Microsoft is to slash the price of Windows 8.1 by 70 per cent for manufacturers of lower-priced laptop and tablet devices, according to reports.
Sources familiar with the matter told Bloomberg that Microsoft is acting to counter competition from less expensive rivals such as Google's Chromebook, by selling its operating system licence for $15 and preinstalling it on devices that cost no more than $250. This is a dramatic cut from the usual fee of $50.
The sources, who asked to remain anonymous, said that the discount would apply to any products that meet the price limit, regardless of the size or type of device.
Some of the larger manufacturers have already paid less for the licences through other incentives such as marketing funds provided by Microsoft, the source said.
The decline of the PC market, which Microsoft has dominated for decades, has pushed the firm to make its mark in the tablet area. By making its operating system less expensive for manufacturers, Microsoft will hope that it can increase take-up of Windows 8.1 in the growing tablet market, while also suppressing the threat from Google's Chromebooks and other alternatives. Apple's iOS and Google's Android currently have a stranglehold of the tablet market from an operating system perspective.
Earlier this month, Microsoft revealed that Windows 8 sold 200 million licences in its first 15 months on sale - 40 million fewer than Windows 7 sold in its first year.
Statistics from NetMarketShare reveal that only 11 per cent of PC users use Windows 8 or its updated build, Windows 8.1. Meanwhile, 48 per cent of PC users use Windows 7, and 29 per cent still run Windows XP - which will have no support from Microsoft from April 2014.