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Microsoft cuts Windows 8 OEM prices to spur demand -- WSJ

The company is offering device makers a discount in a bid to convince them to develop small touch-enabled laptops, the Wall Street Journal reports.

Acer's Windows 8-based Aspire S7.
Acer's Windows 8-based Aspire S7.

Microsoft is aiming to amp up demand for Windows 8 notebooks by offering manufacturers a discount on the operating system, the Wall Street Journal has reported.

Based on comments from "people familiar with the situation," the Journal yesterday said that Microsoft is trimming OEM (original equipment manufacturer) prices for Windows 8 and Office 2012. The goal is to encourage device makers to develop smaller, touch-based laptops designed for the latest Windows version.

Sales of Windows 8 computers have been weak since the OS debuted last October. Conventional desktops and most laptops still lack the touch screens needed to take full advantage of the new environment. Potentially reaching consumers this fall, the newer touch-based notebooks could help drive more sales.

Last month, Microsoft discounted the OEM price of Windows 8 plus Office to $30 for touch-enabled devices smaller than 10.8 inches, says one of the Journal's sources. The previous price was around $120. Devices larger than 10.8 inches get the same discount minus Office.

A Microsoft spokesman wouldn't spill any details to the Journal but sent the publication the following statement:

As we've said before, Windows 8 was built to scale across all sizes of PCs and tablets -- large and small. We continue to work with partners to ensure that Windows is available across a diverse range of devices.

A Microsoft spokesperson declined CNET's request for comment on the OEM pricing.

Similar reports but with different details have come from Taiwan-based Digitimes, which claims that Microsoft will offer OEMs a discount of $20 on touch-screen notebooks 11.6 inches and smaller. The same discount would apply for notebooks smaller than 10.8 inches, but here Microsoft would throw in Office 2013 as well.

The discount would kick in sometime in April or May, according to Digitimes' sources. Retail prices on 11.6-inch Windows 8 notebooks would likely start dropping in June to reflect the discount.

Meanwhile, Microsoft's Surface tablet still seems to be in a sales slump, at least according to one analyst.

Pacific Crest analyst Brendan Barnicle today cut his sales estimates for the tablet, as reported by Forbes.

For the current quarter, Barnicle expects Microsoft to sell just 600,000 Surface units, a hefty drop from the prior forecast of 1.4 million. And for all of fiscal 2013, he sees sales of 3 million, down from the previous projection of 4 million.

Microsoft's inability to jump-start tablet sales puts the company in a difficult position.

"Despite an attractive valuation for MSFT, we remain concerned that the company is facing a very challenging transition as the market moves away from PCs, which account for 50 percent of Microsoft's revenue, to other devices, where Microsoft has been far less dominant," Barnicle said, according to Forbes.