Windows RT Failing to Capture Tablet Market

Windows RT is virtually identical to Windows 8, but runs on ARM-based devices; Windows 8 is built for x86 hardware.

Microsoft’s idea for Windows RT must have seemed like a winner on paper: craft a version of Windows for mobile devices built on the ARM chip architecture (which powers a sizable portion of tablets and smartphones on the market), send the resulting products into the ring against Apple and various Android manufacturers, and profit. Given the size of the Windows juggernaut, how could Microsoft lose?

As it turns out, the answer is “badly,” at least in the early stages of Windows RT’s lifecycle. According to research firm IDC, tablets running Windows RT shipped 200,000 units in the first quarter of 2013, good for 0.4 percent of the market—far behind not only the iPad (which shipped 19.5 million units) and Android touch-screens (27.8 million units), but also Windows 8 on tablets (1.6 million units). Even if you view the tablet market as deeply entrenched and cruel to new competitors, that’s a notably weak performance by Windows RT, especially considering Microsoft’s efforts to promote it over the past few months.

“Recent rumors have circulated about the possibility of smaller screen Windows RT and Windows 8 tablets hitting the market,” Ryan Reith, Program Manager for IDC’s Mobility Tracker program, wrote in a statement accompanying the data. “However, the notion that this will be the saving grace is flawed. Clearly the market is moving toward smart 7-8 inch devices, but Microsoft’s larger challenges center around consumer messaging and lower cost competition. If these challenges are addressed, along with the desired screen size variations, then we could see Microsoft make even further headway in 2013 and beyond.”

Windows RT isn’t Microsoft’s only issue at the moment. On April 18, Microsoft reported quarterly revenues of $5.70 billion for its Windows division, a 23 percent increase from the same quarter a year ago. But as the company noted in a press release, “adjusting for the recognition of revenue related to the Windows Upgrade Offer, Windows Division non-GAAP revenue was flat.” That’s not a good sign, considering the size of Microsoft’s massive Windows 8/Windows RT marketing campaign that took place over that quarter.

Numbers aside, you know it’s bad when Intel CEO Paul Otellini, a longtime Microsoft cheerleader, tells analysts and media on a conference call that Windows 8 “didn’t quite have that same kind of adoption curve” as its predecessors, and “requires a bit of training.”

But that doesn’t mean Microsoft (or Windows) is doomed. Quite the contrary: the company has the funding to make extraordinarily long plays. If Microsoft keeps tweaking Windows 8 and Windows RT, and pouring millions more dollars into the marketing effort, it’s not inconceivable that its market-share could increase in the tablet space. But how much effort is Microsoft willing to expend, for how much gain?


Image: Microsoft