My first prediction for CES in January (this morning I was meeting with a big Japanese OEM):Android tablets will be a bigger deal than Windows 8 tablets.
After meeting with Japanese OEMs for my CES previews I just don't get how Microsoft can subsidize Windows 8 to compete with the Android tablets I'm seeing. My discussions with OEMs back this up. They see the Android-based tablet world breaking in two:
1. Amazon-style subsidized tablets for about $200 (low-end devices that don't run latest OS's, have very consumer-focused and very controlled app stores, and don't run all apps). Some that aren't subsidized, like the Archos, will hit that price point but will be cheaper quality, smaller, 7-inch ones, without brand names or distribution, so will struggle to get taken seriously.
2. High end iPad Android ICS-based competitors at about $500 to $600 (some very nice ones are coming, and that's an Apple fan saying that). These will appeal to most workers, gamers who want to play newer kinds of games instead of just Angry Bird style stuff, or workers who need to hook up projectors and do more bleeding edge high-resolution stuff.
These OEMs don't see how Microsoft will be able to compete at either price range. Microsoft doesn't have Google's advertising engine and it doesn't have Amazon's ecosystem and retail engines to fund giving away the OS (typically OEMs are charged about $40 per copy of Windows, which ends up being more than $100 at retail. Android, on the other front, is free, or at least, cheaper).
I'm also not seeing many of the cool startups building apps for Windows 8-style tablets yet. Most tell me they are too busy porting their iPad apps to Android right now to pay attention to Windows 8 tablets that may or may not sell in second half of next year.
So, no subsidization engine and no "cool apps" engines for Microsoft could make 2012 a long year for Steve Ballmer.
This could be a very nasty trend for Microsoft. Here's why:
I'm hearing enterprises are going iPad in a very big way. Comcast and General Electric and many others are standardizing around iPad in first quarter of next year, some for ALL employees, which is just mind blowing.
So, if most of the market goes to iPad, everyone else goes to Android, who will buy a Windows 8 tablet that's $700 to $900? People who need to run Microsoft Office, right?
But those buyers are starting to be switched to cheaper alternatives from Google, Box, VMware, and others. The pull of Office isn't nearly as strong as it once was (and, even, Microsoft is starting to realize this and just shipped several cool apps for iPad).
The Japanese OEMs tell me their market research folks are seeing these trends too and are making sizable pro-Android bets to take advantage of them (they know the game is for the 20 to 40% of the tablet market that Android, RIM, and Windows 8 will fight for once iPad gets done). It's amazing to see the Japanese OEMs break away from Microsoft's 20+ year domination. When I worked at Microsoft in 2003-2006 I never even imagined I'd see this move.
These OEMs also know that it's going to be very hard to get market share away from Apple. They saw how RIM's PowerBook is crashing and burning. They saw how Motorola struggled with its tablet. They are emboldened slightly by Amazon's entry because that will get more app developers to support Android but they know this isn't an easy fight they are in.
What does it mean for developers?
I bet Microsoft starts throwing money around even more to try to get apps built for Windows 8-based tablets. But many developers told me they turned down the money they've offered so far because it's just not enough to have your company's attention taken away from the markets that really matter, and that's Android and iOS.
It's just amazing to me that the market could really shift in 2012 and that big old companies like Comcast and General Electric are standardizing around Apple stuff now. The CEO of Workday and many other enterprise companies say they see this shift happening big time (I'm seeing it in planes, too, flying home from both Paris and Texas I saw iPads everywhere, even to do work). There's a big insurance company that I know about that's going iPad for every employee, too, and they are just buying everyone wireless keyboards for when they need to really type a lot.
This is a MAJOR shift underway inside big companies and if I was Steve Ballmer I'd really be freaking out about now. I can't wait to see his keynote speech at CES and see how much he's sweating about what Apple and Google are doing to Microsoft.
Anyway, I'll bring this up on the Gillmor Gang at http://ff.im/OwoSt
at 1 p.m.
What do you think? Am I nuts? Tell me how Microsoft is gonna dominate CES with its tablet strategy. I just don't see it, so let me have it!