Digitimes Research: Microsoft new inexpensive solution for 2015 may not help on competition with Chromebook

Joanne Chien, DIGITIMES Research, Taipei 0

Microsoft, which launched Windows 8.1 with Bing for US$249 notebooks, has recently decided to continue pushing the solution in 2015, but with some modifications on specifications and applicable markets, looking to suppress Chromebooks which have been achieving rapid growth recently.

Because of the two product lines' different market positions and value created for the market, Digitimes Research believes Windows 8.1 with Bing will hurt brand vendors' profits more than its effect on suppressing Chromebook growth.

Microsoft's new Windows 8.1 with Bing solution for 2015 is set to be released on February 1, 2015, and will be the third time that Microsoft has led an inexpensive notebook project in the past three years. When the notebook market was seriously impacted by tablets, Microsoft had trouble achieving results from the tablet industry, and Chromebooks also started rising.

Gradually rising demand for Chromebooks is the driver pushing Microsoft to launch inexpensive solutions and the software giant's competition with Google has also extended from the mobile market to the PC industry.

However, compared to Chromebooks which have created value for brand vendors and the market, Microsoft's Windows 8.1 with Bing solution is mainly about low prices and specifications, which greatly worries brand vendors participating in the project. Microsoft will need to resolve such concerns or it could lead the industry further into low-price competition.

After seeing global notebook shipments suffer the first on-year drop in 2012, demand for Windows-based tablets remain weak, and Windows 8 fail to boost notebook demand as expected in the fourth quarter of 2012, Microsoft's small screen touch (SST) solution launched in early 2013 provided notebooks and tablets with 11.6-inch or below displays, low Windows 8 licensing fees to help prices drop below US$399.

Although the SST solution did not perform well, a similar project still remains active in 2014.

In 2013, the notebook market suffered a further shipment drop, declining 10.5% on year. However, Chromebook shipments enjoyed strong growth, boosting the volume from slightly above one million units in 2012 to over three million units in 2013, and also triggering more vendors to participate in development. The rise of Chromebooks pushed Microsoft to launch Windows 8.1 with Bing.

Microsoft's solution is mainly targeting Chromebooks and is looking to help notebook products achieve price points similar to those of Chromebooks at below US$249. Microsoft is also aiming to help notebooks using its Windows 8.1 with Bing solution to feature hardware and software at least as good as those of Chromebooks, and therefore has decided to extend display size limitations to 14- and 15-inch, sizes Chromebooks do not usually adopt.

This article is an excerpt from a Digitimes Research Special Report (2015 global notebook demand forecast). Visit our latest Special reports.