Microsoft Isn't Going Far Enough

Microsoft can't seem to take a hint.

Sources are telling Bloomberg that the software giant is slashing prices for hardware manufacturers making small tablets running Windows RT.

Microsoft's scaled-back mobile operating system has been a dud since rolling out late last year. Its own Surface RT has been a flop. I saw it coming. You probably did, too.

Cutting prices for Windows RT licenses is a step in the right direction, but it doesn't go far enough. Microsoft is competing with Google's Android and Apple's iOS, and it can't match the ecosystem or developer support of either platform.

Folks aren't buying Windows 8-fueled tablets in large numbers, but at least there's some support for a device that is truly compatible with PCs. Windows RT -- a costly Android wannabe that trades a lack of app selection for access to a Microsoft Office workaround -- just isn't selling at all.

Industry tracker IDC reports that just 200,000 of the nearly 50 million tablets shipped this past quarter were Windows RT devices. When you're commanding 0.4% of the market, a price cut makes sense. However, tablet makers facing the choice between supporting Google's Android for free or paying for Windows RT at any price have a pretty easy decision. It's not a surprise that so many of the Windows PC supporters in the past have sidestepped Windows RT support in favor of putting out Android tablets.

Forget about charging for Windows RT licenses. Microsoft may actually have to pay hardware companies to support Windows RT the way that it has in mobile through its Lumia deal.

The other comical aspect of Microsoft's half-hearted response is that the price break on Windows RT licenses only applies to small tablets. In other words, Mr. Softy is somehow protecting the pricing integrity of the larger Surface RT, even as it begins to quietly discount those tablets by offering free keyboard covers for buyers in recent days.

What's the point, Microsoft?

Apple's iPad has the high-end, full-sized market cornered. Android has everything else, and it also has companies willing to take a hit on the hardware. We're not just talking about Google's own Nexus line. The Android-propelled Kindle Fire can be had for as little as $159 because wants consumers paying to download books, movies, games, and music through its platform.

Amazon and Google are hungry for different reasons -- Amazon wants shoppers, Google wants users -- but it's all about market penetration at a time when Microsoft isn't cool enough to take on Apple and not cutthroat enough to take on Google or even Amazon.

A price cut on Windows RT licenses for small tablets doesn't go far enough in terms of price and size restriction. This isn't Microsoft's awakening. It's another heaping scoopful of denial. 

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Longtime Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends and owns shares of, Apple and Google. It also owns shares of Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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