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Windows tablet price war FINALLY has 'em prying open wallets

All it took was a reduction of 70%. Margin, what margin?

Toshiba Encore Windows 8.1 tablet

Microsoft is, er, fighting back in the UK tab tussle stakes after grabbing market share from OS rivals, although the small victory could be seen as a bit hollow.

According to Q4 tech distie sales data compiled by Context, a little over 120,000 Windows 8/8.1 fondleslabs were shifted to customers - 8.3 times more than the installed base a year ago. This handed Microsoft a 12.3 per cent share of the spoils versus 0.9 per cent in the same quarter two years ago.

Marie-Christine Pygott, senior analyst at the venerable channel beancounter, pointed out that a slew of low-cost Windows devices hit the market, whereas in the same period a year earlier, most of the machines sold were for biz users.

“In Q4 2014, the overall [Microsoft] number was up quite a bit, with the majority of Windows slates in the UK being cheap, low-end consumer products,” she told us.

Last year Microsoft dropped the Windows licence fees for hardware makers on devices smaller than nine inches, so it may be seizing share from rivals – mainly Google – but it ain’t getting rich doing so.

The average sale price (ASP) for Windows tabs crashed in the last quarter to £119, compared to £405 in Q4 ’13.

At least Microsoft fared better than the other main OS protagonists in what was a shrinking landscape, as slabs were relegated to the bargain basement for any consumer that wanted to give something touchy-feely to a loved one.

Context stats showed 978,000 tabs were sold to Brit customers in Q4, equating to a hefty 35 per cent year-on-year decline in unit sales.

Market saturation, elongated buying cycles and crashing demand, particularly for low-end Android devices, were all blamed by Pygott for the drop.

“Tablets are no longer top of customers’ wish list,” she said. “We are seeing increased saturation on top of the fact the expected rush from consumers for low-end Android devices didn’t happen.”

Context does not make public the distie sales of tab hardware makers but Android machines were down more than 50 per cent to 560,000 units, reducing market share by a fifth to 56 per cent. ASPs slid 14.3 per cent to £126.

Pygott said tab-makers expected a consumer “rush” to replace Android devices bought 12 to 18 months earlier, but this didn’t happen. Clearly these companies need to sharpen their forecasting skills.

Apple fared relatively better as iPad sales via wholesalers dropped six per cent to 311,000 units, and this meant it gained ten per cent of market share in the quarter to 32 per cent. ASPs fell to £251 versus £288 a year earlier.

Overall, ASPs in the UK dropped to £165 from £180, which Context said was down to competitive pricing pressures related to inventory, “particularly the writing down of stock”.

As we revealed last summer, the UK was awash with more tabs than it could find a home for, and a bargain was always on the cards for Chrimbo as efforts were made to reduce stocks by cutting prices.

With the tab market in reverse, the PC form factor was again basking in the glory of expanding sales – some 1.15 million notebooks, desktop and PC workstations were shifted by disties in Q4, up 24.8 per cent.

The business sector helped to prop up the slumping PC market in recent year and still held its own in the run up to Christmas, but there was a strong push on low-end notebooks – particularly Windows with Bing PCs, and this alerted consumers.

As with tabs, no one is making gargantuan profits: the sub-£200 category accounted for 40.6 per cent of total PC sales in Q4, compared to ten per cent in the prior year’s quarter.

Consumer PC growth was 27 per cent and the business segment grew 22 per cent. ASPs fell to £339 from £379. The strength of unit growth more than offset the drop in unit prices, the analyst told us. ®

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