Monday, December 02, 2013

The Windows Subsidy

Long ago, I wrote about the Windows Tax. The tax works like this: you buy a Windows computer. Since no brick and mortar shops sell computers without Windows (or iOS), you must pay for the Windows license, even if you're not going to use Windows or you don't want to use Windows. Then when you get Windows up and running, you must buy and install antivirus for your computer. Many of the most popular applications only run on Windows: Photoshop, Quicken, Office, to name a few.

In just the last few years, there has been a monumental shift in our computer culture. Many people have found that the smartphone, a tablet or even just the cloud, have replaced their personal computer. The need for a full blown desktop computer has been seriously mitigated by the new handheld technologies that are available today. These devices, usually running Android or Apple's iOS, have been eating the lunch usually designated for Microsoft, leading to a steady decline in market share for Microsoft.

Microsoft has responded. They have copied Google and Apple in certain ways that make sense for the company. They have worked hard to change their marketing strategy, but there is much work to be done if they want to take back market share. At this point, I really don't think they can reverse their decline. It may be too late.

The biggest change I'd like to point out is the Windows subsidies that have been created to get people to buy Windows computers again. The subsidies are now bigger because Windows has become a liability rather than an asset when compared with the competition - competition Microsoft didn't have a decade ago.

I'd like to share with you my experience buying a computer at the Microsoft Store in City Creek Mall, Salt Lake City. My wife happened to get an email listing the Dell Inspiron 15z. Here are the specs:

Latest Core i5 CPU
6GB RAM
500 GB HDD
32 GB SSD
USB 3.0 all around
HDMI output

Pretty impressive, right? This computer normally sells for around $8-900. We bought the computer in a 1-day only sale for only $400 - at the Microsoft Store. The Windows tax has, in a sense, become a Windows subsidy to finally compete in the market and overcome the liability of Windows. When Apple decided to give their upgrades to their customers for free, that was probably the tipping point for Microsoft to offer this computer for sale for such a low price in its own store.

I feel a definite sense of irony writing this article. Many times I have said I would not buy a Windows computer again. But the subsidies offered by Microsoft to support Windows sales are compelling. When my wife Alice told me about the very steep discount for this computer, we talked about her aging laptop computer and decided to get a new one.

So off we went, to City Creek, to visit the Microsoft Store. They have an impressive display of technology to engage the consumer. They have a massive video display that wraps around the wall and it all looks like it's running from one computer. There are tablets everywhere alongside the laptops. They even had a 3-D printer on display. That was pretty cool. But we came for the door-buster deal on a very nice laptop at half the list price and we needed to move quick before they were all gone if we wanted one.

We approached a salesperson to learn more. She waxed eloquent about the 24/7 support that Microsoft now offers on their computers - that's an extra $150 a year. She highlighted the extended warranties, the touchscreen and Windows 8.1. Oh, yes. That. While listening to the salesperson, I began to feel a bit guilty. Why? I'm going to image the hard disks in the laptop and replace Windows with Ubuntu Linux.

It was a very interesting sales experience, one that I will not soon forget. Microsoft has definitely learned how to do customer service from Apple. Whether it is enough to save them, it's hard to say.

In my next post, I will share with you how I converted this machine from Windows, to a Linux machine that boots to a login prompt in about 12 seconds from the time the power button is pressed. Stay tuned.
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