Microsoft Can't Quit Now

Microsoft Can't Quit Now

In nearly every metric, Microsoft's Windows RT has failed to make a meaningful impact on the market. Even beyond Microsoft's struggles selling Surface RT, the Windows RT platform only grabbed an estimated 200,000 in worldwide shipments in the first quarter. That only registered a 0.4% unit market share. In terms of usage share, NetMarketShare estimates Windows RT at less than 0.00% share, which is not a typo.

Additionally, Intel's newest Haswell chips eliminate one of Windows RT's main advantages: battery life. Since Windows RT uses ARM-based chips, the devices initially enjoyed an advantage in power consumption. This year, Intel's latest and greatest put up incredible improvements in this department, giving consumers one less reason to consider Windows RT.

Investors might think it's time for Microsoft to reconsider Windows RT, but in reality the software giant can't give up on the platform now.

In some ways, Windows RT is a way for Microsoft to diversify in the age of low-cost mobile computing. With today's mobile devices continuing to see downward pricing pressure, there's simply not much room for Microsoft and Intel to play together like they used to. For instance, Moor Insights & Strategy analyst Patrick Moorhead considers Windows RT as a "hedge against Intel," which can be used to target lower price points.

You simply can't reach $200 to $300 price points if Windows 8 and Intel chips are involved. The 8-inch Acer Iconia W3 is the first device in the important small-sized category, which runs Windows 8 and is powered by an Intel Atom processor. It retails for $379, but despite the high price, it's poorly built. Acer had to cut corners elsewhere, like with the display.

Due to more competition within the ARM ecosystem, there is more price competition. Those lower prices inevitably translate into lower retail prices for tablets, which Microsoft will need to exploit to compete with Google Android tablets and Apple's iPad.

As Microsoft's big bet on ARM is a way to wean its reliance on Intel, the software giant has little choice but to keep trying with Windows RT.

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