 8.1 OS instead of the usual $50, to pre-install it on devices which cost less that $250. Moreover, it gets even more interesting because this price cut is applicable to all devices that fall under this price ceiling, regardless of the size or the type of the device.
The flip side of Microsoft's recent resurgence is that it has still seen its annual revenue decline significantly, primarily because of fierce competition from arch rivals Apple and Google, whose strategies seem to be working in their favor. Hence, Microsoft seems to now have taken on the classic theory of 'Taking one step backward leading to many steps forward' by incentivising PC manufacturers to sell cheaper models, thus enabling it to increase its market share of the $80 billion tablet market, dominated by tablet giants Apple and Google who have a combined 95% market share.
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