With Windows 8 failing to spur PC demand, Microsoft is resorting to the oldest trick in the book: price cuts.
Not surprisingly,that should result in cheaper Windows 8 tablets and hybrids, according to IDC's Bob O'Donnell.
"It lowers the vendors' total cost, which allows them to get to a lower price point," he said.
But maybe more importantly, Microsoft has offered another incentive: to spark the market for small Windows 8 devices, any product with a display size of less than roughly 11 inches will get a discount plus a free copy of Office 2013, according to reports.
That plays into two trends: the lower cost of smaller touch displays and a market increasingly favoring smaller tablets.
"The manufacturing yields for [larger] touchscreens is very low, which makes the cost high. While the [smaller] 10- and 11-inch inch class touch-screen supply is better, which allows lower prices," O'Donnell said.
And things should get even smaller than that. O'Donnell said Microsoft is missing the 7-inch class tablet wave that is cresting with Apple's iPad Mini and Android-based tablets like Samsung's Galaxy Tab and Google's Nexus 7.
Problem is, Windows 8 currently won't work with those smaller displays. But the rumored Windows Blue may address that, he said. Windows Blue is expected to accommodate tablets with screen sizes in the 7 to 8 inch range, according to a report at the Verge.
"Put all of that together and you can imagine seeing much more aggressive small Windows 8 touch-based products," O'Donnell said.
The means Microsoft can "better compete for the consumer's dollar against popular media tablets," said Craig Stice, an analyst at IHS iSuppli.
All of this is necessary because Windows 8-based products just aren't selling very well. "The problem is the PC market is horribly stalled so they have make some pretty dramatic moves to reignite the market," O'Donnell said.
Microsoft declined to comment.