Why Is Microsoft Cutting Windows Licensing Price by 70%?

According to Bloomberg, international giant Microsoft intends to slash the licensing price for Windows 8.1 by 70%. Before you get to excited, take note that the cuts are targeted at low-cost computer and tablet manufacturers. Simply put, if you're a low cost manufacturer and want to preinstall Windows 8 on a device with a resale value of less than $250, you will be charged $15 instead of the usual $50 for licensing.

Windows 8 sales have been slow

Although released more than 15 months ago, the sales on Windows 8 and the latest 8.1 version have been extremely slow. In fact, the head of marketing for Microsoft, Tami Reller has announced that Windows 8 has yet to meet the success of its Windows 7 predecessor. If you are a numbers person, then here are the facts: while there were over 240 million Windows 7 copies sold within the first year alone, Windows 8 has only managed to sell 200 million licenses so far.

Photo credits: hothardware.com

Given Microsoft's history, I believe the slow sales can also be blamed on superstitious users. Frankly, looking back at Microsoft’s Windows versions, it's always been one hot, one cold in this precise order; Windows XP was a hit, while Vista was rather poorly made. A further reason why the sales have been so slow lately could stem from the decline in personal computer sales, as the smartphone market exploded.

The competition had a say in this

At a closer look at Microsoft's annual report, it becomes increasingly obvious that the company has suffered perhaps its biggest decline on record. It's no secret that their losses are mostly due to cheaper rivals like Google and Apple, competitors that are slowly advancing in the PC space.

In an era where smartphones and tablets are replacing desktops, Microsoft's future looks grim. In the past several years, Google and Apple accounted for 95% of the tablet market, whereas Microsoft is taking up only 5%. Therefore, by offering incentives to PC makers along with their intention to make Windows Phone and Windows RT available free to device makers, Microsoft hopes to retake some of the ground lost.