Prices Of Windows 8 Machines Are Falling. Wow, Demand Must Be Red Hot!

Notebook manufacturers appear to be lowering the prices of some Windows 8 notebooks and tablets, presumably pinched by underperforming Windows 8 demand or a slow selling season.

Six out of the fourteen Windows 8 notebooks or tablets sold by Microsoft via its Windows Store now come with discounts attached, CNET noted, with one — the Toshiba Satellite U925T-S2130 — slashed 30 percent from $1,149 to $799. On Amazon, a number of the most popular Windows 8 notebooks seem to be discounted about 20 percent, although Amazon's seemingly perpetual discounts from list price make it difficult to tell what is new.

Why Now?

There are two likely culprits: the date, and the data.

Both the first and second quarters are traditionally slow times for electronics sales, particularly compared to the months-long run-up to the holidays. Given that it's the first week in April, market-research firms require a few days to assemble their snapshots of first-quarter sales, and their predictions for the upcoming quarter. We know that PC sales dropped 6.4 percent during the fourth quarter of 2012, and IDC and Gartner are likely preparing numbers that show further declines in the first quarter. 

Retailers and manufacturers themselves, however can react immediately. It's certainly possible that Hewlett-Packard, for example, decided to cut the price of its HP Envy X2-11-G012NR touchscreen notebook by $250 to $599, a drop of just under 30 percent, for seasonal reasons. (On Amazon, a related X2-11-G010NR was discounted from $999 to $680, a drop of about 32 percent.)

The Toshiba Satellite U925t-S2130, which the Microsoft Store now sells for $799, down from $1,149. The Toshiba Satellite U925t-S2130, which the Microsoft Store now sells for $799, down from $1,149.

On the other hand, Windows 8 notebooks, Windows RT devices and the Surface tablet have generally appeared to struggle in the market. March data from Net Applications shows Microsoft's Windows 8 still lagging behind Windows 7, Windows XP, and Windows Vista, although its 0.5 percent gain in total market share places it at 3.17 percent of the PCs Net Applications tracks. Since November, Windows 8 has climbed about half to 0.6 of a percentage point of market share per quarter. The problem is that WIndows 7 has held relatively steady at between 44 and 45 percent.

Microsoft indicated that the discounts could be seasonal.

“The Microsoft stores carry a product assortment aimed at showing people how technology can simplify and enhance their lives," Jonathan Adashek, general manager of communications and strategy, Sales and Marketing Services Group at Microsoft, said in a statement. "We regularly offer seasonal promotions, discounts and change our assortment of products based on customer feedback and to showcase an ever increasing selection of Windows 8 devices, including notebooks, tablets, convertibles, all-in-ones and more.”

It's A New, Low-Cost PC World

The reality, analysts have said, is that Microsoft needs to adjust to the new reality of lower-cost PCs. 

On average, the Windows 8 notebooks that Microsoft sells appear to be higher-priced than the notebooks that retailer Best Buy, for example, lists as its "best selling" models. The average price for a Best Buy Windows 8 machine appears to be about $699, while only four of fourteen models at the Microsoft Store are below that amount.

"[D]evices based upon its new Windows 8 and Windows RT operating systems failed to gain much ground during their launch quarter, and reaction to the company's Surface with Windows RT tablet was muted at best," IDC Ryan Reith said in January. "We believe that Microsoft and its partners need to quickly adjust to the market realities of smaller screens and lower prices."

Both Microsoft and Amazon appear to be discounting on the order of 20 percent, with tablets like the Samsung Ativ getting slightly bigger discounts. Still, Best Buy doesn't seem to be actively promoting any discounts, and just a handful of NewEgg's Windows 8 machines have been marked down — and with just single-digit discounts, at that. (Some of the more extensive discounts are attached to bargain-basement PCs, like this Asus model.) So it's possible that we're seeing the first tics of a nervous industry.

At this point, a fire sale is an unlikely scenario — margins in the PC industry are already too thin. But all it takes is one smaller PC manufacturer looking to boost its sales numbers, or a larger manufacturer that gets cold feet. If that happens — well, look out.

Image Source: Microsoft

This story was updated at 9:02 PM PDT with comment from Microsoft.