Microsoft Cuts Windows Price in Face of Apple and Google Competition

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Windows 8Increased competition from rivals like Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOG) has forced Microsoft (NASDAQ:MSFT) to lower the licensing fee for its Windows 8.1 operating system software, reports Bloomberg. According to “people familiar with the program” cited by Bloomberg, Microsoft will lower the cost of the licensing fee for Windows 8.1 by 70 percent for manufacturers of lower-cost devices. Per the sources, the licensing fee reduction is designed to incentivize manufacturers to install Windows on cheaper devices, including tablets.

Microsoft will license Windows 8.1 for only $15 to manufacturers that preinstall the operating system on devices that cost less than $250, said Bloomberg’s sources. However, Microsoft will still charge its typical licensing fee of $50 for devices above the $250 price threshold. The price reduction will also not apply to the retail price of Windows 8.1 that consumers buy.

Microsoft’s Windows software has come under increasing competitive pressure from the growing popularity of tablets, as well as low-cost Chromebooks — notebooks that use Google’s operating system. Apple has long dominated the worldwide tablet market with its iPad line of tablet devices. According to data from market research firm Strategy Analytics, Apple finished 2013 as the No. 1 tablet vendor with a 33 percent share of the global market. Outside of Apple, most other tablet makers use some version of Google’s Android operating system. On the other hand, Microsoft has struggled to gain significant market share with its Surface line of tablets and the company failed to qualify among the top five global tablet vendors in the fourth quarter of 2013, according to IDC data.

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